Judicialization Matters! A Comparison of Dispute Settlement Under GATT and the WTO

Abstract

By analyzing disputes between the United States and the EU under General Agreement on Tariffs and Trade (GATT) and the World Trade Organization (WTO) respectively, the paper demonstrates that the judicialization (or legalization) of international dispute settlement procedures (IDSPs) can contribute to states’ compliance with (these) dispute settlement mechanisms. The article compares four sets of pairwise similar disputes which the United States had with the EU: the so-called Domestic International Sales Corporations case (which arose under GATT) and the Foreign Sales Corporations case (which was settled through WTO procedures), the Steel case (GATT) and the Patents case (WTO), the two Hormones cases under GATT and the WTO respectively, the Citrus case (GATT) and the Bananas case (WTO). In each of the four comparisons, the United States acted more in accordance with the judicial WTO dispute settlement procedures than with the diplomatic GATT procedures. We can therefore say that contrary to realist assumptions, the judicialization of IDSPs can contribute to their effectiveness. However, contrary to idealist assumptions the effectiveness of IDSPs does not automatically follow from their judicialization. Yet, as assumed by institutionalists, judicialized IDSPs are better than diplomatic IDSPs in sustaining states’ compliance with these procedures precisely because of their normative and strategic effects.