Explaining Patterns of WTO Member Behavior at the WTO Dispute Settlement

Under what conditions do WTO Members change domestic policies or measures that are challenged in WTO litigation? This chapter tests the hypotheses put forward in the previous chapter and argues that the degree of integration into value chains of the economic sectors affected by a WTO dispute influences members’ propensity to change domestic policies when targeted in WTO litigation. I propose that compliance with WTO rulings is faster when a domestic coalition consists of pro-trade liberalization groups composed of exporters seeking to avoid the imposition of retaliatory measures and import-dependent firms integrated into value chains wishing to exploit the opportunity to access cheaper imports. Under these circumstances, trade-liberalizing responses to WTO legal challenges are therefore more likely. I test this theory by relying on a novel database of WTO trade disputes and by estimating a Cox proportional hazard model. The results support my hypothesis and indicate that indeed when WTO-targeted measures involve sectors highly integrated into value chains, compliance with WTO panel rulings is faster.