Bargaining in the Shadow of the Law: Early Settlement in GATT/WTO Disputes
Fordham International Law Journal
Marc L. Busch
Copyright c 2000 by the authors. Fordham International Law Journal is produced by The Berkeley Electronic Press (bepress). http://ir.lawnet.fordham.edu/ilj
Bargaining in the Shadow of the Law: Early
Settlement in GATT/WTO Disputes
This Essay proceeds in four steps. Part I summarizes the quantitative evidence on the
pattern of escalation and outcomes of more than 600 GATT/WTO disputes from 19
48 through 1999
Part II elaborates on our theory of settlement bargaining within the context of an institution lacking
enforcement power and shows how the hypotheses are consistent with the evidence introduced
earlier. Part III discusses the theory’s expectations regarding the effect of the 1989 and 1995 dispute
settlement reforms and likewise compares those predictions with the evidence. Part IV highlights
the implications of our perspective for proposed future reforms dealing with transparency and
developing country participation
BARGAINING IN THE SHADOW OF THE
LAW: EARLY SETTLEMENT IN
Marc L. Busch* & Eric Reinhardt**
In the words of the Director General of the World Trade
Organization' ("WTO"), Mike Moore, dispute settlement "is the
backbone of the multilateral trading system."' 2 As dispute
settlement under the General Agreement on Tariffs and Trade'
("GATT") and WTO grows progressively more rule-oriented, 4
the literature on the institution's jurisprudence is increasing
markedly. And yet, as the text of the Dispute Settlement
Understanding' ("DSU") makes clear,6 and as the Appellate Body's
Wool Shirts and Blouses report reminds us, the basic aim of the
institution is political, inasmuch as the goal is to settle disputes,7
with or without reports. Along these lines, one little-known fact
about GATT/WTO is that fully three-fifths of all disputes end
prior to a panel ruling, and most of these without a request for a
* Associate Professor, Queen's School of Business, Kingston, Ontario, Canada.
** Assistant Professor, Department of Political Science, Emory University, Atlanta,
1. Marrakesh Agreement Establishing the World Trade Organization, LEGAL
INSTRUMENTS-RESULTS OF THE URUGUAY ROUND VO1. 1, 33 I.L.M. 1144 (1994)
[hereinafter WTO Agreement].
Report of the Appellate Body, WT/DS33/AB/R (Apr. 25, 1997).
panel even being made. This lends weight to Mike Moore's
observation that "settlement . . . is the key principle," without
which, "it would be virtually impossible to maintain the delicate
balance of international rights and obligations."' That being
said, WTO observers have invested little in trying to understand
the role of consultations and early settlement in particular. Why
do disputants disproportionately settle early despite the
institution's lack of enforcement power? How have procedural
reforms over the years influenced these trends? This Essay
examines consultations and early settlement in GATT/WTO dispute
Given that the WTO remains a "court with no bailiff,"9 its
rulings at best can have only a modest direct influence on
dispute outcomes. As Robert Hudec wisely observes, "No
functioning legal system can wait until then to exert its primary
impact."1° Rather, the effectiveness of the regime
disproportionately manifests itself in the form of settlement, either at the stage
of consultations or during panel proceedings prior to a ruling.
Further, what additional liberalization the system (as apart from
the market power of the complainant) is able to elicit from
defendants is attributable not to the WTO's (supposedly) improved
enforcement regime, but to the system's ability to deliver a
definitive, normative condemnation of defendants' policies. Yet,
cases in which the regime's bluff has been called (i.e., those in
which judgments are issued), are likely to be those in which the
regime's normative power holds little sway over the defendant.
Hence, we expect that once a ruling has been issued a dispute is
much less likely to end with full or partial satisfaction of the
complainant's initial demands.
This argument suggests as a corollary that the
muchvaunted WTO reforms, as well as the more modest 1989
improvements, should have relatively little impact on the overall
success of the dispute settlement regime or the pattern of early
settlement in particular. These reforms, after all, invest little in
the consultation stage. Rather, they speak to the procedures
8. Moore, supra note 2.
9. George E. Rossmiller, Discussion, in AGRICULTURAL TRADE CONFLICTS AND GATT:
NEW DIMENSIONS IN U.S.-EUROPEAN AGRICULTURAL TRADE RELATIONS 262, 263 (Giovanni
Anania et al. eds., 1994).
