The case against reforming the WTO enforcement mechanism

University of Illinois Law Review

Volumn 2008, Issue 1, 2008, Pages 319-357

  Nzelibe, Jide ^a  

^a NORTHWESTERN UNIVERSITY   (United States)

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EID: 40949121151     PISSN: 02769948     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Conference Paper

References (228)

1. Understanding on Rules and Procedures Governing the Settlement of Disputes, Apr. 15, 1994, Marrakesh Agreement Establishing the World Trade Organization, Annex 2, Legal Instruments - Results of the Uruguay Round, 33 I.L.M. 1125, 1226 (1994) [hereinafter Dispute Settlement Understanding or DSU].
2. For background information on dispute settlement mechanisms under the GATT/WTO system, see Ernst-Ulrich Petersmann, International Trade Law and the GATT/WTO Dispute Settlement System 1948-1996, in 11 INTERNATIONAL TRADE LAW AND THE GATT/WTO DISPUTE SETTLEMENT SYSTEM 3-122 (Ernst-Ulrich Petersmann ed., 1997).
3. See, e.g., Kym Anderson, Peculiarities of Retaliation in WTO Dispute Settlement, 1 WORLD TRADE REV. 123, 128 (2002);
4. Jagdish Bhagwati, After Seattle: Free Trade and the WTO, 11 INT'L AFF. 15, 28 (2001);
5. Marco Bronckers & Naboth van den Broek, Financial Compensation in the WTO, 8 J. INT'L ECON. L. 101 (2005);
6. Steve Charnovitz, Rethinking WTO Trade Sanctions, 95 AM. J. INT'L L. 792, 814-24 (2001);
7. Sungjoon Cho, The Nature of Remedies in International Trade Law, 65 U. PITT. L. REV. 763, 786-87 (2004);
8. Petros C. Mavroidis, Remedies in the WTO Legal System: Between a Rock and a Hard Place, 11 EUR. J. INT'L L. 763 (2000);
9. Victor Mosoti, Africa in the First Decade of WTO Dispute Settlement, 9 J. INT'L ECON. L. 427 (2006);
10. Joost Pauwelyn, Enforcement and Countermeasures in the WTO: Rules are Rules - Toward a More Collective Approach, 94 AM. J. INT'L L. 335, 346 (2000);
11. Joel P. Trachtman, Building the WTO Cathedral, 43 STAN. J. INT'L L. 127 (2007);
12. Nuno Limão & Kamal Saggi, Tariff Retaliation Versus Financial Compensation in the Enforcement of International Trade Agreements (World Bank Policy Research, Working Paper No. 3873, 2006), available at http://www.wds.worldbank.org/srvlet/WDSContentServer/WDSP/IB/2006/03/24/ 000160016_20060324163518/Rendered/PDF/wps3873.pdf.
13. See Marc L. Busch & Eric Reinhardt, Developing Countries and General Agreement Tariffs/World Trade Organization Dispute Settlement, 37 J. WORLD TRADE 719 (2003);
14. Gary N. Horlick, Problems with the compliance structure of the WTO dispute resolution process, in THE POLITICAL ECONOMY OF INTERNATIONAL TRADE LAW 636, 641-42 (Daniel L. M. Kennedy & James D. South-wick eds., 2002);
15. Gregory Shaffer, How to Make the WTO Dispute Settlement System Work for Developing Countries: Some Proactive Developing Country Strategies (unpublished manuscript), available at www.ictsd.org/dlogue/2003-02-07/Shaffer.pdf.
16. Some developing countries have formally proposed a monetary remedies scheme. See Proposal by the LDC Group, Negotiations on the Dispute Settlement Understanding, TN/DS/W/17 (Oct. 9, 2002), available at http://trade.ec.europa.eu/doclib/docs/2003/december/tradoc_115337.pdf (proposing monetary damages equal to injury suffered);
17. see also Proposal by the African Group, Negotiations on the Dispute Settlement Understanding, TN/DS/W/15 (Sept. 25, 2002) (proposing monetary compensation to be continually paid pending and until the withdrawal of the measures in breach of WTO obligations). Commentators have also made similar proposals. See, e.g., Claude Barfield, WTO Dispute Settlement System in Need of Change, 37 INTERECONOMICS 131 (2002);
