| This dissertation examines government decisions to initiate and resolve trade disputes under the dispute settlement procedures of the World Trade Organization (WTO), and its predecessor, the General Agreement on Tariffs and Trade (GATT). This study is motivated by the fact that few disputes are taken before the GATT or WTO for formal legal adjudication, and that trade disputes emerge, evolve, and end in a predictable manner. The trade dispute process entails a series of three sequential decisions: to impose a potentially objectionable trade barrier, to challenge such a barrier before the GATT/WTO, and to resolve a GATT/WTO dispute through a panel ruling as opposed to an “out of court” settlement.; The first overarching finding is that international law exerts a significant impact on government behavior at all three stages of a trade dispute. For one, governments typically follow international legal rules for imposing trade protection, even when there are political incentives to behave otherwise. They are deterred further from imposing illegal trade protection when they fear being challenged before the new, stronger WTO dispute settlement mechanism. In addition, governments are more likely to take before the GATT or WTO those cases that have the strongest legal merit, as well as to seek legal panel rulings to resolve those disputes that are the most uncertain and intractable. A second overall finding is that domestic political considerations motivate many trade dispute choices. Most notably, government leaders take before the GATT and WTO those disputes that promise the greatest potential domestic political and economic rewards. Furthermore, leaders tend to seek the “political cover” of GATT/WTO panel rulings when they face sizeable domestic constraints.; These findings emerge from the estimation of multivariate statistical models that account for the selection dynamics inherent to the trade dispute process. The statistical tests are performed using an original data set that contains information on more than 4,600 possible and actual GATT and WTO trade disputes among 95 countries over the past four decades. |
