Firms’ Integration into Value Chains and Compliance with Adverse WTO Panel Rulings

Abstract

AbstractThis article aims to account for the variation in the time it takes for WTO Members to bring compliance following adverse panel rulings. It seeks to answer the question: under what conditions do defendants swiftly implement adverse rulings of WTO panels? I demonstrate that defendants are more likely to comply without delay when the targeted measures involve firms that are integrated into regional and global value chains. When a dispute touches upon the interests of these firms and targets import-restricting measures, they are triggered to mobilize and press for compliance because they rely on foreign imports. In effect, the mobilization of these firms changes the domestic political conditions in favor of timely implementation. I show the plausibility of my argument in a comparative design with four case studies in which the US and Canada acted as defendants in WTO disputes. I control for a number of political factors and also consider legal sources of variation – i.e. the complexity of the form of implementation – that may impact WTO Members’ record of compliance.