18. Bronckers & van den Broek, supra note 3, at 101;
19. Chi Carmody, Remedies and Conformity Under the WTO Agreement, 5 J. INT'L ECON. L. 307, 307-09 (2002);
20. Robert MacLean, The Urgent Need to Reform the WTO's Dispute Settlement Process, 8 INT'L TRADE L. & REG. 137 (2002);
21. Trachtman, supra note 3, at 128-29.
22. See Phillip P. Frickey, Legislative Processes and Products, 46 J. LEGAL EDUC. 469, 471 (1996).
23. One such proposal was put forth by Mexico which argues that developing countries be allowed to trade their retaliation rights. See Special Session of the Dispute Settlement Body, Negotiations on Improvements and Clarifications of the Dispute Settlement Understanding, Proposal by Mexico, TN/DS/W/23 (Nov. 4, 2002). For an analysis of this proposal, see Kyle Bagwell, Petros C. Mavroidis, & Robert W. Staiger, The Case for Auctioning Countermeasures in the WTO (Aug. 2004) (unpublished manuscript), available at http://www.columbia.edu/̃kwb8/auctionation080904.pdf;
24. see also Kenneth W. Abbott, GATTas a Public Institution: The Uruguay Round and Beyond, 18 BROOK. J. INT'L L. 31, 65 (1992);
25. Pauwelyn, supra note 3, at 335.
26. See generally PAUL B. STEPHAN ET AL., INTERNATIONAL BUSINESS AND ECONOMICS: LAW AND POLICY (3d ed. 2004).
27. Jide Nzelibe, The Credibility Imperative: The Political Dynamics of Retaliation in the World Trade Organizations Dispute Resolution Mechanism, 6 THEORETICAL INQUIRIES LAW 215, 217 (2005).
28. See, e.g., id. at 235.
29. See Limão & Saggi, supra note 3, at 25.
30. Alan O. Sykes, Public Versus Private Enforcement of International Economic Law: Standing and Remedy, 34 J. LEGAL STUD. 631, 656 (2005).
31. See generally id.
32. Chad P. Bown, Participation in WTO Dispute Settlement: Complaints, Interested Parties, and Free Riders, 19 WORLD BANK ECON. REV. 287, 289 (2005).
33. Busch & Reinhardt, supra note 4, at 720.
34. Bown, supra note 14, at 290.
35. Id. at 293.
36. Andrew T. Guzman, A Compliance-Based Theory of International Law, 90 CAL. L. REV. 1823, 1869 (2002).
37. See ROBERT Z. LAWRENCE, CRIMES AND PUNISHMENTS? RETALIATION UNDER THE WTO (2003);
38. Judith Goldstein, International Institutions and Domestic Politics: GATT, WTO, and the Liberalization of Trade, in THE WTO AS AN INTERNATIONAL ORGANIZATION 133, 144-46 (Anne O. Krueger ed., 1998);
39. Mark L. Movsesian, Enforcement of WTO Rulings: An Interest Group Analysis, 32 HOFSTRA L. REV. 1, 2 (2003);
40. Nzelibe, supra note 9, at 216.
41. See, e.g., the proposals and commentary referenced supra note 5.
42. See Goldstein, supra note 19, at 144-46;
43. Movsesian, supra note 19, at 3;
44. Nzelibe, supra note 9, at 215-17;
45. Alan O. Sykes, The Remedy for Breach of Obligations under the WTO Dispute Settlement Understanding: Damages or Specific Performance?, in NEW DIRECTIONS IN INTERNATIONAL ECONOMIC LAW 340 (Marco Bronckers & Reinhard Quick eds., 2000).
46. DSU art. 19.1. For a discussion of second-order or second-best solutions in constitutional and statutory schemes generally, see Adrian Vermeule, Hume's Second-Best Constitutionalism, 70 U. CHI. L. REV. 421 (2003).
47. See DSU art. 22.2.
48. In many respects, how to measure equivalent harm has been a source of significant controversy in the literature. See Holger Spamann, The Myth of 'Rebalancing' Retaliation in WTO Dispute Settlement Practice, 9 J. INT'L ECON. L. 31 (2006). But putting aside that debate for now, the goal of the enforcement mechanism has been to allow the injured member to rebalance its obligations by suspending concessions equivalent to the harm it suffered as a result of the violation.
49. Nzelibe, supra note 9, at 228.
50. Chad P. Bown & Bernard M. Hoekman, WTO Dispute Settlement and the Missing Developing Country Cases: Engaging the Private Sector, 8 J. INT'L ECON. L. 861, 862 (2005);
51. Henrik Horn, Petros C. Mavroidis, & Håkan Nordström, Is the Use of the WTO Dispute Settlement System Biased? 1 (Ctr. for Econ. Policy Research, Discussion Paper No. 2340, 1999), available at http://venus.icre.go.kr/metadata/152052340.pdf;
52. Christina Davis & Sara Bermeo, Who Files? Developing Country Participation in GATT/WTO Adjudication 7 (May 8, 2007) (unpublished manuscript), available at www.princeton.edu/̃cldavis/files/who_files.pdf.
