This article examines the effect of overlapping institutions in trade policy, where theWorld Trade Organization, preferential trade agreements, and other economic negotiation venues give states many options for negotiating rules and settling disputes. This article argues that overlapping institutions influence trade politics at three stages: selection of venue, negotiation of liberalization commitments, and enforcement of compliance. First, lobby groups and governments on both sides of a trade negotiation try to choose the set of rules that will favor their preferred outcome. WTO rules that restrict use of coercive tactics outside of the WTO generate a selection process that filters the most difficult trade issues into WTO trade rounds or dispute adjudication while easier issues are settled in bilateral and regional fora. This selection dynamic creates a challenge at the negotiation stage by disaggregating interest group pressure for liberalization commitments. The narrowing of interest group lobbying for the multilateral process may impede negotiation of liberalization agreements that could only gain political support through a broad coalition of exporter mobilization. At the enforcement stage international regime complexity creates the potential for contradictory legal rulings that undermine compliance, but also adds greater penalties for noncompliance if reputation effects operate across agreements.
The potential for international law to reduce power asymmetries depends on weaker countries learning to navigate the legal system. This paper examines the use of courts by developing countries to defend their trade interests. Power relations and low capacity may prevent these countries from fully participating in the international trade system. Yet some developing countries have been among the most active participants in GATT/WTO adjudication. We argue that high startup costs for using trade litigation are a barrier to developing country use of the dispute settlement process. Analysis of dispute initiation from 1975 to 2003 shows that past experience in trade adjudication, as either a complainant or a defendant, increases the likelihood that a developing country will initiate disputes. As weaker countries overcome these initial capacity constraints they will increasingly benefit from the international legal structures they have joined.
What explains the selection of cases for WTO adjudication? This article explores the business conditions under which industries lobby their home government to use the WTO adjudication process and the political factors that influence government decisions. It explains the industry pattern of selection for international trade disputes as a function of the velocity of the business environment. While WTO adjudication is seen as costly and slow, a positive ruling brings broad benefits in terms of deterrence against future discrimination. Firms in static industries will invest in WTO dispute settlement to achieve these benefits, but firms in industries shaped by dynamic competition have high opportunity costs that make them less willing to pursue adjudication. This argument accounts for why there are fewer WTO cases about electronics industry issues than there are likely incidences of protectionist measures. Since Japan is a leading exporter and provides a government report with unique data on potential WTO disputes, it was chosen to test the argument in greater depth. Interviews with Japanese business officials and statistical analysis of an original data set provide support for the argument. The authors conclude that the passive attitude toward WTO adjudication by Japan's largest export industry, electronics, and the sensitivity of Japan's diplomatic relations with China have constrained the cases that Japan files. These findings suggest that the effectiveness of the WTO for dispute settlement is conditional upon the time horizon of the industry and the political relations among members.
This article explains how the institutional context of international negotiations influences their outcomes. I argue that issue linkage counteracts domestic obstacles to liberalization by broadening the negotiation stakes. Institutions bolster the credibility of the linkage to make it more effective. I test the argument in the agricultural sector, which has been among the most difficult sectors for governments to liberalize. Statistical analysis of U.S. negotiations with Japan and the EU from 1970 to 1999 indicates that an institutionalized linkage between agricultural and industrial issues encourages agricultural liberalization in both Japan and Europe. Through case studies of key negotiations, I first examine why countries choose to link issues, then show how the linkage changes interest group mobilization and shifts the policy process to promote liberalization.