Dispute Settlement and Developing Countries Utkarsh SinghRoll No. 1045

I. IntroductionThe Dispute Settlement Understanding (DSU) of the World Trade Organization (WTO) was one of the key outcomes of the Uruguay Round of multilateral trade negotiations. For some it is perhaps the most important outcome.[footnoteRef:2] The legalized dispute settlement system of the World Trade Organization (WTO) has been hailed as a new development in international economic relations in which law, more than power, might reign. Nowhere has the international rule of law advanced more than in trade law. And yet, such declarations beg the question of who predominantly uses the legal system, who prevails, and how does it affect bargaining in the systems shadow? Can the legal system work for smaller countries and, in particular, for small developing countries? To what extent has legal capacity the ability to mobilize legal resources to prepare and litigate a WTO case replaced the premium provided by market power?[footnoteRef:3] [2: David Palmeter and Petros C. Mavroidis, Dispute Settlement in the World Trade Organization, 16 (2nd. Edn., Cambridge University Press, Cambridge, 2004).] [3: Shaffer, Gregory C., Developing Country Use of the WTO Dispute Settlement System: Why it Matters, the Barriers Posed (December 23, 2008). Minnesota Legal Studies Research Paper No. 08-50; Minnesota Legal Studies Research Paper No. 08-50. Available at SSRN: http://ssrn.com/abstract=1320222 (last visited on Sep. 15, 2011)]

This dispute settlement mechanism was an outcome of a compromise between the negotiators. On one hand, members wanted a strong dispute settlement system and on the other they wanted a weaker enforcement mechanism. This was to balance the interests of negotiators who were aware that their countries may be involved in WTO dispute settlement as both complainants and defendants, so they wanted to insulate themselves from both sides.[footnoteRef:4] As complainants, they wanted their case to be heard under a rule-based system and as defendants they wanted to have the policy space not to implement the Dispute Settlement Body (DSB) rulings which are politically sensitive or which are against their interests. Thus, it should be clear from the onset that a weak enforcement mechanism was intended and was an outcome of a compromise. Although the enforcement system is weak, developed countries are able to induce fellow developed and developing countries to comply with DSB rulings. They can effectively use retaliation, or the threat thereof, in most cases. On the contrary, developing countries allege that they cannot effectively use retaliation against developed countries due to the fact that their economies are weak. The main problem therefore is that developing countries are left without any effective remedy in the WTO dispute settlement.[footnoteRef:5] [4: John H. Jackson, The Jurisprudence of GATT & the WTO, 121 (Cambridge University Press, Cambridge 2000). ] [5: Davey, William J. , The WTO Dispute Settlement System: How Have Developing Countries Fared? (November 30, 2005). Illinois Public Law Research Paper No. 05-17. Available at SSRN: http://ssrn.com/abstract=862804]

This article examines not trade barriers as we conventionally conceive of them but rather the barriers posed for smaller and poorer WTO members to challenge trade barriers. This note will go ahead to examine and analyze the other side of the coin as well, which is whether the system is well suited to serve the interests of the developing countries as well and they need to take unilateral action at a domestic level to overcome the perceived obstacles in being an active participant in the WTO Dispute Settlement.II. Why Dispute Settlement Matters? : The Indispensable Need for Developing Countries to ParticipateParticipation in the WTO dispute settlement system can matter in four primary respects. First, it matters in specific adjudication to the extent that WTO legal decisions affect specific economic outcomes, as they have done. Chad Bown found that these concessions have mattered economically.[footnoteRef:6] Three years after the date of adoption of a WTO judicial decision in favor of the complainant, imports of the complainants affected goods increased substantially into the respondent member. In other words, WTO dispute settlement has tangible effects by providing greater market access for individual industries. [6: Chad P. Bown, Participation in WTO Dispute Settlement: Complainants, Interested Parties and Free Riders, World Bank Economic Review (forthcoming 2012)]

