Costly Procedures: Divergent Effects of Legalization in the GATT/WTO Dispute Settlement Procedures

Abstract

Increasing legalization of international institutions has divergent effects on member countries. Whereas legalization decreases uncertainty and increases convergence of countries’ expectations on international outcomes, it imposes costs on countries by increasing the complexity and difficulty of procedures for them to utilize. Countries with the administrative capacity to follow elaborate procedures reap the benefits of increased legalization. For countries without such capacity—primarily developing countries—the potential benefits are offset by their difficulty in following the procedures. I examine this argument against the institutional changes in dispute settlement procedures that occurred in the transition from the General Agreement on Tariffs and Trade (GATT) to the World Trade Organization (WTO). Compared to the GATT era, developed countries—ones with greater capacity—are much more likely to utilize dispute settlement in the WTO than developing countries. Gains from the institutional changes in dispute settlement procedures have accrued to benefit mostly developed member countries in the WTO.

Trade, institutions, and the timing of GATT/WTO accession in post-colonial states

“…The handful of cross-national analyses have focused primarily on the duration of the negotiation process itself (Michalopoulos 2002;Evenett and Primo Braga 2005;Yu and Wong 2008) or analyzed post-colonial states' economic patterns with a different theoretical focus, treating GATT/WTO membership only as a control variable rather than the question of interest (Head et al 2010). Rather than focusing on the timing of accession, scholars of international political economy have devoted the bulk of their efforts to measuring the effects of institutional membership on trade flows and national trade policies (Gowa and Kim 2005;Rose 2004;Goldstein et al 2007;Subramanian and Wei 2007), to clarifying the dynamics of trade round negotiations (Baldwin 2007;Jones 2009a, b;Odell 2009), and to explaining variation in the escalation, outcome, and effects of trade disputes (Busch 2000;Busch and Reinhardt 2001Reinhardt 2001;Guzman and Simmons 2002;Allee and Huth 2006;Kim 2008;Sattler and Bernauer 2008;Davis and Blodgett Bermeo 2009). Previous work has also explored the relationship of developing countries to the GATT/WTO (Pietras 1998;Finger and Winters 1998;Drahos 2003;Clapp 2006;Davis 2006;Patel 2008), as well as the potential for forum shopping in the settlement of trade disputes created by the overlapping jurisdictions of the GATT/WTO and preferential trade agreements (PTAs) (Davis 2006;Busch 2007;Naoi 2009).…”

The World Trade Organization at work: Performance in a member-driven milieu

“…Particular attention has been devoted to the alleged existence of a structural bias against developing countries' participation. Overall evidence is mixed, while controlling for trade flows as a proxy for expected disputes, some scholars find evidence of lack of legal resources while others suggest power asymmetry as the key factor for explaining the number of actual cases launched (Busch and Reinhardt 2002;Guzman and Simmons 2005;Kim 2008;Bown 2009;Sattler and Bernauer 2010). In addition, some work has focused 4 There have been many critical studies focusing on welfare transfer from the South to the North resulting from the Uruguay Round, e.g., Finger and Nogués (2002).…”

What Is Litigation in the World Trade Organization Worth?

“…See Maggi and Staiger 2011;Baccini and Kim 2012;Kim 2008;Busch and Reinhardt 2000;Busch and Pelc 2010;and Sattler, Spilker, and Bernauer 2014. 5. See Allee 2005Allee , 2010aAllee , and 2010bBown 2005a;Busch, Reinhardt, and Shaffer 2009;Davis and Bermeo 2009;Kim 2008;and Sattler and Bernauer 2011. 6.…”