Standard of proof in WTO dispute settlement proceedings: an applied statistical perspective

This paper proposes a statistical framework for establishing prima facie evidence in WTO proceedings in which empirical evidence and statistical analysis play an important role. As our main contribution, we suggest a general guideline for the choice of the significance level in a statistical analysis, in order to meet the requirements for establishing prima facie evidence of a claim. We consider a fundamental asymmetry between whether a complainant's initial claim is positive or negative. Statistically, a positive claim is one in favour of the alternative hypothesis, whereas a negative claim is one in favour of the null hypothesis. To account for this asymmetry, we suggest using different significance levels for positive and negative assertions, respectively. For positive claims, we suggest using the most commonly applied significance level of 5%. For negative claims, we suggest the less strict (but still commonly accepted) significance level of 10%. Choosing a less strict significance level in the case of a negative claim than in the case of a positive claim accounts for another fundamental asymmetry between the two possible outcomes of a statistical hypothesis test: rejecting the null hypothesis or not. Our framework helps to define reasonable hurdles in WTO proceedings to substantiate claims using statistical methods while leaving enough leeway for the panel and the Appellant Body to make adjustments on a case-by-case basis.