The Politics of Dispute Settlement Design: Explaining Legalism in Regional Trade Pacts (2000)

Abstract

In recent years two parallel trends have emerged in the organization of international trade. The first development is the rise of regionalism, with a host of new integration initiatives drawn along geographical lines. The second is a distinct but less widespread move toward legalism in the enforcement of trade agreements. To an unusual extent trading states have delegated to impartial third parties the authority to review and issue binding rulings on alleged treaty violations, at times based on complaints filed by nonstate or supranational actors. Separately, the two trends have garnered scholarly attention. The intersection of these two trends, however, remains little examined. Few comparative studies of institutional form, across different trade accords, have been undertaken. This is curious, for regional trade pacts exhibit considerable variation in governance structures. Moreover, questions of institutional design – which constitute a dimension of bargaining distinct from the substantive terms of liberalization – have proven contentious in recent trade negotiations, underscoring their political salience. The creation of supranational institutions in regional trade accords has direct implications for academic debates regarding sovereignty, globalization, and interdependence. Nevertheless, research on this particular issue remains scarce. Addressing this gap, I focus on a specific aspect of governance in international trade: the design of dispute settlement procedures. In particular, I investigate the conditions under which member states adopt legalistic mechanisms for resolving disputes and enforcing compliance in regional trade accords.