International Trade - Theory and Policy, 2010a

toward the defendant country. To be fair, the rescission must have an effect on the defendant that
is approximately equal in value to the cost imposed by the defendant’s violations.
Dispute Settlement History
Since the WTO began in 1995 there have been over four hundred disputes brought to the DSB. A complete
listing can be found at the WTO Web site here
(http://www.wto.org/english/tratop_e/dispu_e/dispu_status_e.htm). A large number countries have been
complainants and defendants although the two countries most often on one side or the other are the
United States and the EU. Some of the most well-known disputes have involved bananas, steel, hormonetreated
beef, and commercial aircraft. Lesser-known cases have involved narrow product groups such as
Circular Welded Carbon Quality Line Pipe, Canned Tuna with Soybean Oil, Combed Cotton Yarn, and
Retreaded Tires.
Many cases have been raised once, sent to consultations, and then never raised again. In some cases,
consultations are sufficient to settle the dispute. Many other cases proceed to panel formation, appeals,
and resolution. In many cases, defendants lose and eventually change their laws to comply with the WTO
decision. In other cases, defendants lose and because of their refusal to comply, or their procrastination in
complying, complainants suspend concessions. In a few cases, countries have refused to comply and faced
no consequences. Occasionally, a defendant wins its case against a complainant.
Overall, the WTO dispute process has worked reasonably well. The cases brought, because they are often
targeted to narrow industries, do not affect a huge amount of international trade. Nonetheless the
existence of a forum in which to register disputes and a mechanism for resolving them (one that includes
some penalties for violations) has had a notable effect of reducing the risk of international trade.
Traders know better what to expect from their trading partners because their partners have committed
themselves to particular trade policies and to a resolution mechanism in the event of noncompliance. In a
sense, then, it is true that the WTO agreements restrict the freedom of a country to set whatever trade
policy it deems appropriate for the moment. That loss of sovereignty, though, is designed to prevent
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