The study investigates the asymmetrical distribution of bilateral dispute initiations at the World Trade Organization Dispute Settlement System (WTO-DSS) between specific country pairs. The study introduces a novel concept of dispute depth to examine how the asymmetrical bilateral dispute initiation affects bilateral trade among disputing dyads and to optimize the number of disputes that a country should file to maximize its trade benefit. By using the augmented Structural Gravity Model of trade and the PPMLHDFE estimator with extensive trade data for the years 1995–2022, across selected WTO member countries, the article demonstrates that an increase in the dispute depth decreases the bilateral trade between disputing dyads. Further, the study finds that the WTO member countries should strategically file no more than three disputes per year to maximize their trade gains. The study has important ramifications in the ambiguous world of WTO-DSS and paves the way for implementing the optimal number of disputes into trade dispute strategy, policy-making decisions and business environment of the constantly evolving international trade landscape.
AaronsonS. A. (2023). Building trust in digital trade will require a rethink of trade policy-making. Oxford Review of Economic Policy, 39(1), 98–109. 10.1093/oxrep/grac046
2.
AkoedaJ., Boafo-ArthurK., Amo-AgyemangC., & AgbodzakeyJ. (2023). The politics of trade disputes in the fourth republic: The case of Ghana and Nigeria. Politics, 14(10), 1700–2222. https://doi:10.7176/JESD/14-10-07
3.
AlleeT., & ElsigM. (2016). Why do some international institutions contain strong dispute settlement provisions? New evidence from preferential trade agreements. The Review of International Organizations, 11, 89–120. 10.1007/s11558-015-9223-y
4.
AndersonJ. E. & Van WincoopE. (2003). Gravity with gravitas: A solution to the border puzzle. American Economic Review, 93(1), 170–192. 10.1257/000282803321455214
5.
AticiC. (2018). Use of the dispute settlement mechanism of the WTO by developing countries in the context of food safety. Global Trade and Customs Journal, 13(3), 107–115. 10.54648/gtcj2018014
6.
AultH. J. (2023). Improving the resolution if international tax disputes. Florida Tax Review, 7(3). 137–151. 10.5744/ftr.2005.1031
7.
BaierS. L., & BergstrandJ. H. (2007). Do free trade agreements actually increase members’ international trade?Journal of International Economics, 71(1), 72–95. 10.1016/j.jinteco.2006.02.005
8.
BeshkarM. (2010). Optimal remedies in international trade agreements. European Economic Review, 54(3), 455–466. 10.1016/j.euroecorev.2009.08.004
9.
BouetA., & MetivierJ. (2020). Is the dispute settlement system, ‘jewel in the WTO’s crown’, beyond reach of developing countries?Review of World Economics, 156, 1–38. 10.1007/s10290-019-00359-w
10.
BownC. P. (2005). Trade remedies and World Trade Organization dispute settlement: Why are so few challenged?The Journal of Legal Studies, 34(2), 515–555. https://ssrn.com/abstract=695422
11.
BownC. P., & ReynoldsK. M. (2015). Trade flows and trade disputes. The Review of International Organizations, 10, 145–177. 10.1007/s11558-014-9208-2
12.
BrutgerR. (2023). Litigation for sale: Private firms and WTO dispute escalation. American Political Science Review, 1(18), 1–18. 10.1017/S0003055423000850
13.
BureauJ. C., MaretteS., & SchiavinaA. (1998). Non-tariff trade barriers and consumers’ information: The case of the EU-US trade dispute over beef. European Review of Agricultural Economics, 25(4), 437–462. 10.1093/erae/25.4.437
14.
BuschM. L., & ReinhardtE. (2003). Developing countries and general agreement on tariffs and trade/world trade organization dispute settlement. Journal of World Trade, 37(4), 719–735. 10.54648/trad2003034
15.
CarrilC. F., MilgramB. J., & PaniaguaJ. (2023). Does terrorism affect foreign greenfield investments?Defence and Peace Economics, 34(6), 827–844. 10.1080/10242694.2022.2067812
16.
ChaudoinS. (2014). Audience features and the strategic timing of trade disputes. International Organization, 68(4), 877–911. 10.1017/S0020818314000174
CookS. J., HaysJ. C., & FranzeseR. J. (2020). Fixed effects in rare events data: A penalized maximum likelihood solution. Political Science Research and Methods, 8(1), 92–105. 10.1017/psrm.2018.40
19.
