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Does WTO Dispute Settlement Enforce or Inform?

Published online by Cambridge University Press:  17 June 2013

Abstract

Whereas some researchers emphasize how World Trade Organization (WTO) dispute settlement reduces complexity and clarifies legislation, others argue that dispute rulings promote co-operation by providing an enforcement mechanism. This article identifies empirical implications from these distinct arguments and tests them on WTO disputes from 1995 to 2006. The study's analytical approach combines a three-step coding of dispute escalation with a strategic bargaining model and statistical backwards induction to account for governments’ forward-looking behavior. It finds strong support for the argument that WTO dispute settlement primarily serves as an enforcement device. It finds much less support for the argument that dispute settlement reduces complexity and clarifies trade law. These results suggest that the role of WTO dispute settlement in generating information on acceptable trade policy standards is less relevant than proponents of the complexity argument tend to assume.

Type
Articles
Copyright
Copyright © Cambridge University Press 2013 

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Footnotes

*

Department of International Relations, LSE (email: t.sattler@lse.ac.uk); Center for Comparative and International Studies, ETH Zurich (emails: gabriele.spilker@ir.gess.ethz.ch and thbe0520@ethz.ch, respectively). A version of this manuscript has been presented at the 4th Annual Conference on the Political Economy of International Organizations, 27–29 January 2011, Zurich. Jeffrey Kucik and Laura Zoratto gave valuable comments on an earlier draft. Marianne Furrer, Quynh Nguyen and Gwen Tiernan provided excellent research assistance. Finally, we thank four anonymous reviewers and the journal's editor, Kristian Skrede Gleditsch, for extremely helpful advice that improved this research. This article was written in the context of the Swiss National Research Program on Trade Regulation. Data replication sets are available at http://dx.doi.org/doi:10.1017/S0007123413000136.

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