The Politics of WTO Enforcement Mechanism

This paper analyzes the influence of domestic political considerations by disputing governments on the WTO enforcement outcome, following a violation ruling against the defendant. Since a different mix of import or export sectors in the disputing countries will benefit from the alternative enforcement outcomes – compliance, compensation, retaliation, and the status quo, they become competing forces that steer the strategic interactions between the disputing governments. This paper first studies the complainant’s retaliation capacity and strategy in formulating the retaliation list, and then examines the scope of settlement possibilities between the disputing parties. The results of the paper provide a synopsis of the disputing governments’ political payoffs under the alternative enforcement scenarios and the conditions that determine the outcome of the implementation.