The Hidden Costs of International Dispute Settlement: WTO Review of Domestic Anti-Dumping Decisions

Abstract

The increasingly international scope of some economic activities is correlated with closer integration of national and international legal arrangements. With the creation of the World Trade Organization (WTO), international scrutiny of national compliance with international trade obligations has become markedly more legalized. WTO panels review actions of WTO member states and issue decisions that are effectively binding upon the parties to the dispute. Among other things, these panels conduct direct reviews of some national administrative actions. This article examines the experience in WTO practice with a special standard of review - inserted at the behest of the United States and similar in wording to the Chevron standard used in U.S. administrative law - for panels to apply in assessing whether national anti-dumping measures conform to WTO obligations. I find that the special standard of review has had essentially no effect upon the review of national anti-dumping actions by the WTO. A canvass of the possible explanations for this outcome (e.g., hostility by WTO panelists to national trade restricting actions) is inconclusive, as is a review of the serious normative arguments for and against the WTO practice. I then add a geopolitical perspective to the analysis - specifically, the asymmetrically important position of the United States in the international trading system. I conclude that, as a dynamic matter, the WTO's disregard of the special standard of review will likely induce a response by the United States that produces deadweight losses to the trading system as a whole. Thus, regardless of one's view of anti-dumping laws, the WTO's disregard of the negotiated standard of review may be undesirable. This analysis reveals the limitations in transposing features of a national legal system to the very different institutional context of an international legal system and thus also suggests the potential for WTO governance problems well beyond review of anti-dumping laws.