MFN and the Third-Party Economic Interests of Developing Countries
in GATT/WTO Dispute
Settlement
Brandeis University
This draft: May 2007
Abstract
Relative to the GATT period, developing countries are more frequent complainants and respondents in trade disputes under the WTO. Perhaps more importantly, the increase in overall WTO trade dispute litigation coupled with the increase in developing country imports and exports implies that such countries are likely to have a more frequent third-party interest in the economic outcome of other countries’ trade disputes. We examine this neglected area of ‘third party’ research by first categorizing the many potential externality concerns associated with formal, market access trade disputes to which such countries are neither complainant nor respondent parties. We then present an empirical investigation focusing on one particular category of third party interest examining data on trade disputes involving allegations that the respondent has violated its import market access commitments in a quasi-MFN manner, and we assess the impact of dispute settlement negotiations on the exports from developing third countries. Finally, we highlight the policy need for transparency to assist developing countries as they adjust because of the externalities that DSU activity imposes on them as third parties.