infonet-economy

Over the past decade, the WTO dispute settlement system has continued to be used extensively, contrasting with the very few disputes taken to inter-state adjudication under FTAs. This paper discusses the causes of this discrepancy, arguing that, besides specific procedural difficulties, it may be explained by a more structural difference between adjudication in a multilateral and in a bilateral setting. The WTO's global scope and the collective surveillance established by the DSU ensure that findings of breach harm a wrongdoer's reputation and mobilize community pressure for compliance. Because adjudication within an FTA cannot mobilize the same multilateral forces, it may not only be less effective than WTO adjudication – it may also be perceived as less effective than unilateral retaliation.