10. ROBERT E. HUDEC, ENFORCING INTERNATIONAL TRADE LAW: THE EVOLUTION OF
THE MODERN GATT LEGAL SYSTEM 360 (1993).
governing the panel proceedings and to the aftermath of panel
reports. If the institution's ability to promulgate a clear
judgment (outside of its ability to make that judgment legally or
politically binding) has not been sharply improved, then the
regime's ability to induce early settlement should remain the same.
Like dispute settlement under GATT, the success of the WTO
system hangs on its ability to encourage bargaining in the
shadow of weak law.
This Essay proceeds in four steps. Part I summarizes the
quantitative evidence on the pattern of escalation and outcomes
of more than 600 GATT/WTO disputes from 19
. Part II elaborates on our theory of settlement bargaining
within the context of an institution lacking enforcement power
and shows how the hypotheses are consistent with the evidence
introduced earlier. Part III discusses the theory's expectations
regarding the effect of the 1989 and 1995 dispute settlement
reforms and likewise compares those predictions with the
evidence. Part IV highlights the implications of our perspective for
proposed future reforms dealing with transparency and
developing country participation.
I. 'A PUNCH THAT WILL NOT HIT ANYONE'
As was true under GATT, disputes 'occurring under the
WTO begin with a complaint, consultations, and potentially
proceed to a panel proceeding. At this stage, in the absence of
settlement or withdrawal of the suit, the panel issues a legal
judgment, a ruling that, for the most part, is the stuff of the literature
on dispute settlement. Surprisingly, few observers have
investigated what proportion of disputes reach each stage of the
process. To find out, we turn to an exhaustive database of GATT/
WTO complaints reported by Busch and Reinhardt. 1 This
database builds on the considerable nucleus compiled by Bob
Hudec,"2 supplemented with more recent records. 3 Like
Hudec, we count only those complaints that explicitly invoke
GATT/WTO laws regulating dispute proceedings, name
defendants, and allege the infringement of specific legal rights, most
often in the form of a "request for consultations." Also, since we
are interested in characterizing patterns of settlement, and since
settlement may occur bilaterally in disputes involving multiple
complainants or defendants, we break multi-state complaints
into each constituent pair of complainant and defendant. 4 The
results, listed by stage of escalation reached, are in Table 1.
Note: Since adjudication in the first years of GATT relied less on formal panels than on
other bodies (e.g., working parties or the entire Council) to issue judgments, the term
"panel" above includes those alternative authorities as well. The figures in parentheses
reflect the row's percent of the total cases initiated in that period. Cases filed in 2000,
as well as 17 earlier WTO disputes whose panels had not yet had a suitable chance to
form or issue a ruling as of July 2000, are not included.
Two facts stand out. First, in a substantial majority of
disputes (roughly 55%), no panel is ever established. A further 8%
or so end prior to the issuance of a panel report. Settlement and
the withdrawal of cases are thus the norm, not the exception.
This finding, of course, is in sharp contrast to the view one might
zation, Overview of the State of Play of WI'O Disputes at www.wto.org/english/tratop-e/
14. For other studies using this approach, see Henrik Horn e.tal., Is the Use of the
WTO DisputeSettlement System Biased?, in CEPR DISCUSSION PAPER 2340 9.(1999); Marc L.
Busch, Democracy, Consultation, and the Panelingof Disputes Under GATT, 44 J. CONFLICT
RESOL. 425-46 (2000); Eric Reinhardt, Aggressive Multilateralism: The Determinants of
GATT/WJ'O Dispute Initiation, 1948-1998 (2000) [hereinafter Reinhardt 2000]; Eric
Reinhardt, Adjudication without Enforcement in GATT Disputes,J. CONFLIcr RESOL.
(forthcoming 2001) [hereinafter Reinhardt 2001].
distil from a casual read of the literature on the GATT/WTO.