Second, and conversely, the failure to participate in WTO dispute settlement can have terms-of-trade effects that adversely affect the overall social welfare of a country. If an importing country raises a trade barrier and that country exercises market power so that foreign exporters must lower their prices in order to sell in its market, then the exporting countrys terms of trade are prejudiced.[footnoteRef:7] That is, the exporting country will need to sell a greater amount of its products (at the lower price) in order to obtain the same amount of imports. The removal or curtailment of the trade barrier following a successful WTO complaint can thus improve a countrys terms of trade and overall social welfare because its exporters will no longer need to reduce their prices to overcome the foreign market access barrier. As Bagwell and Staiger state, the terms-of-trade consequences of trade-policy choices can be expressed equivalently in the language of market access, and so the terms-of-trade consequences and the market-access implications of trade-policy choices are different ways of expressing the same thing. Whereas the first reason for participation focuses on the market access benefits to an individual industry, this second reason focuses on the welfare of a country as a whole on account of terms-of- trade effects. [7: John H. Jackson, The World Trading System, 173 (The MIT Press, Cambridge, Mass., London, 1997).]

Third, systemically, participation matters where WTO jurisprudence shapes the interpretation, application, and social perceptions of the law[footnoteRef:8] over time and thus affects future bargaining positions in light of these understandings. Just as in domestic law, the outcome of an individual WTO case has not only a tangible component but also a broader systemic one. The tangible component is that a measure is found to either violate or comply with a legal obligation, and if it is in violation, it gives rise to a remedy, both benefiting the exporter and (potentially) a countrys terms of trade. The systemic component affects the understanding of the laws application in subsequent cases. In short, participation affects the framing of cases, which affects judicial interpretation, which affects what the law means over time. As an interviewed developing country delegate states, what they [panels] do is fill in the gaps of trade agreements; what they do is to finish the job negotiators did not perform, perhaps as part of an intentional compromise, when negotiations failed to define a provision with much precision, leaving its meaning to be resolved in the future. Those who participate in WTO cases help to define that meaning through case law. [8: Petros C. Mavroidis, Judicial supremacy, judicial restraint, and the issue of consistency of preferential trade agreements with the WTO: The Apple in the picture in Daniel L.M. Kennedy and James D. Southwick (eds), The Political Economy of International Trade law, 583 (Cambridge University Presss, Cambridge, 2002).]

This systemic component leads to the most important fourth, and related, point. WTO law can affect domestic and bilateral political bargaining in the shadow of a potential case without any formal complaint being filed.[footnoteRef:9] Domestically, the WTO legal system gives governments leverage over economic sectors that demand protection. Governments can now argue that such protection is costly because it can result in authorized trade retaliation. Blonigen and Bown, for example, found statistical evidence that suggests that retaliation threats substantially affect US AD [antidumping] activity from 1980 through 1998 by making it both less likely [for private petitioners] to name a foreign import source in an AD petition and government agencies less likely to rule positive in their AD decision. WTO law also provides strategic actors with arguments that they may deploy in domestic political debates regarding regulatory initiatives. [9: Gregory Shaffer, How to Make the WTO Dispute Settlement Work for Developing Countries: Some Proactive Developing Country Strategies in Towards A Development-Supportive Dispute Settlement System in the WTO, ICTSD Resource Paper No. 5, Geneva, 2003, 1; Gregory C. Shaffer, Defending Interests: Public-Private Partnerships in WTO Litigation, Brookings Institution Press, Washington, D.C., 2003, 161.]

III. Statistics on the Systems use: The Number GameAcademics have increasingly mined statistics on the use of the WTO dispute settlement system to examine who are the primary participants and which of them are most successful. A number of scholars have examined how developing countries have fared compared to developed countries.The statistics show that the United States and EC remain by far the predominant users of the WTO legal system and thereby are most likely to advance their larger systemic interests through the judicial process and through bargaining in its shadow. Although their proportion of total WTO complaints has somewhat declined in the last few years, they continue to be the systems predominant users.[footnoteRef:10] [10: B. Blonigen and C. Bown, Antidumping and Retaliation Threats, 60 (2003), Journal of International Economics, 249. ]

