Gravitation or discrimination? Determinants of litigation in the World Trade Organisation

Abstract

The strong presence of large countries in World Trade Organisation (WTO) dispute settlement and the absence of very poor ones have raised concerns that increasing legalisation in the global trading system has not diminished discrimination against less powerful countries as much as expected. This article examines dispute initiations in all WTO member state dyads in 1995–2003 to shed more light on this issue. The analysis suggests that the main driver of dispute initiation is a gravitational one: larger economies and bigger traders are more likely to become involved in trade disputes primarily because their economies are more diversified, and also because greater market size makes them more attractive targets of litigation. While evidence is not found for discriminatory effects against countries with small legal capacity, the results of the article point to a more complex form of power bias – namely a preponderance effect. They suggest that disputes among country dyads including a much more powerful defendant than complainant or vice versa are dealt with outside the WTO. This finding is potentially worrying because it is, arguably, easier to reduce legal capacity differences than to reduce power differences

Why do some international institutions contain strong dispute settlement provisions? New evidence from preferential trade agreements

“…A first control variable is for regime type, since studies have found that democratic states are more likely to embrace legal dispute settlement to settle disputes (e.g., Allee and Huth 2006;Gomez-Mera and Molinari 2014;Sattler and Bernauer 2011). By extension, one would expect that democratic states will be more receptive to the inclusion of strong, legal dispute settlement language in their agreements.…”

What Is Litigation in the World Trade Organization Worth?

“…Sattler and Bernauer 2011. See Allee 2005Allee , 2010aAllee , and 2010bBown 2005a;Busch, Reinhardt, and Shaffer 2009;Davis and Bermeo 2009;Kim 2008;and Sattler and Bernauer 2011. smaller states resemble relatively easy targets for retaliatory measures when litigating against a large trading partner because they depend more strongly on exports to rich and large markets. This adds to existing concerns about the effectiveness of the WTO dispute settlement procedure in that it may fail to enable disadvantaged countries to effectively proceed against a discriminating trading partner and achieve the removal of illegal trade barriers.…”

Chile frente a la regulación sobre medidas no arancelarias de la Organización Mundial del Comercio

“…Algunas de ellas, como poder económico (Sattler & Bernauer, 2011), capacidad legal (Busch, Reinhardt & Shaffer, 2008;Conti, 2010), diversidad y valor de las exportaciones (Horn, Mavroidis & Wijkström, 1999;Holmes, Rollo & Young, 2003) y disponibilidad de recursos financieros, humanos e institucionales (Bohl, 2009;Guzmán & Simmons, 2005), sugieren una relación entre el nivel de desarrollo del país y la frecuencia con que este recurre al OSD. De hecho, Leitner & Leister (2013) después de analizar las principales tendencias en el total de disputas ante la OMC entre 1995 y 2012 que Estados Unidos y la Unión Europea serían por lejos los miembros con mayor participación como reclamantes, así como demandados, ante el OSD.…”