Second, and more surprising still, the proportion of disputes in
which a panel has been established has not changed appreciably
over time, even under the WTO. If anything, under the WTO,
somewhat fewer disputes last long enough to have a ruling
issued, despite the strict time limits concerning panel
establishment and panel proceedings. These findings are borne out by
other scholars who have reached qualitatively similar
conclusions using different methods for delineating disputes.15
The key question, of course, is how outcomes of disputes
vary across these different stages of dispute settlement. By
"outcome," following Hudec, 6 we mean the ultimate policy result of
a dispute, rather than the nature of a ruling per se. In other
words, the key is whether the defendant liberalized the disputed
trade policy practices, conceding to some or all of the
complainant's demands, as opposed to whether a ruling(if there was one)
favored one side or the other. Using a benchmark that has
meaning at each stage of dispute settlement, from consultations
to a panel ruling, Hudec coded the policy result of each dispute
into one of three categories, depending on whether the
objectionable practices were fully, partly, or not at all removed. 17
Reinhardt and Busch extend Hudec's data on dispute outcomes
up through the end of 1994.18 Results of this work for 298
bilateral disputes in the GATT period, broken down by stage of
dispute escalation, are displayed in Table 2.9
The data paint a remarkable picture. Specifically, 67.1% of
those disputes ending prior to a ruling (whether before or after
the establishment of a panel) exhibited full or partial
concessions by the defendant. Surprisingly, despite the fact that only
16.1% of rulings upheld the status quo, a lower proportion (only
62.2%) of the cases with rulings ended in comparable levels of
concessions. To put it another way, most of the concessions
made by defendants in these disputes (53.9%) took the form of
pre-ruling settlements, even though the rulings issued were
heavily biased against defendants. Settlement is clearly where the
in15. See, e.g., C. Christopher Parlin, Operation of Consultations,Deterrence, and
Mediation, 31 L. & POL'Y INT'L Bus. 565-72, 567-69 (2000).
16. Hudec, supra note 10.
18. Reinhardt 2001, supra note 14; Busch, supra note 14.
19. Reinhardt 2001, supra note 14, tbl. 1.
Final Disposition of Case
Panel not established
Panel established, no ruling
Ruling for complainant
Ruling for defendant
Level of Concessions
Note: As in Table 1, since adjudication in the first years of GATT relied less on formal
panels than on other bodies (e.g., working parties or the entire Council) to issue
judgments, the term "panel" above includes those alternative authorities as well.
"Ruling" above refers to the issuance of reports and not their formal adoption by the
stitution achieves its greatest impact. The puzzle, of course, is
that this early settlement is happening in the shadow of weak
Table 2 further indicates that the probability of settlement is
not evenly distributed across the events leading up to a ruling.
In particular, concessions by defendants appear significantly
more likely to occur after a panel has been established, but before
it has ruled (regardless of which way the verdict goes).
Reinhardt conducts an analysis of the probability of concessions by
defendants at each stage of dispute escalation, controlling for
factors like the complainant's relative market power and the
nature of the disputed measures.20 The resulting predicted
probability of concessions at each stage, showing the bubble in
settlement rates after panel establishment, is depicted in Figure
Besides simply highlighting the importance of pre-ruling
settlement for the institution, these findings raise an intriguing
question. Neither GATT nor the WTO possess centralized
enforcement power, the upshot being that both have relied on the
complainant itself to implement any retaliatory measures that
may be authorized. In this spirit, Hudec aptly characterizes an
adverse ruling as a "punch that will not hit anyone."21 The
21. Robert E. Hudec, 'Transcendingthe Ostensible:' Some Reflections on the Nature of
Litigation Between Governments, 72 MINN. L. REv. 211-26, 219 (1987).
