Is the WTO dispute settlement procedure fair to developing countries?

The World Trade Organization’s Dispute Settlement Procedure has been described as the “crown jewel” of the multilateral trading system, having been highly effective in settling a large number of disputes-without it, the results might have been much worse. Any WTO member can file a complaint against a trade practice of another member that it believes to be in violation of WTO agreements. The Dispute Settlement body then makes a ruling on the dispute. Finally, if the respondent is found guilty by the Dispute Settlement body, the respondent may either bring its practices into compliance or face authorized retaliatory trade measures by the complainant. But is the Dispute Settlement Procedure fair to developing countries, or is there some bias in favor of powerful countries? If potential retaliatory measures by a WTO member are unthreatening to a potential offender, then does the potential offender ignore rules? Do other factors, such as political power, bias which members benefit from the Dispute Settlement Procedure? One approach to investigate potential bias looks at the final outcomes of disputes, asking: do developed countries tend to ignore the Dispute Settlement body’s recommendations when facing complaints from developing countries? Investigations with this approach have found some empirical evidence of bias against developing countries, but samples of disputes are small. Another approach to investigate bias looks at Dispute Settlement body rulings, asking: does the WTO’s panel of experts tend to rule against developing countries? An investigation found that threat of retaliatory measures and asymmetric power did not bias rulings, but that countries with better legal capacity - usually more developed countries - were more likely to win disputes. We take a different approach, looking at which members file complaints to ask: given that members may not even file complaints if they expect to lose, do developing countries avoid filing complaints because they lack power?

Non-PR

IFPRI1; CRP2; 3 Building Inclusive and Efficient Markets, Trade Systems, and Food Industry; 5 Strengthening Institutions and Governance

MTID; PIM

CGIAR Research Program on Policies, Institutions, and Markets (PIM)