2007-05 Why are so many WTO disputes abandoned?

Previous research on the success of the WTO dispute settlement system may miscalculate the true benefits of the dispute process due to the nature of the datasets used. Approximately 33 percent of all disputes filed at the WTO are classified as pending or inactive, and thus omitted from most studies. Further investigation reveals that many of these inactive cases were actually settled by the countries involved or considered in a similar WTO dispute and, as a result, no further WTO action was taken. This suggests that the WTO dispute settlement process may be more effective in resolving disputes than otherwise thought. For those disputes not successfully resolved, I empirically estimate why countries may choose to initiate WTO dispute settlement action but fail to follow through, thus allowing the offending party to continue with the alleged WTO-illegal activities. The results suggest that developing countries are less likely to resolve their complaints in the WTO dispute settlement system, a troubling implication for the equity of the system.