dence here indicates, however, that defendants nonetheless seek
to avoid an adverse ruling by settling early. This simply begs the
question, "Why should defendants settle early if they can spurn
adverse rulings with impunity?" The answer cannot simply be
that it is the threat of retaliation by the complainant that
prompts early settlement, since this threat is obviously
insufficient to induce full compliance in the majority of cases (58.25%)
in which there is a ruling against the defendant. Moreover,
retaliation by the complainant is extraordinarily rare and
legallyauthorized retaliation is even more so. 22 Hence, in order to
explain early settlement in GATT/WTO disputes, we must look
II. BARGAINING IN THE SHADOW OF WEAK LAW
When adjudication lacks enforcement power, the shadow of
the law, as apart from the complainant's potential threat to
retaliate unilaterally, at most can serve as a modest inducement to
22. Jackson, supra note 4, at 67, 95.
settle early. Yet, the threat of a "punch that will not hit anyone"
can still make a country flinch. A panel ruling carries weight to
the extent that it delivers a timely and coherent normative
statement on the matter. Even without a credible threat by a
complainant to seek authorization to retaliate, a definitive legal
opinion from the institution may empower groups in the defendant
state who oppose the disputed measure. Alternatively, a ruling
may enable the defendant's executive to "tie hands," making
concessions more politically palatable by citing the need to be a
"good citizen" of GATT/WTO. 23 A well-reasoned report may
also set a de facto (if not formal) precedent that might put
related protectionist policies by the defendant at risk for litigation
or it may adversely affect the defendant's positions in ongoing
multilateral trade round talks. Still, for most states most of the
time, these factors may have little importance compared to the
domestic political benefits of maintaining a disputed
protectionist practice. The challenge for the system is to use its only
leverage-the clear normative statement embodied in a ruling-on
even those states that, under certain circumstances, are likely to
openly thumb their nose at this norm.
As it turns out, the small possibility that an adverse ruling
might independently sway a defendant is enough to induce
greater concessions through early settlement, even from
defendants not inclined to comply in the event of an adverse ruling.
This, as Reinhardt elaborates, is because of the way uncertainty
about the defendant's preferences plays into the bilateral
bargaining process. 24 For example, consider a complainant that
can unilaterally retaliate without the blessing of GATT/WTO or
file for dispute settlement. Whether the complainant is
politically capable of implementing costly retaliation is uncertain, as is
the extent to which the defendant would suffer politically if it
fails to comply with an adverse ruling. Both states attempt to
exploit this uncertainty to maximum advantage, leveraging
concessions or upholding the status quo, as the case may be. The
result is that even when the defendant has no inherent interest
in complying with rulings, it will be compelled to offer early on a
more generous settlement package than it otherwise might,
23. Eric Reinhardt, TyingHands without a Rope: RationalDomesticResponse to
InternationalInstitutional Constraints,in The Interaction of Domestic and International
Institutions (Daniel W. Drezner ed., forthcoming).
24. Reinhardt, supra note 14.
since the complainant's resolve is boosted by its (in this case,
erroneous) belief that the defendant is going to be compelled to
concede in the event of an adverse ruling. Thus, "the basic force
of the procedure [comes] from the normative force of the
decisions themselves and from community [i.e., complainant]
pressure to observe them. ' 25 And the normative power of a GATT/
WTO ruling can constrain even the behavior of states that do
not subscribe to the norm. Needless to say, this norm is in no
way divorced from the underlying power contest; the
defendant's uncertainty about the complainant's willingness to
implement retaliatory measures (if called upon to do so) is absolutely
necessary to give recalcitrant defendants some interest, however
slight, in cutting a deal in the first place.
Of course, as Amy Porges put it nicely, sometimes "the
souffl does not rise," i.e., settlement talks fail and the dispute goes
to a ruling.26 In this event, since only the anticipation, and not
the realization, of a ruling can boost the complainant's
bargaining power, the system has lost its best chance to influence the
defendant's policy. That is, the cases most likely to end without
concessions by defendants are disproportionately those in which
rulings are issued. Hence, what is surprising is not that the twin
levers of the legal norm and the threat of sanctions combine to
elicit cooperation from defendants, but that they do so
disproportionately in the form of early settlement. True, an adverse
ruling is likely to cause greater concessions from a defendant
than would a ruling supporting the status quo (a point upheld
by the evidence from GATT disputes in Table 2). Nevertheless,
the number of concessions after rulings is expected to be lower
than in cases ending prior to rulings, just as the evidence
presented earlier indicates.
