Costly Procedures: Divergent Effects of Legalization in the GATT/WTO Dispute Settlement Procedures

Increasing legalization of international institutions has divergent effects on member countries. Whereas legalization decreases uncertainty and increases convergence of countries' expectations on international outcomes, it imposes costs on countries by increasing the complexity and difficulty of procedures for them to utilize. Countries with the administrative capacity to follow elaborate procedures reap the benefits of increased legalization. For countries without such capacity—primarily developing countries—the potential benefits are offset by their difficulty in following the procedures. I examine this argument against the institutional changes in dispute settlement procedures that occurred in the transition from the General Agreement on Tariffs and Trade (GATT) to the World Trade Organization (WTO). Compared to the GATT era, developed countries—ones with greater capacity—are much more likely to utilize dispute settlement in the WTO than developing countries. Gains from the institutional changes in dispute settlement procedures have accrued to benefit mostly developed member countries in the WTO.