Why Does the World Trade Organization Appear Neoliberal? The Puzzle of the High Incidence of Guilty Verdicts in WTO Adjudication

Abstract

The dispute settlement mechanism of the World Trade Organization tends to give verdicts for the plaintiff much more often than verdicts for the defendant. Simple logic suggests that this is a puzzle: it is not immediately obvious why defendants do not settle out of court if they are likely to be found guilty. I argue that there are three alternative explanations for this puzzle: imperfect enforcement, asymmetric information, and domestic constraints. By examining three major WTO cases, I find the domestic constraints explanation the most persuasive.