53. See commentators cited supra note 5.
54. See Abbott, supra note 7, at 65;
55. Pauwelyn, supra note 3, at 337.
56. See Bagwell, Mavroidis & Staiger, supra note 7.
57. See Trachtman, supra note 3, at 158.
58. See id. at 166.
59. Yuka Fukunaga, Securing Compliance Through the WTO Dispute Settlement System: Implementation of DSB Recommendations, 9 J. INT'L ECON. L. 383, 414-15 (2006).
60. See Pauwelyn, supra note 3, at 343-44.
61. For an analysis of such a dispute, see the discussion infra text accompanying note 83.
62. See, e.g., Trachtman, supra note 3, at 164-65.
63. See, e.g., Anderson, supra note 3, at 129-30.
64. See Nzelibe, supra note 9, at 223.
65. See, e.g., Nzelibe, supra note 9, at 219-21;
66. Sykes, supra note 12, at 646-47;
67. Warren F. Schwartz & Alan O. Sykes, The Economic Structure of Renegotiation and Dispute Resolution in the World Trade Organization, 31 J. LEGAL STUD. S179, S194-95 (2002).
68. See Alan O. Sykes, Regulatory Protectionism and the Law of International Trade, 66 U. CHI. L. REV. 1, 25-26 (1999).
69. See Nzelibe, supra note 9, at 223.
70. See, e.g., Cho, supra note 3, at 785-86.
71. See Sykes & Schwartz, supra note 38, at 191-92.
72. See id. But see John H. Jackson, The WTO Dispute Settlement Understanding - Misunderstandings on the Nature of Legal Obligation, 91 AM. J. INT'L L. 60, 62-63 (1997) (suggesting that "the overall gist of those clauses [of the DSU] ... strongly suggests that the legal effect of an adopted panel report is the international law obligation to perform the recommendation of the panel report").
73. See Daniel W. Drezner, Bargaining, Enforcement, and Multilateral Sanctions: When Is Cooperation Counterproductive?, 54 INT'L ORG. 73, 74-75 (2000).
74. See ROBERT AXELROD, THE EVOLUTION OF COOPERATION 136-39 (1984);
75. see also Nzelibe, supra note 9, at 252 ("[T]he utility of the [tit-for-tat] strategy is not that it any way compensates the injured party, but that it provides sufficient incentives to each party 'not to try gratuitous defections.'").
76. Mark A. Cohen, Corporate Crime and Punishment: An Update on Sentencing Practice in the Federal Courts, 1988-1990, 71 B.U. L. REV. 247, 267-68 (1991).
77. See infra text accompanying notes 55-56.
78. See Ernst-Ulrich Petersmann, Justice as Conflict Resolution: Proliferation, Fragmentation, and Decentralization of Dispute Settlement in International Trade, 27 U. PA. J. INT'L ECON. L. 273, 306-07 (2006);
79. Christian Tietje & Karsten Nowrot, Forming the Centre of a Transnational Economic Legal Order? Thoughts on the Current and Future Position of Non-State Actors in WTO Law, 5 EUR. BUS. ORG. L. REV. 321, 347-51 (2004).
80. See Ernst-Ulrich Petersmann, Human Rights, Constitutionalism and the World Trade Organization: Challenges for World Trade Organization Jurisprudence and Civil Society, 19 LEIDEN J. INT'L L. 633, 633-35 (2006);
81. Petersmann, supra note 48, at 278;
82. Tietje & Nowrot, supra note 48, at 321-22. However, not all commentators agree that allowing private access to WTO litigation will best proximate a first-order ideal. See Sykes, supra note 12, at 646-52 (suggesting public choice intuitions that counsel against private rights of action in international trade disputes).
83. See Petersmann, supra note 48, at 278.
84. See supra text accompanying notes 35-37.
85. See supra text accompanying note 37.
86. For a description of how rational ignorance affects consumers in international trade policy issues, see John O. McGinnis & Mark L. Movsesian, Commentary, The World Trade Constitution, 114 HARV. L. REV. 511, 524 (2000).
87. See Brendan O'Flaherty & Jagdish Bhagwati, Will Free Trade with Political Science Put Normative Economists Out of Work?, 9 ECON. & POL. 207, 207 (1997).
