PAYING TO LOSE? DOES IT PAY OFF TO ADVANCED ECONOMIES TO SUPPORT THE WTO?

Analyzes of the outcomes of the Dispute Settlement (DS) system of the World Trade Organization (WTO) have focused on identifying the effects that the outcomes of disputes have on trade balances and the factors that contribute for different levels of impact on trade balances. Out of a concern for not just what the outcomes are but what they mean, this paper argues that effects on trade balances are just one part of the full impact of the outcomes of disputes, and that the other part is how the effects on trade balances affect the economy of each party in the dispute. The ultimate effect of the outcome of a dispute is not how it changes trade balances, but how the change in trade balances that is caused affects the economic condition of the countries involved. A concern for the actual significance of the outcomes of the DS system to each country thus requires factoring in the distinct effects that outcomes have on each country's economy due to the differences in the economic makeup of countries. After developing this argument and elaborating on the measurement of the impact of changes in trade balances on the economic condition of countries, a proxy measure is operationalized and applied to a selection of countries. Findings suggest that it is questionable whether the US reaps relative gains consistent with its relative economic position and budget allocations, but further research is necessary before a sensible conclusion can be reached. [ABSTRACT FROM AUTHOR]