Developing Countries and General Agreement on Tariffs and Trade/World Trade Organization Dispute Settlement

Abstract

It has long been observed that developing countries made scant use of dispute settlement under the General Agreement on Tariffs and Trade (GATT). Less clear are the reasons for this. Most observers insist that the various GATT reforms that were intended to help developing countries failed to insulate them from the “power politics” of the system (Kuruvila, 1997). Not surprisingly, many of these same observers predict that the greater “legalism” of the World Trade Organization (WTO), and the Dispute Settlement Understanding (DSU), in particular, will encourage more participation by developing countries. Indeed, some go so far as to suggest that, enticed by a system in which, unlike in the GATT years, “right perseveres over might” (Lacarte-Muro and Gappah, 2000, 401), developing countries will have greater recourse to multilateral dispute settlement. The underlying presumption, of course, is that developing countries were especially ill-served by GATT’s diplomacy, and are better poised to benefit from the WTO’s more legalistic architecture. We argue that this conventional wisdom is wrong on both counts. In assessing how developing countries have fared in dispute settlement, two questions beg empirical attention. First, have developing countries secured more concessions, by which we mean favourable trade policy outcomes, in WTO versus GATT dispute settlement? And second, what explains any differences in the outcomes realized by developing, as opposed to developed countries? Most observers note that developing countries have, in fact, been more active in WTO dispute settlement. This greater participation is typically traced to the legal reforms ushered in by the DSU— notably the “right” to a Panel and automatic adoption of Panel reports. The argument is that these reforms have done much to temper the power politics that permeated the