What can the WTO's Trade Disputes tell us About the Treatment of Developing Countries?
Abstract
The World Trade organization is the largest multilateral trade organization in the world, representing 98% of global trade. Seeking to promote trade between its 164 member countries, it is imperative that WTO agreements be followed by all members, such that the organization maintains its legitimacy.
The complexity brokering agreements that can be agreed on by 164 countries means that governments will have to give up the right to certain policy moves. This loss of policy space may be acceptable to some, but to developing nations it may be a hindrance from the goal of economic growth. Is giving up parts of their political sovereignty worth being part of the WTO? A Key aspect is the way the members of the WTO hold each other accountable. The dispute settlement mechanism is where governments may file complaints against other members of the WTO, should they believe that there has been a breach of WTO commitments. When an organization has such a range of economies, from the wealthiest and largest economies in the world, to the least-developed countries, can such a system really be fair? Are there statistical grounds to assume that the system favors the developed members of the WTO?
The objective of this study is to investigate the participation of developing countries in the WTO’s DSM, and the fairness of the system towards countries of different economic standing. Looking at the disputes that have involved developing countries will give insight into where WTO members challenge them, as well as how fair the system is to countries of developing status. What is found is that only a small number of developing countries do participate in the DSM, and that they participate actively enough to make it seem as though the developing countries are participating at a normal rate. Additionally, there is no clear disparity between developed and developing countries in terms of who the DSM awards a case in favor of. This study finds that some characteristics of a dispute can be used to determine the outcome. This includes disputes that involve dumping, or a large difference in GDP per capita between participants having a lower chance of being ruled in favor of a developing country. Ultimately, while the DSM is a statistically fair system, it is a system underutilized by developing countries, and more support for poorer participants, or more faith in the system is needed.