Do WTO disputes actually increase trade?

Exporters, trade lawyers, policy makers, and academics see the WTO’s Dispute Settlement Understanding as an important, though costly, venue for facilitating the removal of harmful barriers to trade. If this conventional wisdom holds, then disputes should increase trade. We provide a careful analysis of trade flows in the wake of WTO disputes. We find that WTO disputes do not increase the respondent country’s imports of the products at issue. Instead, our analysis shows very narrow effects from disputes. These depend on the dispute outcome and issue area. Although we find variation across countries in their responsiveness to disputes, no single explanation accounts for this variation. Our evidence casts doubt on arguments that dispute settlement promotes trade between members.