CorreiaS., GuimarãesP., & ZylkinT. (2020). Fast Poisson estimation with high-dimensional fixed effects. The Stata Journal, 20(1), 95–115. 10.1177/1536867X20909691
20.
DaveyW. J. (2022). WTO dispute settlement: Crown jewel or costume jewelry?World Trade Review, 21(3), 291–300. 10.1017/S1474745622000106
21.
DavisC. L. (2015). The political logic of dispute settlement: Introduction to the special issue. The Review of International Organizations, 10, 107–117. 10.1007/s11558-015-9220-1
22.
DavisC. L., & BermeoS. B. (2009). Who files? Developing country participation in GATT/WTO adjudication. The Journal of Politics, 71(3), 1033–1049. 10.1017/s0022381609090860
23.
DavisC. L., & MorseJ. C. (2018). Protecting trade by legalizing political disputes: Why countries bring cases to the international court of justice. International Studies Quarterly, 62(4), 709–722. 10.1093/ISQ/SQY022
24.
Esteve-PérezS., Gil-ParejaS., & Llorca-ViveroR. (2020). Does the GATT/WTO promote trade? After all, Rose was right. Review of World Economics, 156, 377–405. 10.1007/s10290-019-00367-w
25.
FeinbergR. M., & ReynoldsK. M. (2018). How do countries respond to anti-dumping filings? Dispute settlement and retaliatory anti-dumping. The world economy, 41(5), 1251–1268. 10.1111/twec.12601
26.
GlauberJ. W., & XingX. (2020). WTO dispute settlement cases involving the agreement on agriculture, 1995–2019 (Vol. 1917). International Food Policy Research Institute (IFPRI).
27.
HoekmanB. M., MavroidisP. C., & SalusteM. (2021). Informing WTO reform: Dispute settlement performance, 1995–2020. Journal of World Trade, 55(1), 1–50. 10.54648/trad2021001
28.
KimM. (2008). Costly procedures: Divergent effects of legalization in the GATT/WTO dispute settlement procedures. International Studies Quarterly, 52(3), 657–686. 10.1111/j.1468-2478.2008.00519.x
29.
KritzerH. M. (1991). Let’s make a deal: Understanding the negotiation process in ordinary litigation. University of Wisconsin Press.
30.
KucikJ., & PeritzL. (2021). How do third parties affect compliance in the trade regime?The Journal of Politics, 83(3), 184–1189. 10.1086/711058
31.
LarchM., WannerJ., YotovY. V., & ZylkinT. (2019). Currency unions and trade: A PPML re-assessment with high-dimensional FEs. Oxford Bulletin of Economics and Statistics, 81(3), 487–510. 10.1111/obes.12283
32.
ManochaD. (2010). Global administrative law and the World Trade Organization’s legitimacy crisis. Foreign Trade Review, 44(4), 13–43. 10.1177/0015732515100402
33.
MoehringK. (2021, February). The fixed effects approach as an alternative to multilevel analysis for cross-national analyses [GK.SOCLIFE Working Paper]. 10.31235/osf.io/3xw7v
34.
MendozaR. U., SiribanC., & TyT. J. (2019). Survey of economic implications of maritime and territorial disputes. Journal of Economic Surveys, 33(3), 1028–1049. 10.1111/joes.12311
35.
OliveroM. P., & YotovY. V. (2012). Dynamic gravity: Endogenous country size and asset accumulation. Canadian Journal of Economics/Revue Canadienne D’économique, 45(1), 64–92. 10.1111/j.1540-5982.2011.01687.x
36.
OzcelikO. (2023). The effects of dispute settlement body of The World Trade Organization on international trade. İzmir İktisat Dergisi, 38(3), 608–624. 10.24988/ije.1140660
37.
PalmeterD., MavroidisP. C., & MeagherN.2022, Dispute settlement in the World Trade Organization. Cambridge University Press.
38.
PaniaguaJ., VillóC., & Escrivà-BeltranM. (2022). Cross-border higher education: The expansion of international branch campuses. Research in Higher Education, 63(6), 1037–1057. 10.1007/s11162-022-09674-y
39.
ParkY. D., & UmbrichtG. C. (2001). WTO dispute settlement 1995-2000: A statistical analysis. Journal of Inernational Economic Law, 4(1), 213–230. 10.1093/jiel/4.1.213
40.
PeritizL. (2015, May11). When are international institutions effective? [Working Paper, UCLA].
41.