Nonetheless, by many measures, the legal system has worked relatively well for the larger developing countries. Because of their participation, developing countries overall relative and aggregate use of the legal system have increased significantly since the WTOs creation, as has their relative success.[footnoteRef:11] [11: Davey, William J. , The WTO Dispute Settlement System: How Have Developing Countries Fared? (November 30, 2005). Illinois Public Law Research Paper No. 05-17. Available at SSRN: http://ssrn.com/abstract=862804]

Yet as Hunter Nottage points out, five developing countries account for 60% of developing country complaints, and thirteen developing countries account for 90% of them. In total, 95 of the WTOs 120 non-OECD members had never filed a complaint before the WTO, and 62 had not even participated as a third party. As regards countries from Africa and the Middle East, none has ever been a complainant before the WTO. No country in the region has been a respondent either, besides Egypt (four times) and South Africa (three times). [footnoteRef:12] [12: T. Josling and T. Taylor (eds), Banana Wars: The Anatomy of a Trade Dispute (CABI Publishing, Cambridge, MA, 2003)]

Moreover, the statistical data likely overstate the actual in house experience of developing country officials with the legal system, experiences that could be deployed for bargaining and litigation in future disputes. For example, in a number of cases, developing countries may participate through the direct financial and legal assistance of more powerful WTO members that promote their own interests, as when the EC provided funds for fourteen ACP countries to hire lawyers in Brussels to defend their interests as a third party (and indirectly, the ECs interests as a party) in the EC-Sugar case brought by Brazil and Thailand.[footnoteRef:13] Although some of these countries Geneva representatives actively followed the legal arguments in the case, they were the exception. [13: See WT/DS27/ARB, 9 April 1999.]

The other view however, is that as in the WTO countries are developing countries by self-declaration, there is a wide disparity among countries that fall within this bracket and so all statistics pertaining to this group must be analyzed keeping this in context.Additionally, a countrys participation in the WTO DS is directly proportional to its economic size and volumes in global trade. The smaller developing countries have much lesser trade and this is an oft ignored factor while computing these statistics.The statistics are also skewed on account of the fact that there has been only one instance of EC-Bananas where a developing country chose not to exercise retaliation on account of a perceived threat and there exist no other examples of real evidence. IV. The Roadblocks in Participation: A Developing Country PerspectiveA. Legal CapacityWTO law likely casts a weaker shadow for countries that lack lawyers conversant with WTO law, which tend to be smaller developing countries. When a country is unable to mobilize legal resources cost-effectively, its threat to invoke WTO legal procedures against a country that wields greater legal resources has less credibility. It may not even consider the threat of litigation, knowing the challenges that it faces. It has less of an incentive to even study the details of WTO law, affecting what is called in socio-legal studies its legal consciousness. It is this aspect of the WTO legal system, one which is rarely examined by legal and other academics other than in passing, which most adversely affects smaller and poorer members.[footnoteRef:14] [14: Peter Lichtenbaum, Dispute Settlement and Institutional Issues, 3 Journal of International Economic Law 173 (2000)]

B. Financial EndowmentWhere large developed countries can absorb high litigation costs by dragging out a WTO case, while imposing them on weaker complainants, they can seriously constrain a countrys incentives to initiate a claim and correspondingly enhance a countrys incentives to settle a dispute unfavourably.In the case ChilePrice Band System and Safeguard Measures relating to Certain Agricultural Products, the Association of Argentine Edible Oil Industries (known by its Spanish acronym as CIARA) paid a law firm US $400,000 just to write the brief for providing a first draft of the demand and being available for specific consultations, even though this limited legal work was found to be less useful than expected. Many claims, such as Brazils against U.S. cotton subsidies, have resulted in significantly greater legal costs. In the cotton case, it is stated that Brazils cotton trade association faced legal fees of around U.S. $2,000,000.[footnoteRef:15] [15: Julio Lacarte Muro and Petina Gappah, Developing Countries and the WTO Legal and Dispute Settlement System: A View From the Bench, 3 Journal of International Economic Law 395 (2000)]