This argument, while perhaps sufficient to account for the
broad pattern of concessions across successive stages of dispute
settlement, does not tell us which states are more likely to settle
than others. Busch takes up this question explicitly, again just
for the GATT period.27 He finds that pairs of highly democratic
countries (e.g., United States-Canada) are up to 21% more
25. Hudec, supra note 21, at 214.
26. William J. Davey & Amelia Porges, Performanceof theSystemI: Consultationsand
Deterrence, 32 INT'L LAW. 695, 704 (1998).
27. Busch, supra note 14.
likely to settle their disputes cooperatively in the consultation
stage, as compared to pairs with one or more states that are not
fully democratic (e.g., Mexico-Guatemala). But pairs of
democratic states are no more likely than non-democratic pairs to
resolve their disputes cooperatively after a panel has been formed.
This finding has clear implications for the WTO's increasingly
heterogeneous membership. It suggests, moreover, that the
greater transparency of a panel proceeding makes it difficult for
those countries that are highly accountable at the ballot box to
compromise in full public view. If so, then efforts to increase
transparency at the consultation stage may well prove
counterproductive-a point that we shall return to shortly.
It also appears that more "open" economies (i.e., those that
are highly receptive to trade as a percentage of Gross Domestic
Product) are less likely to make concessions at either the
consultation or panel stages. More precisely, the most open economies
are about 31% less likely than the least open economies to make
concessions at the consultation stage, and about 13% less likely
at the panel stage. 28 This is surprising, given the view that more
trade-dependent economies ought to be especially concerned
with provoking foreign retaliation, and thus presumably more
likely to make concessions than less trade-dependent
countries.29 One explanation for this finding may be that more open
economies have less slack to liberalize further, given their
investment in "social insurance" measures, for example. 0
The data on dispute outcomes allow us to answer another
question: exactly how frequent is compliance with GATT/WTO
rulings? Speaking just of the GATT period, most scholars have
adopted the sanguine view that noncompliance is quite rare.31
The figures in Table 4, however, tell a different story. Namely,
only two-fifths of rulings for the complainant result in full
compliance by the defendant. In nearly a third, defendants fail to
comply at all, effectively spurning panel rulings (as a result,
some of these rulings were not invested with formal legal
authority by virtue of the defendant's veto). The WTO track record
may well be better, although there are plenty of negative results
here as well (e.g., Bananas & Hormones). The point here is not
that the institution is ineffective, but rather that, as highlighted
above, whatever positive effect it has on a defendant's willingness
to liberalize occurs prior to rulings, in the form of early
settlement. To put it another way, we cannot judge the institution's
effectiveness by looking at compliance alone.
Which states are more likely to comply with adverse rulings?
Counter to conventional wisdom, democracies, even controlling
for their (typically) greater market power, are less likely to
comply." As noted above, once GATT has thrown down the
gauntlet, it will be harder for a government that is highly sensitive to
public opinion to cave in. Otherwise, the evidence fits intuition.
For example, a defendant that is highly dependent on the
complainant's export market, or whose GDP is a small fraction of the
complainant's (speaking to terms-of-trade considerations), is
more likely to liberalize in the wake of an adverse ruling. And
Less Developed Countries ("LDCs") are more likely to comply
with adverse rulings than their comparably-sized, but more
developed, counterparts." Since the later 1980s, many LDCs have
embarked upon unilateral trade liberalization programs, and
adverse GATT rulings help reinforce leaders facing opposition to
the reforms, tying their hands. Ironically, given GATT/WTO's
lack of autonomous enforcement power, only when the national
public is incompletely informed about the (lack of)
consequences of noncompliance (as is more often the case with LDCs,
which participate in GATT/WTO disputes less frequently) can a
leader credibly tie his hands with an adverse ruling.
The shadow of the law elicits greater concessions from even
those defendants that would not suffer politically from
noncompliance with an adverse ruling. Moreover, if the institution did
not affect the bargaining between the disputants, then the
direction of a ruling would not condition the probability of
concessions by the defendant. As we see in Table 4, however,
liberalization of the disputed measures is more than 4 times as likely after
2. Reinhardt 2000
, supra note 14, at 19, 33.
