How Do the Third Parties Contribute to WTO Dispute Resolution?

Abstract

World Trade Organization (WTO) judicial bodies face dual obstacles because of their limited legal authority: they do not have the power to investigate members, so they depend primarily on submissions from disputants. They have no authority to sanction members directly, so they rely on decentralized enforcement. The legalization of the trade regime depends on consent and voluntary compliance. This article focuses on the role of third parties in the dispute settlement process and investigates how they contribute to the legalization of the WTO. I use an original dataset covering all WTO disputes from 1995 to 2012, containing unusually detailed information about the number of third parties, the total dispute settlement period, and the final stage that disputants use, etc. In contrast to the existing literature, which characterizes third parties as spoilers that prevent early settlement, I find that WTO third parties have heterogeneous motivations for participation; moreover, participation by third parties with differing motivations has different effects on dispute settlement and compliance. In particular, third parties that claim to have ‘systemic interests’–a legal designation that allows them to participate despite their negligible stakes in a dispute–have considerable influence on dispute resolution. Specifically: (1) their briefs provide higher-quality information than other third-party briefs to panels and the Appellate Body; (2) they help to accelerate dispute settlement; and (3) their participation makes respondents more likely to comply with panel and Appellate Body rulings. WTO, third parties, trade disputes, legalization, trade laws, systemic interests, panels, Appellate Body