The Politics of Forum Choice for Trade Disputes: Evidence From U.S. Trade Policy

This paper examines how interest group pressure influences the choice of trade negotiation strategies. Political economy studies have largely focused on explanations of protectionism, and export promotion has received less attention. Similarly, institutional studies give more attention to why states choose to violate or comply with international rules, without examining the decision by states to use an institutional venue to challenge violations. Yet the reciprocal nature of trade policy and member driven enforcement of trade rules both depend upon actions by states to pressure trade partners for market access. This paper presents a framework for understanding how lobbying by interest groups influences the choice of negotiation forum for trade disputes. I argue that governments use choice of negotiation forum to signal commitment to resolve a dispute. I show that this dynamic pushes the most politicized trade problems into WTO fora, while other issues are likely to be dealt with in other negotiation venues. Governments choose the WTO fora because the binding commitments and enforcement mechanism of the WTO show domestic lobby groups that their issue is receiving priority. Industries with high political contributions use their influence to buy litigation to gain market access. The argument is tested with statistical analysis of an original dataset of trade barriers and the selection of negotiation strategies by the United States. Evidence shows that U.S. selection of WTO disputes follows a political logic favoring industries that are highly mobilized in the U.S. and where there is strong opposition by protection interests abroad. Increasing levels of trade that accompany globalization generate both wealth and conflict as states confront each other with demands for market access and protection for sensitive industries. The World Trade Organization helps states manage this conflict through a common set of negotiated multilateral rules and a formal dispute settlement system. Theories address why states design institutions with adjudication mechanisms and how reputation penalties encourage compliance with legal rulings (Keohane et al., 2000; Maggi, 1999). Research has also shown the domestic political constraints that lead states to violate agreements they have signed (Rosendorff, 2005). Less is known, however, about the conditions that lead states to challenge non-compliance. By studying the use of WTO adjudication as a trade policy choice taken in a context of multiple negotiation fora, I address a central issue about the monitoring and enforcement of international law. While a growing literature examines WTO adjudication, few compare the choice of adjudication with alternative strategies. Since its establishment in 1995, the dispute settlement system of the WTO has been used for litigation of over three hundred trade disputes. Research has focused largely on explaining outcomes for these cases (e.g. Busch, 2000; Reinhardt, 2001; Guzman and Simmons, 2002; Bown, 2004a). The complaints filed for adjudication, however, represent a small fraction of the total number of policies in violation of WTO agreements. In trade policy, the parallel process of creating regional trade associations, participating in the multilateral trade system, and concluding bilateral arrangements has resulted in overlapping jurisdictions. Each institutional forum varies in the level of legalization. Yet many trade issues could conceivably come up in any of these negotiation fora. What determines why one trade barrier is raised in a formal complaint for adjudication while others are negotiated in different venues or simply monitored without any