88. See generally GREGORY C. SHAFFER, DEFENDING INTERESTS: PUBLIC-PRIVATE PARTNERSHIPS IN WTO LITIGATION (2003) (discussing how private actors influence the public enforcement of trade commitments).
89. For a discussion of how the veil of ignorance works in the design of constitutional or statutory regimes, see Adrian Vermeule, Veil of Ignorance Rules in Constitutional Law, 111 YALE L.J. 399, 419-24 (2001).
90. Id. at 419.
91. See Kyle Bagwell, Petros C. Mavroidis & Robert W. Staiger, It's a Question of Market Access, 96 AM. J. INT'L L. 56, 68-74 (2002).
92. See id. at 75.
93. See generally NILÜFER ÇAGATAY, TRADE, GENDER AND POVERTY 32 (2001).
94. Sometimes domestic institutional design features can make it easier for these public regarding commitments to be politically sustainable. See Rachel Brewster, The Domestic Origins of International Agreements, 44 VA. J. INT'L L. 501, 502 (2004);
95. Rachel Brewster, Rule-Based Dispute Resolution in International Trade Law, 92 VA. L. REV. 251, 287-88 (2005) [hereinafter Brewster, Rule-Based Dispute Resolution];
96. Tom Ginsburg, Locking in Democracy: Constitutions, Commitment, and International Law, 38 N.Y.U. J. INT'L L. & POL. 707, 727-28 (2006);
97. Kal Raustiala, Form and Substance in International Agreements, 99 AM. J. INT'L L. 581, 595 (2005). Also, states will sometimes use formal dispute resolution mechanisms in international agreements as a precommitment device.
98. See Brewster, Rule-Based Dispute Resolution, supra, at 502-03;
99. Ginsburg, supra, at 733;
100. see also Zachary Elkins, Andrew T. Guzman & Beth A. Simmons, Competing for Capital: The Diffusion of Bilateral Investment Treaties, 1960-2000, 60 INT'L ORG. 811, 823 (2006) ("BITs allow governments to make credible commitments because they raise the ex post costs of noncompliance above those that might be incurred in the absence of a treaty.").
101. See Sykes & Schwartz, supra note 38, at 184.
102. See Nzelibe, supra note 9, at 220;
103. Sykes & Schwartz, supra note 38, at 184.
104. Commentators have suggested that not only does retaliation provide an important benefit to export groups it also makes such groups agents of trade liberalization. See Goldstein, supra note 19, at 144-46;
105. Movsesian, supra note 19, at 10;
106. Nzelibe, supra note 9, at 222-28.
107. Nzelibe, supra note 9, at 223.
108. See id. at 238-40 (discussing asymmetric retaliation costs in WTO disputes).
109. For the panel report on the EC Bananas dispute, see Panel Report, European Communities - Regime for the Importation, Sale and Distribution of Bananas, WT/DS27/R/USA (May 22, 1997). For the appellate body report, see Appellate Body Report, European Communities-Regime for the Importation, Sale and Distribution of Bananas, WT/DS27/AB/R (Sept. 9, 1997). For an in-depth and detailed review of the controversy underlying this famous dispute, see Raj Bhala, The Bananas War, 31 MCGEORGE L. REV. 839 (2000). After the DSU granted Ecuador the right to retaliate in that dispute, Ecuador wrote to the DSU and complained that since it imported mostly capital inputs from the EC it could not afford to retaliate. See Communication by the Permanent Mission of Ecuador, European Communities - Regime for the Importation, Sale and Distribution of Bananas, Recourse by Ecuador to Article 22.2 of the DSU, WT/DS27/52 (Nov. 9, 1999).
110. See Nzelibe, supra note 9, at 234.
111. See id. at 230.
112. See DSU art. 21.3.
113. See id.
114. See id. art. 22.1-.2 ("Compensation and the suspension of concessions or other obligations are temporary measures available in the event that the recommendations and rulings are not implemented within a reasonable period of time.").
115. See id. art. 22.3.
116. See id. art. 22.4.
117. See id. art.22.6-.7.
118. See Nzelibe, supra note 9, at 245.
119. See Pauwelyn, supra note 3, at 345.
120. See Nzelibe, supra note 9, at 230.
121. See Bagwell, Mavroidis & Staiger, supra note 7, at 2 ("The idea is that, if a country wins a ruling ... and finds that it is unable or unwilling to retaliate itself, it should be able to trade the right to another country that would value and utilize the right of retaliation.").