The internal costs of identifying and supporting an individual case can be higher for a developing country because of economies of scale and scope. Since developing countries export a narrower array and smaller value of exports, they are less likely to have experience in WTO litigation. They are less likely, in socio-legal terms, to be repeat players. Because they do not litigate multiple cases, as do larger countries, they do not benefit from economies of scale and scope when mobilizing resources for a single case. As a result, internal support costs in a single case should be higher for a developing country. In addition, a poor country must consider the greater opportunity costs confronting it on account of its scarce resources.Legal expenses have been rising for all WTO members on account of the growing complexity of WTO jurisprudence. The WTOs more contextualized, case-specific jurisprudence has arguably increased the demand on lawyer time. To the extent that WTO panels and the WTO Appellate Body require higher standards of proof which involve greater use of statistical trade data as opposed to legal presumptions, legal costs will continue to rise.C. Failed NegotiationsBecause of the WTO judicial systems weak enforcement powers, the judicial decision in a particular case should likewise be viewed in terms of its shadow effect on the resolution of a dispute. Cases are resolved through diplomatic negotiations (and private party bargaining behind-the-scenes) that take place in the context of, and are informed by, judicial decisions.Developing countries have been less able to settle complaints advantageously during the consultation phase, which involves a significant percentage of WTO complaints, and ones that have triggered the greatest amount of market access concessions. Developed country complainants in WTO cases saw defendants fully liberalize disputed measures 74% of the time, compared to only 50% for developing country complainants. This discrepancy expanded significantly when one excludes the largest developing countries. Seventy-one percent of the cases in which developing countries benefited from full compliance involved complaints from the largest and wealthiest developing countries (Brazil, India, Korea, Singapore, Thailand, Mexico, Chile, and Argentina). It is precisely in settlement negotiations after the filing of a complaint and before a WTO panel has issued a ruling that rich complainants are much more likely to get defendants to concede than poor complainants, holding GDP constant.[footnoteRef:16] [16: William J. Davey, WTO Dispute Settlement, 3 Journal of International Economic Law 15 (2000)]

These statistics suggest that developing countries are less able to convince a defendant of the eventual success of their case at any early stage and that a defendant may more likely drag out a legal case against a developing country plaintiff in order to impose legal costs that it is better positioned to absorb.D. CompensationCompensation is usually where a respondent offers to reduce its tariff on another product which is of interest to the complainant so as to solve the imbalance in trade which has been caused by the respondent's violation of WTO Agreements . Compensation is given on a Most Favoured Nation (MFN) basis. This remedy has attracted a lot of criticism in that it is ineffective and does not ensure compliance with DSB recommendations and rulings. In cases where the respondent fails to withdraw or amend a WTO inconsistent measure, both parties have to agree to compensation. Parties seldom reach an agreement with regard to compensation.[footnoteRef:17] [17: Asif H. Qureshi, Participation of Developing Countries in the WTO Dispute Settlement, 47(2) Journal of African Law 174 (2003)]

Compensation is prospective and not retroactive. Neither the complaining nor the responding government normally would have interest in compensation. In accepting compensation, the complaining government agrees to a solution that does nothing to the industry experiencing trade damage as a result of the non-complying measure; in offering compensation the respondent government effectively selects an innocent industry to pay the bill, in the form of less protection, for the benefits conferred on the favoured industry. Both governments are likely to look upon this exercise as a lose-lose proposition. The other criticism of compensation is that because of the MFN rule, trade compensation can be very expensive. In addition, it may be very difficult to find products on which compensation can be offered and which are of interest for the complainant. Compensation should also be attractive for the affected industry otherwise it may be difficult to sustain politically especially where the case has been initiated as a result of a complaint by the industry. Thus, the serious flaws of compensation are that it is counter productive, it does not offer relief to those actually damaged and it damages innocent bystanders. So this remedy needs to be revisited to make it more effective.E. RetaliationArticle 22 of the DSU authorizes parties to a dispute to suspend concessions or other obligations in order to induce compliance with a decision i.e. retaliation. Developing countries cannot effectively employ retaliation against developed countries. If they try to do so, it hurts them by cutting access to foreign goods and/or making those goods expensive for domestic consumers. The suspension of concessions and other obligations by the complaining party may not effectively influence the trade flows and trade policies of a developed country.[footnoteRef:18] For instance, in the EC-Bananas III case, Ecuador was authorized to apply retaliatory measures for an amount of US$201.6 million a year but found it impossible to make use of this possibility without causing severe damage to its own economy. The authorisation was given in 1999 but up to now Ecuador has not retaliated because it is not feasible. She lacks the economic muscle to wrestle against the EC. This serves to demonstrate that WTO remedies are not adequate for developing countries since they cannot always employ them due to their weaker economic position as compared to their developed country counterparts. [18: James Bacchus, Groping Towards Grotius: The WTO and the International Rule of Law, 44 (2) Harvard Journal of International Law 533 (2003) ]

