Is WTO Dispute Settlement Effective?

By Iida, Keisuke | Global Governance, April-June 2004 | Go to article overview

Is WTO Dispute Settlement Effective?

Iida, Keisuke, Global Governance

The World Trade Organization (WTO) has become one of the most controversial international institutions, as evidenced by the massive protests in Seattle in November 1999. (1) Curiously, both the defendants and the critics of the WTO seem to believe that it is a highly effective institution, but that should not be assumed. Rather, that assumption has to be examined and demonstrated objectively and systematically. This article makes a first step in that direction.

The WTO has two major functions: legislative and judicial. The legislative function refers to the role of the WTO as a forum in which to reach trade agreements. The judicial function is performed by the dispute settlement system, one of the new major features of the current multilateral trade system. The political features and underpinnings of these two functions, although somewhat similar, are distinct enough to warrant separate analyses. Furthermore, due to the long stalemate in multilateral negotiations until the breakthrough at the Doha ministerial conference in November 2001, the legislative function of the WTO has been in low gear, and the real action has been taken by the judicial arm. Therefore, in this article, I focus only on dispute settlement, or the judicial arm of the WTO.


Recent regime analyses have concentrated on the question of effectiveness. This trend is particularly notable in environmental studies, presumably because the idea of "effectiveness" moves our attention away from formalism and directs it to substance. For instance, questions about an international environmental regime's effectiveness are not directed to the formal language of a treaty, but rather to whether or not it does anything useful for the environment. Oran Young and Marc Levy distinguish between several different types of effectiveness: problem-solving, legal, economic, normative, and political. (2) Effectiveness in problem solving is the most intuitive: whether or not a regime solves the problem that the regime is supposed to combat or to help solve. Although this is clearly one of the most important concerns, Young and Levy argue that this definition sometimes poses several difficulties. Legal effectiveness focuses on compliance: whether or not contracting parties behave according to the rules specified in the regime. While measurement is easier with regard to this dimension, it may trap us into a purely formal analysis. Economic effectiveness adds an economic-cost dimension to the problem-solving approach mentioned above. Normative effectiveness refers to whether or not a regime achieves values, such as fairness and participation. Finally, political effectiveness refers to the effectiveness of a regime in altering the behavior of actors in favor of better management of environmental problems. According to this yardstick, a regime could be "politically" effective without full compliance, presumably a difficult goal to achieve in international politics.

While this classification suffers from some operational ambiguities, it is useful in generating a multifaceted approach to the analysis of international regimes. Some of the questions I pose later in this article could be classified accordingly. For example, the questions of the effectiveness of the WTO in facilitating dispute resolution and preventing unilateralism are problem-solving approaches. The analysis of its effectiveness in assuring a level playing field and reconciling trade and nontrade concerns is a normative approach, and the discussion of the legislative-judicial balance in dispute settlement is "political."

A major concern in the literature has been to search for clues to establish causal connections between regimes and their effectiveness with regard to some of these dimensions. However, an equally important research question is "What makes international regimes effective?"--if effectiveness can be measured and can be traced back to the regimes. The answers to this question have been few and far between. …

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