A trade balance: litigation and negotiation in the World Trade Organization's dispute settlement system

The establishment of the World Trade Organization (WTO) has been widely accepted as representing the legalisation of world trading rules. However, it is important to reflect on the limits of this legalisation thesis in terms of the interface between international and domestic policy processes. By locating trading disputes in a political analysis of policy implementation, it is argued that it is difficult to establish conceptually how the WTO dispute settlement system could have authority separate from and above the conventional international politics of trade policy relations. Instead, the article argues that case outcomes should be expected to be largely the product of domestic political institutions and policy processes, and how these intersect with developments in the WTO dispute settlement system. Brief studies of the Australian government's dispute settlement strategy and two high-profile WTO disputes-the US upland cotton and European Union sugar cases-serve to suggest that the authority of international trade law is not as significant as assumed by the legalisation thesis. Rather, domestic politics and institutions have an important impact on the outcome of trade disputes.