V. The Road Ahead: Overcoming the Roadblocks : A Developing Country PerspectiveA. Retrospective remediesThere is a debate in the legal literature as to whether the DSU can be read as providing retrospective damages. However, the understanding of members is that the DSU is only concerned with prospective remedies. Thus, currently the multilateral trading system is about a balance of rights and obligations with WTO remedies to preserve future trading opportunities rather than to redress past injury. It is recommended that WTO law should provide for both prospective and retrospective remedies. [footnoteRef:19] [19: Kim Van der Borght, The Reform of the Dispute Settlement System of the WTO: Improving fairness or Inducing Fear, 4(2) MJIEL 2 (2007)]

The implication of this is that a member who is found to be in violation of WTO law should have the obligation both to stop the illegal act and to provide reparation for the damage suffered by the injured party. This proposal is commendable in that it will give the offending country an incentive to comply early with the rulings and recommendations of the DSB since the longer they take to comply the more they are to pay. This then removes all the present incentives for delay in the dispute settlement process especially on the implementation and enforcement of DSB recommendations and rulings.B. Member sanctionThis proposal calls for the amendment of the DSU so as to reflect that WTO members whose measures have been found to be inconsistent with their obligations, cannot bring forward a complaint on any issue against another WTO member unless they have first complied with their obligations. However, the problem with this measure is that it can lead to growing disregard of the WTO rules by a member who has been sanctioned. It is suggested that if such sanctions should be included in the WTO, they should be limited in time or even over a specified subject matter.[footnoteRef:20] [20: Roderick Abott, Are Developing Countries Deterred From Using the WTO Dispute Settlement, ECIPE News (Jan. 8, 2007) ]

C. Collective retaliation This proposal was made by India and its effect is that where a member has been found to be in violation of the WTO Agreement(s) and has failed to comply with a DSB recommendation or ruling, there should be joint action by all other members on the suspension of concession. The effect of this is that there will be withdrawal of market access commitments by all members of the WTO.[footnoteRef:21] [21: Gregorry Shaffer, Challenges of WTO Law: Strategies for Developing Country Adaptation, World Trade Review (July 2006)]

The above suggestion may work in favour of developing countries in that where a developing country could not have retaliated; collective retaliation seems to create enough pressure to induce compliance by the respondent of whatever stature. For instance, if the USA fails to comply with the recommendations or rulings of the DSB, all other WTO members including the heavy weights like the EC, China and Japan would join the retaliation process. This may induce the USA to comply because industries in the USA would put pressure on the US Government to comply. Such pressure could not be generated by small countries like Antigua and Barbuda which on their own cannot threaten the USA with retaliation.D. Financial or monetary compensation in the WTOWhere a respondent has failed to withdraw or amend a WTO inconsistent measure, the current system of remedies in the WTO provides members with a choice between trade compensation and retaliation. Trade compensation can only be achieved where both complainant and respondent agree and this is usually difficult to achieve. This may lead to punishment of innocent industries in both complainant and respondent members' territories. Retaliation distorts trade and developing countries have no muscle to retaliate against developed countries without seriously hurting their own economy. Resultantly, it is recommended that financial compensation should be introduced in the WTO dispute settlement system. Repatriation by governments of injury for which they are held liable is acceptable under public international law. The following compelling advantages of financial compensation are as follow. First, it is not trade restrictive. Second, it helps redress injury. Third, it may work better to induce compliance. Fourth, it does not lead to disproportionate burden on innocent bystanders. Fifth, it can be a disincentive to foot dragging in the implementation and enforcement process. Sixth, it is in line with general public international law and finally, it can add an element of fairness.[footnoteRef:22] [22: Hunter Nottage, Developing Countries in the WTO Dispute Settlement, GEG Working Paper Series (Jan. 2009)]

