Collaborative Research: The Role of Legal Capacity in WTO Dispute Settlement

Emory University, Atlanta GA

Investigators

Abstract

The adjudication regime of the World Trade Organization (WTO) is widely touted as more successful than any such multilateral institution today. According to conventional wisdom, the key is the WTO's legalistic architecture, making it an island of the rule of law in a world of power-oriented economic diplomacy. Proponents argue that, because "right perseveres over might" in WTO dispute proceedings, developing countries face a reasonably level playing field in such trade conflicts. Are poorer countries indeed as likely to participate and prevail in WTO disputes as their wealthier counterparts? Member-states can only take advantage of the WTO's robust "rule of law" if they have adequate legal capacity, defined as the institutional resources required to prepare and prosecute a case. Developing countries lack such capacity, albeit to varying degrees. The PI's hypothesize that, given cases with the same salience and potential, a poorer country will be much less likely to bring a WTO complaint than will a developed country. Likewise, a poorer complainant will be less likely to induce a defendant to liberalize once a suit is filed. Of course, these biases could also trace to power-oriented disadvantages, such as asymmetric dependence on large markets or on donated aid and preference programs. The PI's contend, however, that legal capacity matters even controlling for power-related variables. This proposal will gather new data. The innovation is a reliable list of hundreds of potential disputes never filed as WTO complaints, involving scores of states, using an official source. The PI's also propose to collect original indicators of legal capacity, legal merits, and the salience of each potential dispute, using well-defined operational measures. The project will include a survey of the delegations of all 146 WTO members, supplemented by in-depth elite interviews. The PI's will assess the impact of legal capacity on dispute initiation and outcomes using the new data on "non-cases" along with data on filed complaints developed by the PI's in previously published work. The proposed study innovates by highlighting the requirement for legal capacity in a properly-functioning "rule of law" regime. The literature on international law so far has ignored this fundamental point, despite the revealed importance of such capacity in domestic legal contexts. The project will also provide extraordinary new data on "non-cases," widely considered the "holy grail" of empirical analyses of international institutions. These data will allow scholars to definitively investigate selection biases that may exist in studies limited to formally filed complaints. Such potential bias remains the most important question mark for the rapidly growing body of work on trade disputes. Because the PI's have carefully refined the proposed study's concepts and operational measures in published work using parallel units of observation (formally filed disputes), and because the PI's have built up close contacts with WTO-related organizations and individuals, the project is feasible. The PI's will disseminate the resulting data through various channels, providing the first public data on "non-disputes" in addition to new variables concerning formal complaints. The findings will help broaden the participation of underrepresented groups in WTO lawsuits, shedding light on the efficacy of publicly-sponsored legal aid and training programs designed to help developing countries use the regime's rules more effectively. Finally, the project's findings will help scholars and diplomats alike assess the ramifications of debates in the current round of WTO trade talks (and in other, regional, trade arrangements) over the optimal design of the dispute settlement system.