Studies of the General Agreement on Tariffs and Trade (GATT) stress the role of formal panels in adjudicating trade conflicts. Yet most cases are settled beforehand in informal consultations. This article tests two sets of hypotheses about the decision to escalate GATT cases, one concerning the significance of the right to a panel, the other concerning the effects of political regime type. Results show that the right to a panel did not inspire more early settlement, more escalation, or more resolution through concessions at the panel stage; however, highly democratic dyads are more likely to achieve concession, but only at the consultation stage. This suggests that a strategy of tying hands, rather than adherence to legal (and other) norms of conflict resolution, is likely to shed light on the way democracies use formal third-party adjudication at GATT. States have long sought to have their conflicts adjudicated by institutions. Nowhere is this more evident than in international trade, and nowhere more puzzling than in the case of dispute settlement under the General Agreement on Tariffs and Trade (GATT). Often dismissed as a quasi-judicial system held together by countless loopholes, GATT dispute settlement has nonetheless enjoyed marked success. Indeed, against all expectations, this institution has not only resolved an impressive number and variety of trade conflicts, but has helped anchor an increasingly rules-based global economy. In the search for clues to this puzzle, scholars have been quick to look at the formal side of dispute settlement, focusing on the role played by GATT panels in particular. Although few would disagree that these ad hoc tribunals are important, the fact is that most cases are never brought before a panel. Instead, the majority of cases are either withdrawn or resolved in consultations, an informal and required first stage in the GATT dispute settlement process. The decision to panel a case is thus an escalation that needs to be explained, one that raises questions about the design and efficacy of dispute settlement institutions more generally. This article takes up these questions

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Democracy, Consultation, and the Paneling of Disputes under GATT

Law did play an important role in this lawyerless multilateral trade order, but which one? Roessler (1999, 10) Introduction Dispute settlement under the General Agreement on Tariffs and Trade (GATT) and its successor, the World Trade Organization (WTO), is the very “backbone of the multilateral trading system” (Moore 2000). Indeed, despite being likened to a “court with no bailiff” (Rossmiller 1994, 263), the GATT/WTO system is widely touted as the most successful of any comparable institution today (Hudec 1993, 353; Petersmann 1997, 63–65; Moore 2000). Add to this that the WTO's Dispute Settlement Understanding (DSU) has corrected many of the shortcomings of GATT 1947, and it is little wonder that most observers are even more optimistic about the future. Until recently, however, there has been virtually no empirical evidence brought to bear on the most important questions in the field. Why do countries take some of their complaints to GATT/WTO and prosecute others unilaterally, “out of court”? Why are some disputes settled with liberalization by the defendant, while the status quo prevails in others? And has greater legalization of the system made dispute settlement more efficacious? Taking Robert Hudec's Enforcing International Trade Law as its point of departure, a growing literature has begun to tackle these and related questions, testing hypotheses against data on the hundreds of complaints filed since 1948. Some of the results confirm prevailing views about the political economy of GATT/WTO dispute settlement.

The Political Economy of International Trade Law: Testing international trade law: Empirical studies of GATT/WTO dispute settlement

In agreements that include flexibility enhancing mechanisms such as escape clauses, how do institutions realize the benefits of flexibility while preventing its abuse? The conventional wisdom is that escape clauses must be made costly, but I show this claim to be at odds with empirical observation. In the GATT/WTO, the institution where escape clauses are most prevalent, compensation following escape was only widespread in the 1950s. Since then, it has been progressively abandoned, in favor of appeals to exception. This alternative mechanism relies on an institution's ability to verify the severity and exogeneity of the domestic circumstances of states seeking temporary escape. Relying heavily on GATT archives, I show how early on in the institution, members had made the link between costless escape and increased monitoring, and pursued reforms to achieve both objectives. The success of members’ ability to verify escapees’ domestic circumstances is observed in the record of safeguard disputes throughout the GATT/WTO's history. Finally, I use the hypothesized link between verifiable information and the chosen escape mechanism to explain an otherwise puzzling GATT incident, that of French emergency trade measures in 1968.

https://www.jstor.org/stable/info/27735100

Seeking Escape: The Use of Escape Clauses in International Trade Agreements

The role of legitimacy in international relations is a topic of much debate, yet there is little understanding of the mechanism behind it. Here I address this discrepancy by asking: are state threats perceived as (il)legitimate more or less likely to be successful? By operationalizing illegitimacy as unilateral action in the presence of a multilateral option, I consider the variation in the success of U.S. trade measures from 1975 to 2000. As I show, the (il)legitimacy of threats modifies the nature of the signal sent by concessions to those threats, and this effect can be measured and predicted. I find that, controlling for material pressure, perceived illegitimacy of U.S. trade threats decreases the likelihood of a target conceding by over 34 percent. Moreover, it pays to resist: targets that resist illegitimate unilateral measures from the United States are 25 percent less likely to encounter similar unilateral measures over the following five years.

Constraining Coercion? Legitimacy and Its Role in U.S. Trade Policy, 1975–2000

Le droit de l’Organisation mondiale du commerce (OMC) determine la maniere de regler les litiges qui surviennent lorsqu’un Etat membre reproche a un autre de violer ses obligations. Il etablit, en substance, un mecanisme juridictionnel exclusif et obligatoire, par lequel tout Etat membre peut obtenir que le differend soit tranche par un groupe special et, en appel, par l’Organe d’appel. Si une violation est constatee et que l’Etat defendeur ne se met pas en conformite avec ses obligations, l’Etat plaignant peut etre autorise a suspendre certaines de ses obligations a l’egard du defendeur. Cette suspension d’obligations, qui est generalement consideree comme la sanction du droit de l’OMC, fait l’objet de la these. La these etudie ce systeme de sanctions, qui s’avere particulierement elabore et effectif au regard des standards du droit international. Apres avoir presente et critique les fondements generalement utilises par les juristes et par les economistes pour expliquer ce systeme, la these propose une explication complementaire inspiree de la theorie de l’institution elaboree par certains auteurs francais du debut du XXe siecle. Les sanctions sont alors le signe du developpement d’un pouvoir propre de l’OMC, qui impose sa volonte a ses Etats membres, et le libre-echange encadre par des regles apparait comme une forme d’interet collectif, en contraste avec l’idee courante d’ouverture des marches dans l’interet individuel des Etats. Cette perspective implique aussi que les sanctions du droit de l’OMC ne se comprennent plus comme un reequilibrage des prestations reciproques des Etats a la suite de l’inexecution de ses obligations par l’un d’eux, mais comme une contrainte en vue de faire respecter les regles communes par chacun, en definitive au benefice des acteurs du commerce international.

Les sanctions dans le droit de l'Organisation mondiale du commerce

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Jean-Gabriel Castel

Papers

The Uruguay Round and the Improvements to the Gatt Dispute Settlement Rules and Procedures