The Globalization of Production and the Politics of Dispute Initiation at the World Trade Organization

This Paper investigates how the growing fragmentation of global production affects WTO members’ decision to initiate trade disputes at the WTO. We formulate the expectation that WTO members are more likely to initiate disputes against trading partners with which they are highly integrated in GVCs. This is so because policymakers in such potential complainants both face strong pressures from firms seeking the removal of barriers that hamper the smooth operation of global production networks, and have higher expectations that a formal WTO dispute will result in compliant policy change in the defendant. We test this hypothesis drawing on a dataset of potential WTO disputes involving the US as complainant in the 1995-2014. The dataset is constructed on the basis of information on market access barriers that negatively affects US exports of goods and services contained in the National Trade Estimate Report on Foreign Trade Barriers published annually by the US Trade Representative. We examine the effect of GVC integration the likelihood of dispute initiation, as well as on the time until dispute initiation, using a Cox proportional hazard model, and controlling for a number of potentially-confounding factors.