Bargaining in the Shadow of a Dispute Settlement Mechanism: GATT vs. WTO

• In Event: The Global Governance of Trade

Abstract

Scholars have criticized international organizations and multilateral negotiations as being driven by power politics, which disadvantages less powerful members. Does international adjudication mitigate or magnify power asymmetries? I answer this question in the context of the dispute settlement mechanism (DSM) of the World Trade Organization (WTO). I argue that specific and firm rules of the WTO-the unilateral right to a panel and the automatic adoption of a ruling-empower complainants. Using a game theoretic analysis, I find that weak members are more likely to benefit from bilateral bargaining under the WTO than the GATT. The model predicts that defendants' inability to block delegation and adoption of a ruling under the WTO leads to more concessions, which benefits weak members. These findings suggest the sheer existence of international adjudication alone fails to empower weak members, but adjudication with specific and firm rules is able to mitigate problems of power politics. The theory's implications are tested through an analysis of the GATT/WTO dispute data.

Author

• Yoo Sun Jung, University College Dublin