| During trade negotiations, states bargain not only over the substantive terms of treaties, but also over procedures to resolve future disputes. Some mechanisms are diplomatic, requiring only consultations; others are legalistic, with independent judges issuing binding rulings. This dissertation offers a political theory of trade dispute settlement design that aims to explain the level of legalism in different accords. Its central claim is that political leaders weigh the benefits of improved treaty compliance against the costs of diminished policy discretion. To judge this trade-off, leaders assess their economy's stake in international trade; their relative economic power vis-a-vis other signatories; and the depth of the proposed liberalization. The more trade-dependent and less powerful the country--and the deeper the level of integration--the more legalistic the dispute settlement mechanism it will favor. Which institution is chosen depends on each country's bargaining leverage, defined as its opportunity costs of nonagreement.;This framework leads one to expect less legalistic dispute settlement in accords between parties whose economic position and bargaining leverage are highly unequal. In asymmetric settings, governments that stand to gain least from trade liberalization have less incentive to risk their policy discretion; they also have the leverage to impose their preference for a diplomatic system. Legalism is expected only in symmetric settings where all parties--given deep integration--have incentives to improve treaty compliance, and none stands to lose from the transition to a legalistic system thanks to their comparable economic power.;The empirical test of these propositions is tripartite: an overview of modern trade accords, followed by case studies of NAFTA and the WTO. With indicators for legalism and an index of intrapact economic asymmetry, the claims are robust across a set of 37 regional pacts. In every pact with high asymmetry, legalism is absent--even, in contrast to functional accounts, where integration is deep. Where asymmetry is low, legalism occurs only where a common market, not merely free trade, is the goal. In the case studies, the sharp contrast between the U.S. roles as eventual demandeur of legalism in GATT and as veto player within NAFTA reinforces this perspective. |
