The WTO Dispute Settlement System: A First Assessment from an Economic Perspective

Monika Bütler () and Heinz Hauser

Cahiers de Recherches Economiques du Département d'économie from Université de Lausanne, Faculté des HEC, Département d’économie

Abstract: We explore the incentives countries face in trade litigation within the new WTO Dispute Settlement System. Our analysis yields a number of interesting predictions. First, because sanctions are ruled out during the litigation process, the Dispute Settlement System does not preclude all new trade restrictions. However, the agenda-setting capacity of the complainant, including its right to force a decision, make trade restrictions less attractive than under the WTO's predecessor GATT. Second, the system's appellate review provides the losing defendant with strong incentives to delay negative findings, and both parties with a possibility to signal their determinacy in fighting the case. Third, a relatively weak implementation procedure potentially reinforces incentives to violate WTO trade rules. Fourth, bilateral settlements are more likely at an early stage in the process and are biased towards the expected outcome of the formal dispute settlement procedure. Empirical evidence based on a first data set of cases at an advanced stage of the litigation process provides qualitative support for our claims.

Keywords: World Trade Organization; dispute settlement; trade restrictions (search for similar items in EconPapers)
JEL-codes: D74 F13 K41 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2000-02
New Economics Papers: this item is included in nep-ind, nep-law and nep-pol
References: View complete reference list from CitEc
Citations: View citations in EconPapers (24)

Published in Journal of Law, Economics and Organization, vol. 16 (2), Fall 2000, pp. 503-533

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Related works:
Journal Article: The WTO Dispute Settlement System: First Assessment from an Economic Perspective (2000)
Working Paper: The WTO Dispute Settlement System: A First Assessment from an Economic Perspective (2000)
Working Paper: The WTO Dispute Settlement System: A First Assessment from an Economic Perspective (2000)
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Persistent link: https://EconPapers.repec.org/RePEc:lau:crdeep:00.02

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