Understanding Non-litigated Disputes in the WTO Dispute Settlement System

Dukgeun Ahn, Jihong Lee and Jee-Hyeong Park

Chapter 1 in The Legal and Economic Analysis of the WTO/FTA System, 2016, pp 3-30 from World Scientific Publishing Co. Pte. Ltd.

Abstract: This article focuses on a less scrutinized aspect of the WTO dispute settlement system – non-litigated disputes. Legal rules concerning consultation and settlement during the panel proceedings are analysed with the case laws. We then propose, and empirically analyse, several key economic determinants of non-litigation in the WTO dispute settlement system that are motivated by the theory of bargaining with informational asymmetry. In particular, our logistic regressions show that a greater difference in the size of the pair of disputing countries reduces the likelihood of voluntary settlement or non-litigation. WTO members also tend to prefer non-litigation when the respondent is smaller than the complainant, has less reputational concern, and faces less retaliatory capacity of the complainant. Our findings suggest a case for reforming the legal rules of the consultation process towards mitigating informational asymmetry or improving communication between disputing parties in the WTO.

Keywords: World Trade Organization; Trade Remedy; Dispute Settlement; Free Trade Agreement (search for similar items in EconPapers)
JEL-codes: F42 (search for similar items in EconPapers)
Date: 2016
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