The Dispute Initiators of the GATT and the WTO:Lessons for the Future to Improve Accessibility, Sustainability, and Relevancy of the WTO

Unlike the unbound nature of the outcomes of the trade disputes during the General Agreement on Trade and Tariffs (GATT) era, the abiding nature of the outcomes of the trade disputes characterizes the World Trade Organization (WTO) system. A member country initiates a dispute at the World Trade Organization (WTO) to seek the trade justice with an aim to get the trade measure of the respondent countries in conformity with the WTO rules. When a government decides to file a dispute at the WTO, however, there is no certainty about the outcome of the dispute. After the complaint is filed, the government of a complaining country has two possibilities, first to settle the dispute mutually and second, to proceed to panel ruling by requesting a panel establishment. The question arises what determines the outcome of a trade dispute at the WTO? This paper examines the outcome of the disputes in light of the economic status of the complainants and the respondent countries. The paper answers the question, does the economic status of the main dispute participants have determinative power on the outcomes of the disputes? The paper investigates the question by using a self-compiled data of all the dispute cases filed during 1948 to 2014. The paper employs a generalized ordered logit method with yearly and country specific fixed effects. The dependent variable is the level of compliance reflected in the phases of the dispute outcomes. The independent variables include economic, legal and polity variables. The gross domestic product (GDP) of the respondent country and the applied tariffs by the respondent country emerge as the significant variables at 1%. This applies not only to the main dependent variable but also to the alternative classifications of the dependent variable. The importance of GDP indicates the importance of legal resources, as the ever-increasing encompassment of a wider range of legal agreements is likely to contribute to the likelihood of compliance by the respondent country. The role of the third party, however, shows an adverse effect on the compliance. The results have a few policy implications for the role of a third party and enforcement system of the WTO