Three's a Crowd: Third Parties and WTO Dispute Settlement

Abstract

Disputes filed at the World Trade Organization (WTO) are attracting a growing number of third parties. Most observers argue that their participation influences the institution's rulings. The authors argue that third parties undermine pretrial negotiations; their influence on rulings is conditioned by this selection effect. They test their hypotheses, along with the conventional wisdom, using a data set of WTO disputes initiated through 2002. Consistent with the authors' argument, they find that third-party participation lowers the prospects for early settlement. Controlling for this selection effect, the evidence also suggests that third-party support increases the chances of a legal victory at the WTO.