WTO dispute settlement, transparency and surveillance

The incentive for governments to negotiate and abide by international trade agreements depends in part on the effectiveness of enforcement provisions. Enforcement is particularly important for developing countries, which will rarely be able to exert credible threats against large trading entities that do not abide by the negotiated rules of the game. In this paper we have discussed some of the systemic aspects of the enforcement problem. Since the WTO rests on decentralised enforcement of international obligations (the ultimate remedy being an authorisation to adopt bilateral countermeasures), it inherits all of the asymmetries that arise when there are substantial differences in bargaining power. Standard solutions suggested in the economic literature to address this problem include multilateralisation of sanctions and the adoption of remedies that deter transgressions (e.g., compensation). Moving in this direction would benefit developing countries, who are mostly 'small' in terms of the leverage they can exert. However, moves towards multilateral enforcement or compensation are unlikely to prove politically feasible. Progress may be easier in the two other areas discussed in this paper: enhancing transparency and information, and adopting more efficient and effective DSP procedures. A combination of efforts that focus on these two dimensions of enforcement could significantly improve the incentives for developing countries to participate in WTO DSP and increase their sense of 'ownership' of the institution.