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12-04-2017 | Issue 1/2018

The Review of International Organizations 1/2018

The internationalization of production and the politics of compliance in WTO disputes

Journal:
The Review of International Organizations > Issue 1/2018
Authors:
Aydin B. Yildirim, J. Tyson Chatagnier, Arlo Poletti, Dirk De Bièvre
Important notes

Electronic supplementary material

The online version of this article (doi:10.​1007/​s11558-017-9278-z) contains supplementary material, which is available to authorized users.

Abstract

In this paper we seek to advance the debate on the conditions under which the WTO Dispute Settlement Body can bring about trade-liberalizing policy change in WTO members. Under what conditions do WTO members change domestic policies or measures that are challenged in WTO litigation? Starting from the assumption that policymakers are political-support maximizers who seek to avoid the mobilization of political enemies, we argue that the degree of integration in Global Value Chains (GVCs) of the economic sectors affected by a WTO dispute influences members’ propensity to change domestic policies when targeted in WTO litigation. The initiation of a WTO dispute against sectors highly integrated in GVCs engenders the emergence of a domestic coalition of pro-trade liberalization groups composed of exporters seeking to avoid the imposition of retaliatory measures and import-dependent firms wishing to exploit the opportunity to access cheaper imports. Under these circumstances, trade-liberalizing responses to WTO legal challenges are therefore more likely. We test this hypothesis by estimating a Cox proportional hazard model and find that GVCs positively impact states’ propensity to comply with the WTO dispute settlement panel rulings.

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