When Multilateralism Backfires: Dispute Settlement and Compliance in the Global Trade Regime

35 Pages Posted: 10 Dec 2019

See all articles by Jeffrey Kucik

Jeffrey Kucik

University of Arizona

Lauren Peritz

University of California, Davis

Date Written: November 11, 2019

Abstract

Multilateralism is associated with a variety of benefits. Involving more states can help monitor compliance and contribute toward enforcement. Yet, in international dispute settlement, multilateralism can backfire. When legal processes are open to participation by non-litigant countries, defendant governments are less likely to comply with unfavorable rulings. First, non-litigant participation spoils bilateral settlements between disputants. Second, it expands the scope of the rulings. As a result, non-litigant participation results in more frequent, more burdensome rulings. This will drive down compliance. We test our argument at the World Trade Organization. Using a novel dataset on compliance in over 150 WTO disputes, we show that third party country participation is correlated with significantly lower compliance rates. Our findings highlight a risk of stringent enforcement and the consequences are significant: noncompliance problems threaten to undercut the operation of the multilateral trade regime, as we’ve seen in recent events.

Keywords: World Trade Organization, Compliance, International Law, Multilateralism

JEL Classification: F1

Suggested Citation

Kucik, Jeffrey and Peritz, Lauren, When Multilateralism Backfires: Dispute Settlement and Compliance in the Global Trade Regime (November 11, 2019). Available at SSRN: https://ssrn.com/abstract=3491858 or http://dx.doi.org/10.2139/ssrn.3491858

Jeffrey Kucik (Contact Author)

University of Arizona ( email )

315 Social Sciences Building
P.O. Box 210027
Tucson, AZ 85721-0027
United States

Lauren Peritz

University of California, Davis ( email )

1850 Hanover Dr
Apt 153
Davis, CA 95616

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