122. Under WTO's MFN principle, trade concessions must extend equally to all WTO members. General Agreement on Tariffs and Trade, art. I, Oct. 30, 1947, 61 Stat. A-11, 55 U.N.T.S. 194 [hereinafter GATT] (mandating that "any advantage, favour, privilege or immunity granted by any contracting party to any product originating in or destined for any other country shall be accorded immediately and unconditionally to the like product originating in or destined for the territories of all other contracting parties").
123. See Appellate Body Report, United States - Definitive Safeguard Measures on Imports of Certain Steel Products, WT/DS248/AB/R (Dec. 10, 2003).
124. See Nzelibe, supra note 9, at 224-25;
125. see also James Cox, Sparks Fly over U.S.-E.U. Trade, USA TODAY, Nov. 11, 2003, at A3 (discussing political benefits to President George W. Bush of steel tariffs and the political sensitivity of threatened retaliation by the EC).
126. See Appellate Body Report, European Communities - Measures Concerning Meat and Meat Products, WT/DS26/AB/R, WT/DS48/AB/R (Jan. 16, 1998) [hereinafter Beef Hormones] (finding European prohibition on import of beef treated with growth hormones to violate SPS Agreement).
127. In the Beef Hormones dispute, after the WTO approved a level of tariff suspensions worth $116.8 million, the United States imposed 100% retaliatory tariffs on a specific range of EC agricultural products. See Final List of European Union Products on Which U.S. Will Impose 100% Ad Valorem Duties in Response to Beef Hormones Dispute, 16 INT'L TRADE REP. 1231 (July 21, 1999). For the EC-Bananas dispute, the retaliation amount authorized was nearly $192 million. See U.S. Issues Final List of European Imports to be Hit with Higher Duties in Banana Row, 16 INT'L TRADE REP. 621 (April 12, 1999). For the DSU arbitration decision authorizing the United States to suspend concessions, see Award of the Arbitrators, European Communities - Regime for the Importation, Sale and Distribution of Bananas European Communities - Recourse to Arbitration by the European Communities under Article 22.6 of the DSU, WT/DS27/ARB (Apr. 9, 1999).
128. See Rosemary A. Ford, The Beef Hormone Dispute and Carousel Sanctions: A Roundabout Way of Forcing Compliance with World Trade Organization Decisions, 27 BROOK. J. INT'L L. 543, 568 (2002) (observing that the United States decided to exclude from the retaliation list beef imported from Denmark because of Denmark's relative lack of influence in EC trade policy).
129. See U.S. INT'L TRADE COMM'N, Publication No. 3630, INDUSTRY REPORT, THE YEAR IN TRADE 2002: OPERATION OF THE TRADE AGREEMENTS PROGRAM 54TH REPORT 39 (2003).
130. See Nzelibe, supra note 9, at 223-26.
131. This "carousel" sanctions plan was part of the Trade and Development Act of 2000, Pub. L. No. 106-200, 114 Stat. 251 (2000) (codified in scattered sections of 19 U.S.C.). The 180 days provision is codified in 19 U.S.C. § 2416 (2000).
132. 19 U.S.C. § 2416.
133. 19 U.S.C. § 2416 (b)(2)(B)(ii) ("The Trade Representative is not required to revise the retaliation list or the action described in clause (i) with respect to a country, if ... the Trade Representative together with the petitioner involved in the initial investigation under this subchapter (or if no petition was filed, the affected United States industry) agree that it is unnecessary to revise the retaliation list.").
134. 19 U.S.C. § 2417.
135. See Gilda Indus., Inc. v. United States, 353 F. Supp. 2d 1364, 1370-72 (Ct. Int'l Trade 2004), aff'd in part, and vacated in part, 446 F.3d 1271 (Fed. Cir. 2006).
136. Nzelibe, supra note 9, at 230.
137. See Robert W. Staiger, International Rules and Institutions for Trade Policy, in HANDBOOK OF INTERNATIONAL ECONOMICS (Gene Grossman & Kenneth Rogoff eds., 1995);
138. Sykes & Schwartz, supra note 38, at 180-82;
139. Kyle Bagwell, Remedies in the WTO: An Economic Perspective (Jan. 9, 2007) (unpublished manuscript, on file with author).
140. As a preliminary matter, the DSB has to authorize the retaliation before it can occur. But first, the issue of noncompliance with the panel's original recommendation has to be resolved. See DSU art. 21.5 ("Where there is disagreement as to the existence or consistency with a covered agreement of measures taken to comply with the recommendations and rulings such dispute shall be decided through recourse to these dispute settlement procedures, including wherever possible resort to the original panel."). Also, even after authorization has been approved, the scofflaw state can still object to the amount or the level of the suspension. See DSU art. 22.6.
