International Legal Studies Program

Are smaller members of the World Trade Organization able to use the WTO’s dispute settlement mechanism on an equal footing with the more powerful members of the organization? This paper examines the relationship between the wealth and power of states and their ability to participate fully within this system of dispute resolution. Two alternative hypotheses are considered. The “power hypothesis” predicts that politically weak countries will refrain from filing complaints against politically powerful states for fear of costly retaliation. The “capacity hypothesis” predicts the opposite – low income states will tend to complain about behavior by high income states because the latter offer a higher expected return.

Using the set of all WTO disputes we test these two hypotheses and find considerable support for the capacity hypothesis and no support for the power hypothesis. We conclude that poor states behave differently than their rich counterparts because they lack the financial, human, and institutional capital to participate fully in the dispute resolution system.