# **3.2 WTO disputes and the levels and scope of imported products**

First consider the trade statistics for the 308 WTO disputes involving import policies that can be mapped to HS-06 products. We identify potential heterogeneity across the broad caseload through examination of three different variables related to the disputed imports: the scope of product coverage, the potential dollar value of impacted trade flows, and the bilateral import market shares.

**_A significant share of WTO disputes involves small amounts of trade and few products, while a significant share involves large amounts of trade and many products._**

Figure 2 presents our first important result which is evidence of vast heterogeneity in bilateral imports between the complainant and respondent across disputes. The distributions of both product counts and the value of trade in bilateral disputes are both monotonically decreasing, with extremely long tails (truncated in the Figure). First, 17.2 percent of cases covered only one HS-06 product, and 14.0 percent of cases involved annual bilateral trade in disputed products that covered less than $1 million per year.<sup>15</sup> Such a large number of small stakes disputes is perhaps surprising, given that the _minimum_ private sector legal fees for litigating even a relatively simple dispute through to the basic Panel Report stage are likely to range from $250,000 to $750,000, depending on the law firm involved.<sup>16</sup> On the other hand, 19.5 15 There are 17 disputes, or roughly 6 percent of this sample, for which bilateral trade in the disputed product is zero in the year prior to the alleged policy violation under dispute. We are generally able to rule out the potential concern that these are disputes with sizeable imports that are simply being unreported in the data, perhaps due to miscoding of the disputed products. For example, in 8 of these disputes, the data reveal positive respondent imports in the disputed product from some other exporting country. Furthermore, in 7 other disputes <mark>we observe positive levels of bilateral trade for the disputed product in the year of the violation (just not the year before), suggesting that the violation is occurring in the same year that the complainant starts exporting to the respondent. Finally, the other disputes also appear related to issues of market entry; e.g., Argentina initiated a dispute attempting to remove policies that would allow it to enter the Indian pharmaceutical market, New Zealand initiated a dispute attempting to remove strict phytosanitary barriers so as to enter the Australian apple market, and the Ukraine initiated a dispute against Moldova’s environmental restrictions.</mark> 16 This is based on confidential interviews with a small sample of private sector lawyers based at different law firms with significant experience working on WTO litigation. Each was given the following identical hypothetical scenario, “Suppose your firm were to litigate from inception through the Panel Report (only, no appeal) a relatively straightforward WTO dispute between two transparent and small countries. As a more concrete example, suppose the litigants are two Central American countries and you are hired by the complainant to pursue a formal dispute over the other country's allegedly WTO-inconsistent application of an antidumping duty. Assume furthermore that this particular dispute did not involve supplemental costs such as hiring expert economic witnesses or providing other outside technical expertise. What is your best estimate for what the minimum charge to the client in litigation fees would be for the work?” This is in line with what we note is even the Advisory Centre on WTO Law’s estimated charges of $200,000 to its Category B members (ACWL, 2007); i.e., the true costs to the Advisory Centre for legal services provided are also _subsidized_ by its endowment (established from high-income country donors) and membership fees.

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