141. See Bagwell, Mavroidis & Staiger, supra note 7, at 3-4.
142. See William Davey, The WTO Dispute Settlement Mechanism 36-37 (Ill. Pub. L. & Legal Theory Research Paper No. 03-08, 2003), available at http://ssrn.com/abstracts=419943.
143. See id. at 1.
144. See, e.g., Claude Barfield, WTO Dispute Settlement System in Need of Change, 37 INTERECONOMICS 131, 134-35 (2002).
145. See generally Joseph S. Nye, Jr., Soft Power, FOREIGN POL'Y, Autumn 1990, at 159.
146. ROBERT Z. LAWRENCE, CRIMES AND PUNISHMENTS? RETALIATION UNDER THE WTO 49-51 (2003).
147. See Bown, supra note 14, at 291, 300-01.
148. See id.
149. See id. at 289.
150. See supra note 5 and accompanying text.
151. See supra text accompanying notes 4-9.
152. See Nzelibe, supra note 9, at 217.
153. See id.
154. See Trachtman, supra note 3, at 40-41.
155. Generally, developing countries argue that the WTO Membership is comprised solely of national governments and allowing amicus briefs would give undue rights to private entities that would otherwise have no standing. See Communication from India, India's Questions to the European Communities and Its Member States on Their Proposal Relating to Improvements of the DSU, 4-6, TN/DSAV/5 (May 7, 2002).
156. See Sykes, supra note 12, at 654-66.
157. See supra text accompanying note 45.
158. See supra text accompanying note 45.
159. See Sykes, supra note 12, at 655-66.
160. For instance, a monetary settlement was reached in a dispute between the EC and United States regarding copyright royalties. For a discussion of this dispute and the monetary settlement, see Bernard O'Connor & Margareta Djordjevic, Practical Aspects of Monetary Compensation, 8 J. INT'L ECON. L. 127 (2005).
161. See id. at 131 n.22.
162. A provisional retaliation list was released by the EC in the Summer of 2002. See Council Regulation 1031/2002, 2002 O. J. (L 157) 8 [hereinafter Council Regulation 1031/2002].
163. See Bush Ends Steel Safeguard Tariffs in Face of Threat by EU to Retaliate, 20 INT'L TRADE REP. 2021 (2003).
164. See id.
165. See Sykes, supra note 12, at 656-67 (discussing the problem of social costs of litigation in the context where private parties are litigating claims). For a detailed analysis of the divergence between private incentives to litigate claims for damages and the social value of such litigation, see Steven Shavell, The Social Versus the Private Incentive to Bring Suit in a Costly Legal System, 11 J. LEGAL STUD. 333 (1982).
166. Shavell, supra note 120, at 334-36.
167. Joel P. Trachtman, The Domain of WTO Dispute Resolution, 40 HARV. INT'L L.J. 333, 339 (1999).
168. See Shavell, supra note 120, at 336-37.
169. See id.
170. Sykes has also made this point in more detail elsewhere. See Sykes, supra note 12, at 655-58.
171. Id. at 657-58.
172. Id. at 654-55.
173. Trachtman, supra note 3, at 152-53.
174. Sykes, supra note 12, at 658.
175. Mancur Olson, Jr. & Richard Zeckhauser, An Economic Theory of Alliances, 48 REV. ECON. & STAT. 266 (1966).
176. See WTO.org, Disputes by Country, http://www.wto.org/english/ tratop_e/dispu_e/dispu_by_ country_e.htm (last visited Aug. 25, 2007).
177. See, e.g., Lawrence H. Officer, An Assessment of the United Nations Scale of Assessments from a Developing-Country Standpoint, 13 J. INT'L MONEY & FIN. 415 (1994) (showing that developing countries fail to shoulder a proportionate burden of their UN financing).
178. See, e.g., Daniel R. Fischel & Michael Bradley, The Role of Liability Rules and the Derivative Suit in Corporate Law: A Theoretical and Empirical Analysis, 71 CORNELL L. REV. 261, 271 (1986) ("Shareholders with tiny investments can bring derivative actions on behalf of a corporation. Because of his small stake in the venture, the complaining shareholder (or his attorney) has very little incentive to consider the effect of the action on other shareholders, the supposed beneficiaries, who ultimately bear the costs.").
