Precedential Power: The Role of the United States in Shaping International Law at the World Trade Organization

Where does precedent in international law come from? Because the efficacy of international courts depends on the efficiency with which they can deal with disputes, they must be able to deter future disputes. Deterrence rests on the availability of precedent (a public good), but because it is costly to generate precedent, powerful states must take on the cost of leadership. In this paper, I investigate the relationship between power and precedent by analyzing dispute settlement at the World Trade Organization (WTO). Borrowing insights from hegemonic stability theory, I argue that it is precisely the strategic nature of WTO dispute settlement that makes powerful states--namely, the United States (US)--willing to supply precedent. This theory accounts for three empirical insights regarding WTO dispute settlement: (1) the US, counterintuitively, tends to file low-stakes cases, (2) cases filed by the US yield a greater precedential value for the broader WTO membership than their counterparts, and (3) the US tends to shape the precedent that it does create in its favor. Statistical analysis using Bayesian estimation provides evidence in favor of the hypotheses. My results suggest that power undergirds the politics of WTO law.