In an era dominated by uncertain geopolitics, the World Trade Organization (WTO) offers an avenue for dispute resolution based on negotiations and an impartial litigation process through its Dispute Settlement Mechanism (DSM). Drawing on all WTO disputes from 1995 to 2016, this thesis develops a theory of proximity. It posits that increased third-party proximity increases main parties' reputational and bargaining costs, decreases the cost of litigation and incentivizes panel ruling instead of early settlement, and employs probit regression to estimate how third‑party multilateral trade agreements (MTAs) influence early settlement probabilities. Results show marginal effects of 5 and 12 percentage points decrease in early settlement for every standard deviation increase in MTA Count and Depth, respectively, while trade volume shows mixed, insignificant results when other variables, including third-party presence and count, are held constant. These findings indicate that legal, not merely economic, proximity shapes bargaining dynamics in the WTO, suggesting that the WTO Secretariat and disputing members should prioritize monitoring institutional networks when allocating mediation resources, and that governments might strategically cultivate, or limit, their MTA portfolios to influence dispute outcomes.
Muhammad Fawwaz Ghazy Hafizh (Sun,) studied this question.