Dial PTAs for peace: The influence of preferential trade agreements on litigation between trading partners

Preferential trade agreements (PTAs) are en vogue both as policy tool, as well as research subject. We do not beg to differ. In this article, inspired by the behaviour of the European Union (EU), we ask whether the proliferation of PTAs and the negotiation of mega-regionals, like the Trans-Atlantic Trade and Investment Partnership (TTIP) between the EU and the United States (US), risk undermining the WTO Dispute Settlement Mechanism (DSM), 'the crown jewel of the WTO system'. The EU is the world's biggest participant in PTAs. It is also, after the US, the most active participant to WTO disputes. Yet, in the twenty years since the creation of the WTO, it has only been involved in a tiny number of disputes with PTA partners. We find that, despite appearances to the contrary, the US has also been involved in very few WTO disputes with its PTA partners. Moreover, without assigning causal relationship to the signature of a PTA and the amount of litigation between preferential partners, we show that there is inverse correlation between the two. We find it likely therefore that the number of WTO disputes is likely to continue decreasing as WTO Members, including the EU and the US, continue signing PTAs. It remains to be seen whether the WTO system will profit or suffer from the likelihood of fewer WTO disputesSCOPUS: ar.j