33. Id., at 33, 36.
a ruling for the complainant than after a ruling for the
defendant. Third, coming as close to a "smoking gun" as one could
wish, Busch demonstrates that, even controlling for factors like
bilateral trade dependence and market size, the target of a US
Section 301 action is up to 38% more likely to concede when the
301 action is accompanied by a GATT/WTO complaint than when it
is not.3" Hudec was right: the threat of a "punch that will not hit
anyone" can nevertheless make a state flinch.
III. THE EFFECT OFPAST REFORMS IN THE DISPUTE
Since GATT/WTO is an evolving system, it is worth
reflecting on the implications of the formal and informal reforms that
have characterized dispute settlement.
One salient hypothesis in the literature concerns the effect
of the 1989 Dispute Settlement Improvements Procedures
("Improvements"), which extended the "right" to a panel. Before the
Improvements, a defendant's threat to delay or block the
formation of a panel would likely deter many complainants from even
trying to panel their disputes. One suspicion is thus that the
Improvements may have encouraged more paneling by clearing
away this obstacle. Indeed, in support of this argument, many
scholars insist that the Improvements revitalize dispute
settlement,3 5 giving GATT its "teeth,"36 and that this would embolden
complainants to request panels, looking to escape the power
politics of the consultation stage." In much the same spirit, the
right to a panel is among the more celebrated innovations
firmed-up by the WTO's DSU.38 But has the right to a panel
changed the way cases brought before the GATT/WTO are
prosecuted? The evidence to date is a resounding no.
To begin, the expectation that the Improvements might
lead to more escalation is simply not borne out by the data. In
particular, Busch found that cases filed for consultations were no
more likely to go to a panel after the Improvements than
before. 9 On one hand, this is rather surprising, given the
expectation that complainants would presumably favor the greater
"legalism" of a panel to consultations. On the other hand, this
finding may not be surprising at all, since the Improvements may
have inspired earlier settlement, rather than more escalation,
since by formally extending the right to a panel. In other words,
under the shadow of the law, defendants would likely plead
stronger cases and complainants would presumably withdraw
weaker ones. If this was correct, then rather than look to see if
more cases were paneled as a result of the Improvements, the
data would be expected to reveal a pattern of more early
settlement. They do not. Rather, concessions at the consultation
stage turn out to be no more likely after, than before the
Improvements, controlling for a host of attributes of the dispute
Of course, it could still be argued that the codification of
dispute settlement norms, as opposed to the right to a panel per
se, may have changed the way cases were prosecuted at the
GATT. If so, it might be more useful to look at the effects of the
1979 Understanding on Dispute Settlement ("Understanding"),
and its annex on customary practices in particular.4 ° Here too,
however, the data belie this expectation. More to the point, the
Understanding did not encourage more escalation, nor did it
lead to more early settlement. In sum, it appears that the norms
codified by the Understanding were as robust before 1979 as
This is not to suggest that the greater legalism of the WTO's
DSU is inconsequential. Our point is simply that the experience
of GATT should alert us to the fact that the real "action" is still
likely to be found in pre-trial negotiations.
IV. IMPLICATIONS FOR PROPOSEDREFORMS
In recent years, demands for greater "transparency" in
dispute settlement became very much in vogue. Particularly in the
wake of the Seattle Ministerial, few analyses of the WTO fail to
39. Busch, supra note 28.
40. WTO 1995, supra note 13, at 632-36.
raise the issue of giving non-governmental and other groups
more access to panel proceedings, for example.41 And while, at
first blush, it seems hard to argue against greater transparency,
our argument suggests that opening up consultations, in
particular, may be a mistake. "Privacy," as an experienced dispute
negotiator reminds us, "is usually more conducive to settlement."42
As a case in point, the unintended side effects of the WTO's
innovation of the interim report are revealing. Designed to
maximize the potential for early settlement, distributing draft panel
opinions to disputants has instead, by all accounts, been misused
by litigants for political grandstanding, entrenching instead of
softening their positions. Consequently, "the public often
becomes aware of a dispute's outcome at the interim stage . . .
