The WTO Dispute Settlement Mechanism – Enforcement, State Power, and Dispute Recurrence

There is a large body of literature that studies the World Trade Organization’s (WTO) Dispute Settlement Mechanism. A somewhat neglected issue in this context, however, is dispute recurrence, i.e., which factors make it more likely that the same complainant files the same dispute against the same defendant? The following paper seeks to contribute to addressing this gap. More specifically, the authors argue that less powerful complainants should not opt for dispute recurrence after having weighed the additional costs from antagonizing the defendant against the unlikely benefit of settling an issue. Specifically, although re-filing a dispute may appear as cost-efficient ex ante, it also implies reputation costs for the defendant and, thus, a complainant will antagonize a defendant if it re-files a dispute. This aspect is especially important for less powerful complainants because the defendant has shown that it considers the issue important enough to hold out despite being accused in front of an international tribunal. The empirical analysis using newly compiled data on WTO disputes in 1995-2009 strongly supports the theoretical claims.