The (Domestic) Power of Legalization: U.S. Support of WTO Dispute Settlement
Alex Thompson
Department of Political Science
Ohio State University
PUZZLE
Why did the U.S. spearhead dispute settlement reform during the Uruguay Round (1986-1994)?
Theoretical puzzle:
– Realism
– Bargaining Power
– Delegation to IOs
– Smith 2000
EXISTING EXPLANATIONS
• Efficiency arguments• Efficient breach• Expand trade• Deep Cooperation → Enforcement
– Problems: Don’t explain U.S. support Don’t explain timing
• Commitment argument• End of Cold War (Goldstein & Gowa 2002)
– Problem: Empirical
STATE LEADERS AND IOs
Relative to other domestic actors, executives benefit from shifting policy issues to the international level.
• Agenda setting• Control• Information/expertise• Bargaining advantage
Literature: Moravcsik 1994, Drezner 2003, Brewster 2004
Argument:
By shifting the resolution of trade disputes to the international level, the President gained influence relative to Congress, even at the risk of diminishing U.S. influence over its trading partners.
Implication 1
Divergent preferences: President and Congress in mid-1980s.
• Trade deficit on the rise in early and mid-1980s• # of AD petitions going up in 1980s—peak year is 1985• # of trade bills introduced in Congress increases
dramatically in mid-1980s– Senate aide in 1985: “The target isn’t the Japanese; it’s the
White House” (Destler 1992)
• Omnibus Trade and Competitiveness Act of 1988– Explicitly designed to check President’s power
U.S. BOP (Millions of $)
-160000
-140000-120000
-100000
-80000
-60000-40000
-20000
020000
4000019
70
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
Implication 2Intentionality: Evidence that Executive branch
sought DS reform for hypothesized reason.
• Executive branch backlash against pressure from Congress- USTR Carla Hills warned the Senate that “Unilateral retaliation can undermine the very system of international rules we are trying to promote and expand in the Uruguay Round.”
- Letter from Reagan cabinet to House Speaker: “Proposed amendments…would have enormous trade chilling effects, would likely provoke retaliation and mirror legislation, and would flatly violate our international obligations…..We cannot accept the premise that the test of a ‘tough’ trade bill is the extent to which it removes Presidential discretion.”
• Interviews: Confirm that domestic balance of power was
a consideration
Implication 3
President advantaged in practice under WTO DSM.
• Commerce official: The new DSM “allows us to raise concerns in a non-threatening manner.”
• USTR official: WTO rulings “give legitimacy to our claims, which helps us with foreign governments and with Congress.”
• International legal rulings offer hands-tying benefits, political cover for leaders (Reinhardt 2003; Allee & Huth 2006)
• Result is sticky: DSU remains despite complaints and calls for reform from Congress
CONCLUSIONS
• Better understanding of an intrinsically important case
• Legalization literature too state-centric (Goldstein & Martin 2000)
• Domestic politics explanation for why powerful states delegate to IOs
Growth of World Merchandise Exports
0
2000000
4000000
6000000
8000000
10000000
12000000
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