# **2.2 Which policies do WTO disputes challenge?**

Next we describe the types of policies that WTO members typically challenge under formal dispute settlement. We provide three related characterizations of the policies under dispute which subsequently help us structure our formal empirical analysis: i) whether the policies affect particular imported products, as opposed to general import conditions, services imports, or even exports; ii) whether the policies were newly imposed or ‘old’ in the sense that the respondent failed to sufficiently reform them in order to bring them into compliance with new commitments in the agreement; and iii) whether the policies are applied on a ‘global’ or ‘partial’ basis – i.e., whether the respondent’s alleged policy is applied to all of its trading partners or if some are excluded.

Table 1 provides a detailed summary of the breakdown of policies challenged under WTO dispute settlement cases during the 1995-2011 period that we describe in the next three subsections.

# **2.2.1 Policies that affect imported products versus general imports, services, or exports**

Begin with Table 1 and our working definition of a WTO dispute, under the bilateral (complainant respondent) pair, non-redundant characterization there were 427 initiations taking place between 1995 and 2011. Our first step is to separate the dispute settlement caseload into alleged WTO-inconsistent policies that affect exports versus those that affect imports. We find 41 disputes that affect exports, and thus we focus our analysis on the remaining 386 WTO disputes that address import policies, noting that these make up 90.4 percent of all disputes.<sup>6</sup> In general, we note that there are a number of research contexts in which it may be important to treat disputes over export policies differently from disputes over import policies. For example, below we use the primary litigants’ (complainant-respondent) bilateral trade data in disputed products to reveal

> 6 Specifically, we classify all disputes over alleged export subsidies, or violations of the Agreement on Subsidies and Countervailing Measures Article 3.1(a), as disputes over policies affecting exports, under the assumption that the complainant is concerned with the subsidy’s impact on common exported products to third-country markets.  We also classify as export policy disputes the much smaller number of cases over export restrictions, such as the disputes filed in 2009 against Chinese export restrictions on raw materials.  The complainants in these disputes argued that Chinese export restrictions increased world prices for these commodities while at the same time subsidizing Chinese producers that use these as inputs.  Although such policies are also likely to have market access implications for foreign producers (e.g., complainant exporters) in China by raising their input costs for raw materials, the resulting market access at stake would be in downstream (user) products, such as steel, and not the raw material inputs. Examination of the downstream market access implications of such policies requires inputoutput mapping and data on the specific downstream products affected by the export restrictions on the inputs. While it would be interesting to examine both these types of (excluded) disputes as well as an extended analysis of our import policy (included) disputes to assess their indirect and downstream market access implications, such an exercise is beyond the scope of the current paper.

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