[and] the chances of settlement at this stage, already low to
begin with, decrease even further."43
The need for privacy is especially acute for resolution of
disputes between democracies, which disproportionately settle early
in consultations, suggesting that they find it easier to
compromise in a setting that is relatively less transparent.44 Indeed, it is
here that the terms of any arrangement, in sharp contrast to
what occurs after panel rulings, are not subject to 21.5, or
"compliance" reviews. This should not be surprising, since after
rulings, pressure from legislators and industries at home will
invariably be greater, if for no other reason than that post-ruling
proceedings leave a clear paper trail and policy changes at that
point are more likely to require implementing legislation.
Consultations, by way of contrast, are sometimes not even reported
to the GATT/WTO until after they are concluded. This gives
the disputants more latitude to strike a deal, latitude that may be
especially important for democracies, given their greater
accountability to domestic constituents.
Another policy prescription concerns proposals for
increased assistance for LDCs in using the WTO dispute
settlement system. To date, GATT reform has focused on
streamlining the access that LDCs have to a panel, most notably the 1966
Decision on Procedures Under Article XXIII.45 While this is
certainly a laudable goal, it may not have the desired effect, since
LDCs are still at a disadvantage when it comes to bargaining
under the shadow of the law.46 Indeed, LDCs are often not in a
position to recognize and take advantage of potential
meritorious complaints because they have few, if any, in-house experts
and are "less sophisticated buyers of legal advice. 1'' Hence, they
are frequently unable to make the most of consultations, where
developed state complainants wielding advance legal briefs are
more readily able to demonstrate the credibility of their
positions and hence induce more settlement by defendants. This
suggests that the WTO would do well to put more emphasis on
helping LDCs in general and at the consultation stage in
particular. The goal is not to make consultations more formal, but
rather to put a country where "the prime minister answers the
switchboard," to quote Mike Moore, on a more equal footing.48
The recent establishment of the Advisory Centre on WTO Law,
based in Geneva,49 goes a long way toward supplementing the
WTO's insufficient existing regular technical assistance budget.
Still, as LDC advocates have argued, the next round of
multilateral trade negotiations should focus on reforms that might
increase developing countries' capabilities to bargain more
aggressively in the shadow of the law.5°
2. Mike Moore , WFO's Unique System of Settling Disputes Nears 200 Cases in 2000 , Press Release (June 5, 2000 ), at http://www.wto.org/english/news-e/presOOe/ prl8Oe.htm.
3. General Agreement on Tariffs and Trade, Oct. 30 , 1947 , 61 Stat. A-11, T.I.A.S. 1700 , 55 U.N.T.S. 194 [hereinafter GATTI.
4. JOHN H. JACKSON , THE WORLD TRADING SYSTEM: LAW AND POLICY OF INTERNATIONAL ECONOMIC RELATIONS 109-27 (2nd ed. 1997 ) ( 1992 ); William J. Davey , An Overview of the GeneralAgreement on Tariffs and Trade , in HANDBOOK OF WTO/GATT DISPUTE SETTLEMENT , 7 - 75 (Pierre Pescatore et al. eds., 1993 ); Michael K. Young, Dispute Resolution in the Uruguay Round: Lawyers Triumph over Diplomats, 29 INT'L LAw . 2 , 389 - 409 ( 1995 ).
5. Understanding on Rules and Procedures Governing the Settlement of Disputes , Apr. 15 , 1994 , WTO Agreement , Annex 2, LEGAL INSTRUMENTS-RESULTS OF THE URUGUAY ROUND vol . 31 , 33 I.L.M. 1226 ( 1994 ) [hereinafter DSU] .
6. See DSU art. 3.7 (stating that "the aim ... is to secure a positive solution to a dispute."). Article 3.3 emphasizes that "prompt settlement.., is essential to the effective functioning of the WTO." Id.
7. United States-MeasureAffecting Imports of Woven Wool Shirts and Blouses from India,
11. Marc L. Busch & Eric Reinhardt, TestingInternationalTradeLaw: EmpiricalStudies of GAT77fWTO Dispute Settlement, in THE POLITICAL ECONOMY OF INTERNATIONAL TRADE LAW: ESSAYS IN HONOR OF ROBERT E . HUDEC (Daniel L. M. Kennedy & James D . Southwick eds., forthcoming 2001 ).
