Why Do Some International Institutions Contain Strong Dispute Settlement Provisions: New Evidence from Preferential Trade Agreements

To understand why some international institutions have stronger dispute settlement mechanisms (DSMs) than others, we investigate the dispute settlement provisions of nearly 600 preferential trade agreements (PTAs), which possess several desirable case-selection features and are evoked more than is realized. We broaden the study of dispute settlement design beyond “legalization” and instead reorient theorizing around a multi-faceted conceptualization of the strength of DSMs. We posit that strong DSMs are first and foremost a rational response to features of agreements that require stronger dispute settlement, such as depth and large memberships. Multivariate empirical tests using a new data set on PTA design confirm these expectations and reveal that depth – the amount of policy change specified in an agreement – is the most powerful and consistent predictor of DSM strength, providing empirical support to a long-posited but controversial conjecture. Yet power also plays a sizeable role, since agreements among asymmetric members are more likely to have strong DSMs due to their mutual appeal, as are those involving the United States. Important regional differences also emerge, as PTAs across the Americas are designed with strong dispute settlement, as are Asian PTAs, which contradicts the conventional wisdom about Asian values and legalization. Our findings demonstrate that rationalism explains much of international institutional design, yet it can be enhanced by also incorporating power-based and regional explanations.

Low-Income Developing Countries and WTO Litigation: Why Wake Up the Sleeping Dog?

The World Trade Organization (WTO) is one of the most judicialized dispute settlement systems in international politics. While a general appreciation has developed that the system has worked quite well, research has not paid sufficient attention to the weakest actors in the system. This paper addresses the puzzle of missing cases of least-developed countries initiating WTO disputes settlement procedures. It challenges the existing literature on developing countries in WTO dispute settlement which predominantly focuses on legal capacity and economic interests. The paper provides an argument that the small universe of ‘actionable cases’, the option of free riding and the assessment of the perceived opportunity costs related to other foreign policy priorities better explain the absence of cases. In addition (and somewhat counterintuitively), we argue that the absence of cases is not necessarily bad news and shows how the weakest actors can use the dispute settlement system in a ‘lighter version’ or in indirect ways. The argument is empirically assessed by conducting a case study on four West African cotton-producing countries (C4) and their involvement in dispute settlement.

The Extensive (but Fragile) Authority of the WTO Appellate Body

The authority of an international court (IC) is not necessarily evolutionary and its development unidirectional. This article addresses the authority of the Appellate Body (AB) of the World Trade Organization (WTO) and shows how it rapidly and almost immediately became extensive, but has since exhibited signs of becoming more fragile. The article applies a typology of IC authority developed by Alter, Helfer and Madsen (2014) and explains the transformation from narrow authority (a dispute resolution venue under the GATT based on political negotiations) to extensive authority (a judicialized WTO dispute settlement system with a sophisticated case law) and presents empirical indicators of the rise of the AB’s authority. Such rapid development of extensive authority is arguably a unique case in international politics at the multilateral level. That authority nonetheless remains fragile, and shows signs that it could decline significantly for reasons we explain.

Seals and the Need for more Deference to Vienna by WTO Adjudicators

This paper asks how World Trade Organization (WTO) panels and the Appellate Body (AB) take public international law (PIL) into account when interpreting WTO rules as a part of international economic law (IEL). Splendid isolation of the latter is not new; indeed it is intended by the negotiators of the Understanding on the Settlement of Disputes (DSU). At the same time, the Vienna Convention on the Law of Treaties (VCLT) is quite clear when it provides the general rules and the supplementary means of treaty interpretation. Despite such mandatory guidance, WTO adjudicators (when given a choice and assuming they see the conflict) prefer deference to WTO law over deference to Vienna and take a dogmatic way out of interpretation quandaries. The AB and panels make abundant reference to Vienna, though less so to substantive PIL. Often times, however, they do so simply in order to buttress their findings of violations of WTO rules. Perhaps tellingly, however, none of the reports in EC – Seals contains even a single mention of VCLT, despite numerous references to international standards addressing indigenous rights and animal welfare. In the longer term, and absent a breakthrough on the negotiation front, this pattern of carefully eschewing international treaty law and using PIL just for the sake of convenience could have serious consequences for the credibility and acceptance of the multilateral trading system. Following the adage ‘negotiate or litigate’ recourse to WTO dispute settlement increases when governments are less ready to make treaty commitments commensurate with the challenges of globalisation. This is true even for ‘societal choice’ cases on the margins of classic trade disputes. We will argue here that it is precisely for cases such as these that VCLT and PIL should be used more systematically by panels and the AB. Failing that, instead of building bridges for more coherent international regulation, WTO adjudicators could burn those same bridges which the DSU interpretation margin leaves open for accomplishing their job which is to find a ‘positive solution’. Worse, judicial incoherence could return to WTO dispute settlement like a boomerang and damage the credibility and thus the level of acceptance of the multilateral trading system per se.