PeritzL. J. (2020). When are international institutions effective? The impact of domestic veto players on compliance with WTO rulings. International Studies Quarterly, 64(1), 220–234. 10.1093/isq/sqz094
42.
PetersonT. M., & ZengY. (2021). Conflict and cooperation with trade partners. International Interactions, 47(2), 266–290. 10.1080/03050629.2020.1835892
43.
PfaffermayrM. (2020). Trade creation and trade diversion of economic integration agreements revisited: A constrained panel pseudo-maximum likelihood approach. Review of World Economics, 156(4), 985–1024. 10.1007/S10290-020-00389-9
44.
PoyhonenP. (1963). A tentative model for the volume of trade between countries. Weltwirtschaftliches Archiv, 90, 93–100. https://www.jstor.org/stable/40436776
45.
RahmanM. A. (2023). The Inceptions of the World Trade Organization (WTO) in escalating international trade. International Economic Law eJournal, 17(170), 1–20. 10.2139/ssrn.4519007
46.
RameshanP. (2003). Trade disputes under WTO: Trends and features. Foreign Trade Review, 38(3–4), 19–37. 10.1177/0015732515040402
47.
SalesV. G. (2023). Assessing the impact of governance policies on landslide risk in Brazilian municipalities. International Journal of Disaster Risk Reduction, 99, 104058. 10.1016/j.ijdrr.2023.104058
48.
ShafferG. (2006). The challenges of WTO law: Strategies for developing country adaptation. World Trade Review, 5(2), 177–198. 10.1017/S1474745606002746
49.
SilvaJ. S., & TenreyroS. (2006). The log of gravity. The Review of Economics and Statistics, 88(4), 641–658. 10.1162/rest.88.4.641
50.
ShinW., & AhnD. (2019). Trade gains from legal rulings in the WTO dispute settlement system. World Trade Review, 18(1), 1–31. 10.1017/S1474745617000544
51.
StegerD. P. (2017). The founding of the Appellate Body (Ottawa Faculty of Law Working Paper No. 2017-33].
52.
TananaikoT., YatsenkoO., OsypovaO., NitsenkoV., BalezentisT., & StreimikieneD. (2023). Economic rationale for manifestations of asymmetry in the global trading system. Sustainability, 15(6), 5316. 10.3390/su15065316
53.
TiarashannyW., & SoeparnaI. (2020). The principle of justice toward the WTO retaliation based on Article 22 of dispute settlement understanding. PalArch’s Journal of Archaeology of Egypt/Egyptology, 17(4), 2570–2582.
54.
TinbergenJ. (1962). Shaping the world economy: Suggestions for and international economic policy. The Economic Journal, 76(301), 92–95. 10.2307/2229041
55.
UdomkitN., EnsslinV., & MeinholdR. (2020). Three stages of trust building of international small- and medium-sized enterprises. Global Business Review, 21(4), 906–917. 10.1177/0972150919856990
56.
VicardV. (2009). On trade creation and regional trade agreements: Does depth matter?Review of World Economics, 145, 167–187. 10.1007/s10290-009-0010-9
57.
VidigalG. (2017). Why is there so little litigation under free trade agreements? Retaliation and adjudication in international dispute settlement. Journal of International Economic Law, 20(4), 927–950. 10.1093/jiel/jgx037
58.
WuH. (2023). The forgotten cog in the dispute settlement machine: An analysis of the underappreciated roles and mandates of the dispute settlement body in the dispute settlement process. Asian Journal of WTO & International Health Law and Policy, 18(2), 333–360. https://ssrn.com/abstract=4589714
59.
XiaoR. (2022). An analysis of the merits and demerits of the World Trade Organization’s dispute settlement mechanism system and the disadvantageous position of developing countries in it. Global Finance Review, 5(1), 9–16. 10.18282/.v4i1.2900
60.
YaseenI., & ShafiS. M. (2023). Developed countries in World Trade Organisation-dispute settlement system: A database analysis. IASSI Quarterly, 42(2), 242–263.
61.
YildirimA. B., PolettiA., ChatagnierJ. T., & De BièvreD. (2018a). The globalization of production and the politics of dispute initiation at the World Trade Organization. Global Policy, 9, 38–48. 10.1111/1758-5899.12615
62.
YildirimA. B., Tyson ChatagnierJ., PolettiA., & De BièvreD. (2018b). The internationalization of production and the politics of compliance in WTO disputes. The Review of International Organizations, 13, 49–75. 10.1007/s11558-017-9278-z
