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The Evolution and Utilization of the GATT/WTO Dispute Settlement Mechanism

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  • Pao-li Chang

    (SMU)

Abstract

This paper provides a theoretical framework of dispute settlement to explain the surge in blocking incidence of GATT panel reports during the 1980s and the variations in withdrawn incidence versus total disputes across different decades of the GATT regime. The study first suggests the role of the degree of legal controversy over a panel ruling in determining countries' incentives to block (appeal) a panel report under the GATT (WTO) regime. The study then analyzes the effects of political power on countries' incentives to use, and their interactions in using, the dispute settlement mechanism, when two-sided asymmetric information exists regarding panel judgement.

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Bibliographic Info

Paper provided by East Asian Bureau of Economic Research in its series Trade Working Papers with number 22062.

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Date of creation: Jan 2007
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Handle: RePEc:eab:tradew:22062

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Postal: JG Crawford Building #13, Asia Pacific School of Economics and Government, Australian National University, ACT 0200
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Related research

Keywords: Dispute Settlement; legal controversy; block; appeal; two-sided asymmetric information; political cost;

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References

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  1. Schweizer, Urs, 1989. "Litigation and Settlement under Two-Sided Incomplete Information," Review of Economic Studies, Wiley Blackwell, vol. 56(2), pages 163-77, April.
  2. Daughety, Andrew F. & Reinganum, Jennifer F., 1994. "Settlement negotiations with two-sided asymmetric information: Model duality, information distribution, and efficiency," International Review of Law and Economics, Elsevier, vol. 14(3), pages 283-298, September.
  3. Butler, Monika & Hauser, Heinz, 2000. "The WTO Dispute Settlement System: First Assessment from an Economic Perspective," Journal of Law, Economics and Organization, Oxford University Press, vol. 16(2), pages 503-33, October.
  4. Lucian Arye Bebchuk, 1984. "Litigation and Settlement under Imperfect Information," RAND Journal of Economics, The RAND Corporation, vol. 15(3), pages 404-415, Autumn.
  5. Lucian Arye Bebchuk, 1987. "Suing Solely to Extract a Settlement Offer," NBER Working Papers 2161, National Bureau of Economic Research, Inc.
  6. I.P.L. P'ng, 1983. "Strategic Behavior in Suit, Settlement, and Trial," Bell Journal of Economics, The RAND Corporation, vol. 14(2), pages 539-550, Autumn.
  7. Barry Nalebuff, 1987. "Credible Pretrial Negotiation," RAND Journal of Economics, The RAND Corporation, vol. 18(2), pages 198-210, Summer.
  8. Chad P . Bown, 2002. "The Economics of Trade Disputes, the GATT's Article XXIII, and the WTO's Dispute Settlement Understanding," Economics and Politics, Wiley Blackwell, vol. 14(3), pages 283-323, November.
  9. Horn, Henrik & Mavroidis, Petros C & Nordström, Håkan, 1999. "Is The Use Of The WTO Dispute Settlement System Biased?," CEPR Discussion Papers 2340, C.E.P.R. Discussion Papers.
  10. Kara Leitner & Simon Lester, 2006. "WTO Dispute Settlement from 1995 to 2005 -- A Statistical Analysis," Journal of International Economic Law, Oxford University Press, vol. 9(1), pages 219-231, March.
  11. Cooter, Robert D & Rubinfeld, Daniel L, 1989. "Economic Analysis of Legal Disputes and Their Resolution," Journal of Economic Literature, American Economic Association, vol. 27(3), pages 1067-97, September.
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Cited by:
  1. Pao-Li Chang, 2004. "The Politics of WTO Enforcement Mechanism," Working Papers 04-2004, Singapore Management University, School of Economics.
  2. Carsten Herrmann-Pillath, 2006. "Reciprocity and the hidden constitution of world trade," Constitutional Political Economy, Springer, vol. 17(3), pages 133-163, September.

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