Countersuits and the Politics of Abandoned WTO Trade Disputes

Abstract

Why are so many WTO trade disputes initiated but never completed? At least one third of all WTO trade disputes are not settled early, nor go to panel. Given the costs associated with initiating a trade dispute, this is an unusually high number. I argue that dropped disputes are a useful domestic political tool - leaders can use them to enhance their standing, particularly close to elections, but if they are unable to reach an early settlement, they can abandon those disputes to avoid potential retaliation without much domestic harm, given the length of dispute resolution and the questionable compliance record. As such, I argue that disputes initiated close to an election of the executive in the complainant country are much more likely to be abandoned. I focus on safeguards, antidumping and countervailing duties that lead to WTO disputes, and test this hypothesis using a two-stage selection model. I nd evidence that suggests that electoral politics may indeed play a role in which disputes are abandoned.