Governing the court: Political economy of the WTO dispute settlement system

International law and legal institutions have played an increasingly significant role in contemporary world politics. The most distinctive development in the recent legalization phenomena is the “judicialization” of dispute settlement (DS) mechanisms of trading regimes. My dissertation explores the causes and effects of a legalized DS mechanism, focusing on the World Trade Organization (WTO). I present three key features of the legalized DS system: clear substantive rules, well-defined procedural rules, and independent legal bodies with delegated authority in interpreting those rules. I argue that, due to these features, the legalized DS system produces (1) an efficiency improvement effect, (2) a utility enhancement effect, and (3) a distributive effect that results from the content of law, application of law, and unevenly distributed efficiency gains.; The dispute settlement under the GATT/WTO and the Uruguay Round negotiations provide a vital empirical base for examining the causes and effects of the legalized DS system. A statistical analysis of the GATT/WTO dispute data and a case study of the UR negotiations reveal following interesting findings.; First, there exist tradeoffs between the stronger-actor-favorable content of law and the weaker-actor-favorable application of law in the WTO system. Second, the DS system of the WTO, as compared with the former GATT system, reduces the time span for concluding disputes, which implies that the member states have achieved efficiency gains by reducing the transaction costs for dispute resolution. Third, the dispute outcomes during the WTO period, as compared with those during the GATT period, reveal narrower variation and less uncertainty. By reducing the risk involved in dispute resolution, the WTO DS system improves utility for the disputing states. Finally, the Uruguay Round negotiations over the choice of DS mechanisms demonstrate that the establishment of the WTO DS system was the bargaining outcome that the US most preferred and the EC/Japan less preferred. By threatening the implementation of the unilateral DS mechanism in the case of nonagreement, the US changed the overall strategic structure of the bargaining and succeeded in creating the DS system that reflected the US's best interest.