179. See Nzelibe, supra note 9, at 249 (suggesting that the EC adopted the litigation avoidance strategy in its dispute with the United States over the Helms-Burton legislation);
180. Geoffrey Garrett & James McCall Smith, The Politics of WTO Dispute Settlement 14 (UCLA Int'l Inst., Occasional Paper Series, 2002), available at http://repositories.cdlib.org/international/ops/ wtogarrettsmith (describing a variety of adjudication avoidance approaches adopted by industrialized states in politically loaded claims).
181. See Nzelibe, supra note 9, at 218.
182. See supra text accompanying notes 38-41.
183. See supra text accompanying notes 13, 68-69.
184. See Bronckers & van den Brock, supra note 3, at 103;
185. Robert E. Hundec, Broadening the Scope of Remedies in WTO Dispute Settlement, in IMPROVING WTO DISPUTE SETTLEMENT PROCEDURES - ISSUES AND LESSONS FROM THE PRACTICE OF OTHER INTERNATIONAL COURTS AND TRIBUNALS (2000).
186. See, e.g., Bown & Hoekman, supra note 26, at 862.
187. In many respects, it may be the case that WTO dispute resolution may be an inappropriate institutional mechanism for inducing developing countries to comply with international trade norms. As Bown and Hoekman have recently observed elsewhere, LDCs are rarely targeted for litigation by advanced industrialized economies. See Chad Bown & Bernard Hoekman, Making Trade Agreements Relevant for Developing Countries: Why Dispute Settlement is not Enough (Nov. 2006) (unpublished manuscript, on file with author). If the political economy obstacles to active developing country participation in the WTO are significant enough, it may be worthwhile looking to other multilateral institutions for mechanisms to induce developing country compliance, such as conditionality requirements in multilateral lending programs. See Roderick Abbott, Are Developing Countries Deterred from Using the WTO Dispute Settlement System? (Eur. Ctr. Int'l Political Econ., Working Paper No. 01/2007, 2007), available at http://www.ecipe.org/pdf/WPnol_07%20Abbott. pdf. For a discussion of multilateral coordination across the International Monetary Fund, the World Bank and the WTO, see Christian Tietje, Global Governance and Inter-Agency Co-operation in International Economic Law, 36 J. WORLD TRADE 501, 506-07 (2002).
188. See Busch & Reinhardt, supra note 4, at 719-20.
189. Gregory Shaffer has elaborated on the disadvantages that developing countries face as follows: [Developing countries] face three primary challenges if they are to participate effectively in the WTO dispute settlement system. These challenges are: (i) a relative lack of legal expertise in WTO law ...; (ii) constrained financial resources, including for the hiring of outside counsel...; and (iii) fear of political and economic pressure. We can roughly categorize these challenges as constraints ... of law, money and politics. Gregory Shaffer, The Challenges of WTO Law: Strategies for Developing Country Adaptation, 5 WORLD TRADE REV. 177, 177 (2006).
190. See, e.g., Bown & Hoekman, supra note 26, at 862-63;
191. Horn, Mavroidis & Nordström, supra note 26, at 7;
192. Davis & Bermeo, supra note 26, at 1-2.
193. Bown & Hoekman, supra note 26, at 862-63.
194. Bown and Hoekman have suggested that we accept the current bilateral system as given and try to devise ways to decrease litigation costs for developing countries without overhauling the WTO enforcement mechanism. See id. at 864. Other empirical studies have questioned the retaliatory disadvantage of developing countries. See Busch & Reinhardt, supra note 4, at 720.
195. See infra notes 147-52 and accompanying text.
196. For an in-depth and detailed review of the controversy underlying this famous dispute, see Bhala, supra note 67.
197. See id. at 961-63;
198. see also Shaffer, supra note 4, at 25-26.
199. See Bhala, supra note 67, at 968.
200. Award of the Arbitrators, European Communities - Regime for the Importation, Sale, and Distribution of Bananas - Recourse to Arbitration by the European Communities under Article 22.6 of the DSU, ¶ 170, WT/DS27/ARB/ECU (Mar. 24, 2000);
201. see also Daniel Pruzin, Intellectual Property: Hailing Final WTO Decision in Banana Case, Ecuador Sees Landmark for Poorer Countries, INT'L TRADE DAILY (BNA), Mar. 30,2000 (observing that the ruling "is ... the first time that the WTO has authorized 'cross-retaliation' by allowing Ecuador to suspend intellectual property protection and wholesale distribution rights for EU goods and service providers").
