Chapter 9 The Usage of the WTO Dispute Settlement System: Do Power Considerations Matter?

Abstract

The usage of the WTO Dispute Settlement System (DSS) is dominated by high-income countries. Since the ultimate enforcement threat of the system is based on retaliation, countries may take their economic size as well as their specific bilateral retaliatory capacity into account when deciding whether or not to respond to a detrimental infringement of a trade agreement by filing a costly complaint. Hence, various scholars conjecture that lawsuits surfacing in the record of the WTO constitute only the biased tip of an iceberg of trade disputes. In order to investigate such a potential bias, this chapter sets up a sequential game of the DSS. Subsequently, a binary choice model is employed to empirically explain a country's decision whether or not to litigate against a trading partner. The results suggest that a country is more likely to file a complaint if (i) it is large, (ii) its trading partner is small, (iii) the trade value of the commodity at stake is large, and (iv) its retaliatory capacity is large.

Citation

Wilckens, S. (2009), "Chapter 9 The Usage of the WTO Dispute Settlement System: Do Power Considerations Matter?", Hartigan, J.C. (Ed.) Trade Disputes and the Dispute Settlement Understanding of the WTO: An Interdisciplinary Assessment (Frontiers of Economics and Globalization, Vol. 6), Emerald Group Publishing Limited, Leeds, pp. 213-241. https://doi.org/10.1108/S1574-8715(2009)0000006012