Causes and consequences of international trade disputes:Evidence from the multilateral trade system, 1948-2016

This thesis investigates international trade disputes under the multilateral trade system, better known as the General Agreements on Tariffs and Trade (GATT, 1948-1994) and the World Trade Organization (WTO, 1995-present). The main contribution of this dissertation is that it presents a novel, comprehensive database covering all trade disputes under the GATT and WTO for the period 1948-2016. Empirically, this research bridges a gap between theory and policy by providing new insights on disputants’ characteristics, determinants of GATT/WTO members’ trade disputes, the determinants of legal outcomes, and the effects of these disputes on international trade. The results show ‘institutional distance’ between bilateral pairs matters to initiate a dispute. Results suggest that for complainants, power derived from market size and/or legal capacity is important. We also show evidence of the legal capacity mechanism for respondent countries. We find that economic determinants, such as differences in absolute GDP and GDP per capita, are significant in predicting legal outcomes in GATT/WTO disputes The stronger the power of a dispute-initiating member, the greater the likelihood the member will achieve compliance by a respondent. Using a structural gravity equation, the results show that trade outcomes for both GATT- and WTO-era disputes are statistically significant and negative. Product-level analysis for the WTO era finds no significant evidence that disputes affect product-level trade. However, disputes initiated by low-income members fosters their trade after disputes. This dissertation provides new empirical evidence on the economic causes and consequences of international trade disputes during seven decades of the multilateral trade system