Trade Remedies and World Trade Organization Dispute Settlement: Why are so Few Challenged?

Abstract

Antidumping and related trade remedies are the most popular policy instruments that many of the largest importing countries in the World Trade Organization system use to restrict international trade. While such trade remedies are also frequent targets of dispute settlement activity under the WTO, given that Panel and Appellate Body rulings have almost invariably found that some aspect of each reviewed remedy was inconsistent with WTO obligations, an open research question is why aren't more remedies targeted by dispute settlement? This paper provides a first empirical investigation of the trade remedy and WTO dispute settlement interaction by focusing on determinants of WTO members' decisions of whether to formally challenge U.S. trade remedies imposed between 1992 and 2003. We provide evidence that it is not only the size of the economic market at stake and the capacity to retaliate under potential Dispute Settlement Understanding - authorized sanctions that influence the litigation decision of whether to formally challenge a measure at the WTO. We also find that if the negatively affected foreign industry has the capacity to directly retaliate through a reciprocal antidumping investigation and measure of its own, its government is less likely to pursue the case on its behalf at the WTO. This is consistent with the theory that potential complainants may be avoiding WTO litigation in favor of pursuing reciprocal antidumping and hence vigilante justice.

Keywords: Trade Disputes, WTO, GATT, Antidumping, Countervailing Duties, Trade Remedies, Retaliation

JEL Classification: F13, K33, K41