12. Hudec , supra note 10, app.
13. WORLD TRADE ORGANIZATION, GUIDE TO GATT LAW AND PRACTICE 620 , 623 - 28 , 771 - 87 ( 1995 ) [hereinafter WTO 1995]; Dispute Settlement Body , World Trade Organi-
28. Marc L. Busch , Accommodating Unilateralism? U.S. Section 301 and GATT/WFO Dispute Settlement (Queen's School of Business, Kingston , Ontario 2000 ).
29. PETERJ. KATZENSTEIN, SMALL STATES IN WORLD MARKETS: INDUSTRIAL POLICY IN EUROPE ( 1985 ).
30. DANI RODRIK , HAS GLOBALIZATION GONE Too FAR ? ( 1997 ).
31. Hudec , supra note 10, at 278-79 ; Jackson, supra note 4 , at 101; Davey, supra note 4, at 72; Abraham Chayes & Antonia Handler Chayes , On Compliance, 47 INT'L ORG . 2 , 175 - 205 ( 1993 ); Ernst-Urlich Petersmann , The Dispute Settlement System of the World Trade Organizationand theEvolution of the GATT Disputes Settlement System Since 1948 , 31 COMMON MKT L. R . 1157 - 1244 ( 1994 ).
34. Busch , supra note 28 , 13 .
35. Jean-Gabriel Castel , The Uruguay Round and the Improvements to the GAiT Dispute Settlement Rules andProcedures, 38 INT'L & COMp. L .Q. 834 , 834 - 49 ( 1989 ).
36. Miquel Montaia i Mora, A GAiT With Teeth: Law Wins Over PoliticsI the Resolution of International Trade Disputes, 31 COLUM . J. TRANSNAT'L L . 103 , 103 - 80 ( 1993 ) ; Young, supra note 4 .
37. Pierre Pescatore , The GATT Dispute Settlement Mechanism: Its Present Situation and its Prospects , 10 J. INT'L ARB . 1 , 2742 .
38. Judith Hippler Bello & Alan F. Holmer , GAT Dispute Settlement Agreement: InternationalizationV. Eliminationof Section 301 , 26 INT 'L LAW. 795 - 803 ; Jackson, supranote 4 , at 72.
41. See , e.g., Robert E. Hudec, The New WTO Dispute Settlement Procedure: An Overview of the First Three Years, 8 MINN . J. GLOBAL TRADE 1 , 43 - 50 ( 1999 ).
42. Davey & Porges, supra note 26, at 699.
43. Terence P. Stewart & Amy Ann Karpel, Review of the Dispute Settlement Understanding: Operation of Panels , 31 L. & POL'Y INT'L Bus . 593 , 640 ( 2000 ). As former Director General Ruggiero said, "[t]he creation of... mis-impressions by selective leaks is highly undesirable because the mis-impressions are unlikely to be correctable later. Moreover, leaks reduce the likelihood of a mutually agreeable solution, which is the preferred result of the DSU and which is the basic reason for revealing the preliminary panel result to the parties in the first place ." World Trade Organization, General Council, Minutes of Meeting Held in the Centre William Rappard , WT/GC/M/28 (Apr. 24, 1998 ).
44. Busch , supra note 14.
45. WTO 1995 , supra note 13, at 641-42.
46. Busch , supra note 14.
47. Trade and Development Centre, Agreement Establishing The Advisory Centre on WTO Law at www .itd.org/links/charl6ll.doc.
48. Frances Williams , Trade Disputes, FIN. TIMES, Nov. 29 , 1999 , at 2.
49. Trade and Development Centre, supra note 47.
50. SOUTH CENTRE , Issues Regarding the Review of the WTO DisputeSettlement Mechanism, in TRADE-RELATED AGENDA, DEVELOPMENT, AND EQUITY WORKING PAPER No. 1 ., at www.southcentre.org/publications/trade/dispute/pdf.