forthcoming in the World Bank Economic Review
Participation
in WTO Dispute Settlement:
Complainants, Interested Parties and Free
Riders
& The
This Version: January 2005
Original Version: September 2003
Abstract
What affects a country’s decision of whether to
formally engage in a trade dispute directly related to its exporting interests?
This paper empirically examines determinants of affected country participation
decisions in formal trade litigation arising under the World Trade Organization
(WTO) between 1995 and 2000. We investigate determinants of nonparticipation
and examine whether the incentives generated by the system’s rules and
procedures discourage active engagement in dispute settlement by developing
country members in particular. While we find the size of exports at stake to be
an important economic determinant affecting the decision to participate in
challenges to a WTO-inconsistent policy, we also provide evidence that measures
of a country’s retaliatory and legal capacity, as well as its international
political-economic relationships matter. These results are consistent with the
hypothesis of an implicit “institutional bias” generated by the system’s rules
and incentives that particularly affects developing country participation in
dispute settlement.