The internationalization of production and the politics of compliance in WTO disputes

In this paper we seek to advance the debate on the conditions under which the WTO Dispute Settlement Body can bring about trade-liberalizing policy change in WTO members. Under what conditions do WTO members change domestic policies or measures that are challenged in WTO litigation? Starting from th...

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Bibliographic Details
Published in:Review of International Organizations 2018-03, Vol.13 (1), p.49-75
Main Authors: Yildirim, Aydin B., Tyson Chatagnier, J., Poletti, Arlo, De Bièvre, Dirk
Format: Article
Language:English
Subjects:
Conflict resolution
Disputes
Economic sectors
Economics
Free trade
GATT
Globalization
International trade
Litigation
Mobilization
Policy making
Political Science
Production
Reforms
Social Sciences
Trade liberalization
Trade policy
Value
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Summary:In this paper we seek to advance the debate on the conditions under which the WTO Dispute Settlement Body can bring about trade-liberalizing policy change in WTO members. Under what conditions do WTO members change domestic policies or measures that are challenged in WTO litigation? Starting from the assumption that policymakers are political-support maximizers who seek to avoid the mobilization of political enemies, we argue that the degree of integration in Global Value Chains (GVCs) of the economic sectors affected by a WTO dispute influences members’ propensity to change domestic policies when targeted in WTO litigation. The initiation of a WTO dispute against sectors highly integrated in GVCs engenders the emergence of a domestic coalition of pro-trade liberalization groups composed of exporters seeking to avoid the imposition of retaliatory measures and import-dependent firms wishing to exploit the opportunity to access cheaper imports. Under these circumstances, trade-liberalizing responses to WTO legal challenges are therefore more likely. We test this hypothesis by estimating a Cox proportional hazard model and find that GVCs positively impact states’ propensity to comply with the WTO dispute settlement panel rulings.
ISSN:1559-7431
1559-744X
DOI:10.1007/s11558-017-9278-z