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To Settle or Empanel? An Empirical Analysis of Litigation and Settlement at the World Trade Organization

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  • Guzman, Andrew
  • Simmons, Beth A

Abstract

This paper seeks to understand the factors that cause disputes at the World Trade Organization to move from the negotiation stage to the panel stage. We hypothesize that transfer payments between states are costly to arrange and that the lowest-cost transfers are those that relate directly to the issue in dispute. This implies that when the subject matter of the dispute has an all-or-nothing character and leaves little room for compromise (for example, health and safety regulations), the parties' ability to reach an agreement through the use of transfers is restricted. In contrast, if the subject matter of dispute permits greater flexibility (for example, tariff rates), the parties can more easily structure appropriate transfer payments through adjustments to the disputed variable. We conduct an empirical test of this hypothesis, finding support for it among democratic states. Copyright 2002 by the University of Chicago.

Suggested Citation

  • Guzman, Andrew & Simmons, Beth A, 2002. "To Settle or Empanel? An Empirical Analysis of Litigation and Settlement at the World Trade Organization," The Journal of Legal Studies, University of Chicago Press, vol. 31(1), pages 205-235, January.
    • Handle: RePEc:ucp:jlstud:v:31:y:2002:i:1:p:s205-35
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    Cited by:

    1. Thomas A. Zimmermann, 2005. "WTO Dispute Settlement at Ten: Evolution, Experiences, and Evaluation," Aussenwirtschaft, University of St. Gallen, School of Economics and Political Science, Swiss Institute for International Economics and Applied Economics Research, vol. 60(01), pages 27-61, March.
    2. Andrew T. Guzman & Beth A. Simmons, 2005. "Power Plays and Capacity Constraints: The Selection of Defendants in World Trade Organization Disputes," The Journal of Legal Studies, University of Chicago Press, vol. 34(2), pages 557-598, June.
    3. Javelosa, Josyline C. & Schmitz, Andrew, 2006. "Costs and Benefits of a WTO Dispute: Philippine Bananas and the Australian Market," Estey Centre Journal of International Law and Trade Policy, Estey Centre for Law and Economics in International Trade, vol. 7(1), pages 1-26.
    4. Steven G. Medema, 2020. "The Coase Theorem at Sixty," Journal of Economic Literature, American Economic Association, vol. 58(4), pages 1045-1128, December.
    5. Anand, Anita & Green, Andrew, 2018. "Securities settlements as examples of crisis-driven regulation," International Review of Law and Economics, Elsevier, vol. 55(C), pages 41-57.
    6. Emile van Ommeren & Arlo Poletti & Dirk De Bièvre, 2021. "The European Union and the political economy of enforcing international trade rules," European Union Politics, , vol. 22(3), pages 377-400, September.
    7. Maggi, Giovanni & Staiger, Robert W., 2020. "Learning by ruling and trade disputes," Journal of International Economics, Elsevier, vol. 126(C).
    8. Talya Bobick & Alastair Smith, 2013. "The impact of leader turnover on the onset and the resolution of WTO disputes," The Review of International Organizations, Springer, vol. 8(4), pages 423-445, December.
    9. Bernauer, Thomas & Spilker, Gabriele, 2010. "Escalation dynamics in WTO disputes over environment, health and safety issues," Papers 89, World Trade Institute.
    10. Spilker, Gabriele, 2013. "The WTO Dispute Settlement Mechanism – Enforcement, State Power, and Dispute Recurrence," Papers 584, World Trade Institute.
    11. Antoine Bouët & Jeanne Métivier, 2020. "Is the dispute settlement system, “jewel in the WTO’s crown”, beyond reach of developing countries?," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 156(1), pages 1-38, February.
    12. Jeheung Ryu & Randall W. Stone, 2018. "Plaintiffs by proxy: A firm-level approach to WTO dispute resolution," The Review of International Organizations, Springer, vol. 13(2), pages 273-308, June.
    13. Antoine Bouet & Jeanne Métivier, 2017. "Is the WTO Dispute Settlement Procedure Fair for Developing Countries?," Working Papers hal-02149414, HAL.
    14. Aydin B. Yildirim & J. Tyson Chatagnier & Arlo Poletti & Dirk De Bièvre, 2018. "The internationalization of production and the politics of compliance in WTO disputes," The Review of International Organizations, Springer, vol. 13(1), pages 49-75, March.
    15. Francesca Parente, 2022. "Settle or litigate? Consequences of institutional design in the Inter-American system of human rights protection," The Review of International Organizations, Springer, vol. 17(1), pages 39-61, January.
    16. Julia Gray & Philip Potter, 2020. "Diplomacy and the Settlement of International Trade Disputes," Journal of Conflict Resolution, Peace Science Society (International), vol. 64(7-8), pages 1358-1389, August.
    17. Serrano Caballero, Enriqueta & Ojo, Marianne, 2019. "Trade Negotiations and Global Relations: Emerging Players and Actors," MPRA Paper 92105, University Library of Munich, Germany.
    18. Duy Vu, 2018. "To Settle or to Fight to the End? Case-level Determinants of Early Settlement of Investor-State Disputes," GREDEG Working Papers 2018-36, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France, revised Feb 2020.
    19. Lee, Jiwon & Wittgenstein, Teresa, 2017. "Weak vs. Strong Ties: Explaining Early Settlement in WTO Disputes," ILE Working Paper Series 7, University of Hamburg, Institute of Law and Economics.
    20. Barbara Koremenos, 2007. "If Only Half of International Agreements Have Dispute Resolution Provisions, Which Half Needs Explaining?," The Journal of Legal Studies, University of Chicago Press, vol. 36(1), pages 189-212, January.
    21. Spilker, Gabriele, 2013. "Compliance with WTO Dispute Rulings," Papers 585, World Trade Institute.

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