202. Panel Report, United States - Subsidies on Upland Cotton, ¶ 8.1, WT/DS267/R (Sept. 8, 2004).
203. See Hilton E. Zunckel, The African Awakening in United States - Upland Cotton, 39 J. WORLD TRADE 1071, 1076-89 (2005).
204. Id.
205. For extensive analysis of this case, see Karen Halverson Cross, King Cotton, Developing Countries and the 'Peace Clause': The WTO's US Cotton Subsidies Decision, 9 J. INT'L ECON. L. 149 (2006).
206. See Bown, supra note 14, at 290. For instance, Bown observes that in a dispute in which South Korea challenged United States safeguards on welded pipes, the nonparties in the dispute that hoped to free ride on South Korea's litigation efforts were disappointed because the settlement the United States negotiated with South Korea yielded a discriminatory increase in market access to South Korea alone. See id. at 290-91.
207. Id.
208. See GATT, supra note 80, art. I.1. (requiring a WTO Member to accord "any advantage, favor, privilege or immunity" it grants to any product of any other country to the "like product" of all other WTO Members).
209. According to recent data on the worldwide distribution of the world's poor, India has 41.01% of the world's poor, China has another 22.12%, while Brazil has 1.82%. See Janice M. Poling, Country Responsibilities in Achieving the Millennium Development Goals 77 (Ctr. Energy & Envtl. Studies, Working Paper No. 0304, 2003), available at http://www.bu.edu/ cees/research/workingp/pdfs/ MDGCountryResp.pdf.
210. See WTO.org, supra note 131.
211. See id.
212. See Jing Gu, China and WTO Dispute Settlement: Three Years On 29-30 (2005) (unpublished manuscript), available at http://www. nottingham.ac.uk/iaps/GuJing%20paper.pdf (suggesting that China has resisted direct participation in litigation for cultural reasons but observing that China had participated as a third party in many disputes).
213. See id. at 6, 29-30.
214. See WTO.org, supra note 131.
215. Appellate Body Report, European Communities - Anti-Dumping Duties on Imports of Cotton-Type Bed Linens from India, WT/DS141/AB/R (Mar. 1, 2001).
216. See, e.g., Panel Report, United States - Anti-Dumping Measure on Shrimp from Ecuador, WT/DS335/R (Jan. 30, 2007).
217. Matthew S. Dunne et al., International Trade, 39 INT'L LAW. 209, 211 (2005).
218. Of course, these political economy factors suggest that many of these developing countries might join the WTO regime for reasons that are completely unrelated to access to dispute resolution. See Eric A. Posner & John C. Yoo, Reply to Heifer and Slaughter, 93 CAL. L. REV. 957, 969-70 (2005) ("Although states continue to join the WTO and to seek entry to the European Union, we do not know whether those states do so to obtain the benefits of the adjudicatory institutions themselves, or simply the substantive benefits of the treaty regime in question.").
219. GREGORY C. SHAFFER, DEFENDING INTERESTS: PUBLIC-PRIVATE PARTNERSHIPS IN WTO LITIGATION 3-9 (2003).
220. Id. at 20-27.
221. For an argument that democracies are more likely to conclude liberalizing trade agreements than nondemocracies because they tend to be more responsive to domestic political pressures, see Edward D. Mansfield et al., Free to Trade: Democracies, Autocracies, and International Trade, 94 AM. POL. SCI. REV. 305 (2000).
222. Id.
223. Id.
224. See Jaroslav Pietras, The Role of the WTO for Economies in Transition, in THE WTO AS AN INTERNATIONAL ORGANIZATION 353, 353-61 (Annie O. Krueger ed., 1998).
225. See generally Mansfield, supra note 170.
226. See, e.g., Çaglar Özden & Eric Reinhardt, The Perversity of Preferences: GSP and Developing Country Trade Policies, 1976-2000, 78 J. DEV. ECON. 1 (2005) (discussing how GSP preferences distort incentives of export groups to lobby for trade liberalization in LDCs).
227. See Gregory Shaffer et al., Brazil's Response to the Judicialized WTO Regime: Strengthening the State through Diffusing Expertise (June 22, 2006) (unpublished manuscript, on file with author).
228. See supra text accompanying notes 147-50. For a more extensive discussion of this dispute and its ultimate resolution, see Bhala, supra note 67, at 839-43. See also Andrew S. Bishop, The Second Legal Revolution in International Trade Law: Ecuador Goes Ape in Banana Trade War with European Union, INT'L LEGAL PERSP., 2001-2002, at 1, 1.