reviews of members’ practices. Nevertheless, nearly all enforcement cases at the
WTO come from interested parties, not from the WTO’s own eVorts.
Both economists and political scientists have focused on the WTO’s dispute
resolution mechanism. Economists, like lawyers, typically ask whether it is optimal
from the perspective of promoting trade (Bu ̈tler and Hauser 2000 ; Hudec 1993 ;
Jackson 1998 ). They also ask whether, as structured, it is eVective in reaching this
goal. These studies generallyWnd that, while the WTO mechanisms are not fully
optimal, over time the development of these mechanisms has been moving in the
right direction. Rules that allowed the blatant exercise of state power, such as the
ability to veto panel decisions, have been phased out. It has become easier for states
without extensive legal and administrative capacities to initiate the dispute process.
Overall, as the system has become more institutionalized and legalized, in norma-
tive terms it has come closer to meeting the demands of economic eYciency.
However, the evidence on whether these new rules are in fact operating as intended
remains quite mixed.
Political scientists, in contrast to the normative focus of economists, tend to
focus on the distributional eVects of the dispute settlement mechanism, for
example whether it tends to favor larger or smaller states. This leads them to
consider questions such as which states bring complaints more often and against
whom. They also focus on the patterns of settlement, asking which cases are
resolved early and which go through the full process, and attempt to make
judgments about which states most often prevail in these disputes. Marc Busch
( 2000 ) has focused on the formation of dispute settlement panels, asking which
cases actually escalate to the panel stage as opposed to being settled at an earlier
stage. This question is fundamental, because the evidence shows that the threat of
future legal proceedings tends to generate larger levels of concessions if disputes are
settled early; states are threatened as much by the process itself as by the actual
decision (Reinhardt 2001 ). However, BuschWnds that changes in procedures have
not substantially altered paneling outcomes. Busch and Reinhardt ( 2003 ) similarly
Wnd that improved WTO procedures have not, in fact, allowed poor countries to
achieve better outcomes. Instead, wealthier countries have tended to do better,
suggesting that the capacity to litigate is an important component of success.
Overall, the theoretical and empirical studies of the GATT/WTO suggest that the
demands of politics and power continue strongly to inXuence international trade
outcomes, in spite of higher levels of institutionalization over time.
Beyond the WTO, another notable development in the institutionalization of
trade has been the proliferation and strengthening of regional trade organizations.
Dispute settlement is a prominent feature of regional trade organizations, as it is of
the WTO. James McCall Smith ( 2000 ) asks about variation in the legalization of
dispute resolution mechanisms, andWnds that it is largely explained by asymmetry
in the powers of states that belong to the organizations. Small states prefer legalized
mechanisms that bind powerful ones, while powerful states prefer to avoid legal
international economic institutions 663