It could introduce an element of greater equity in view of the fact that developing countries that may lack sufficient retaliation power can be compensated financially. This remedy is practical and achievable, and is in the interest of developing countries so it should seriously be considered in the ongoing DSU negotiations.VI. The Other Side of the Coin: Overcoming Constraints InternallyIn a very recent paper, Bohanes and Garza argue that all of the problems generally posed as dissuading developing countries from participation are ones that can be overcome by developing countries themselves by undertaking capacity building measures and fostering public-private partnerships within their trade community internally, that is at a domestic level.[footnoteRef:23] [23: Jan Bohanes and Fernanda Garza, Going Beyond Stereotypes: Participation of Developing Countries in WTO Dispute Settlement, 4(1) Trade, Law & Development 45 (2012)]

In brief their findings are, first, participation of developing countries in the WTO dispute settlement system is a reflection of a broad range of factors. It is difficult to generalize, given the vast differences between those WTO members that are labelled as developing. Moreover, many factors influence a governments decision to litigate, and these factors play out somewhat differently in each and every country.[footnoteRef:24] [24: Ibid, at 51]

Second, participation in WTO litigation is not a goal in itself. Being an active participant in WTO disputes is of course a healthy expression of being a participant in the global economy. Total absence of such participation can signal a problem that may warrant a multilateral response, so as to ensure sound functioning and legitimacy of the entire system. However, participation can only be (roughly) commensurate with a countrys economic position in the system and the economic stakes at issue. The mere fact that the United States has brought 98 complaints to date, in comparison to Guatemalas 8 complaints and Malawis zero complaints, does not per se indicate that the system is biased and skewed against Guatemalas and Malawis interests. The goal cannot be that Guatemala or Malawi bring as many cases as the United States - or that they actually bring any cases, for that matter. Rather, what is crucial is that a system exists in which, when Guatemala or Malawi find it in their interest to commence litigation at the WTO, they are not prevented from doing so for reasons that the international community finds objectionable and inequitable, and that can be remedied via multilateral mechanisms.[footnoteRef:25] [25: Ibid, at 59]

Third, active complainants are also frequent defendants. Participation of developing countries in WTO dispute settlement is by far not only about developing countries acting as complainant against developed countries. Equating participation of developing countries in WTO litigation with suing developed countries is wrong and not helpful. Disputes brought against developing countries are frequent, and disputes between developing countries are on the rise. Developing countries conduct extensive trade amongst themselves and enhancing their litigation capacity means making it more likely that other developing countries will end up on the defendant side. This, too, is a healthy expression of being an active, trading nation. Moreover, it will also typically be good for the defendant country. Rectifying WTO-inconsistent legislation will virtually always enhance good governance (even if this point is frequently lost in the debate.)[footnoteRef:26] [26: Ibid, at 72]

Fourth, the major challenges for developing countries to effectively use WTO litigation appear overwhelmingly linked to their domestic governance. Developing countries should therefore strengthen their bureaucracies, streamline their internal decision-making mechanisms, and reorganize institutions to create conditions favourable for coordination and communication both within the government, and between the government and the private sector. Some of the large developing countries experience (for instance, Brazil) offer successful examples on which other countries can draw. Some multilateral assistance is possible in this context (for instance, via a recently launched ICTSD-sponsored programme), but such reforms and institutional change are first and foremost an internal matter for each country.[footnoteRef:27] [27: Ibid, at 78 ]

Fifth, governments should actively seek to participate as third parties in WTO disputes. This will provide them with first-hand experience of WTO litigation, which has been shown to be very significant for active participation, because it provides valuable experience and de-dramatizes perceptions of international litigation within the bureaucracy. Moreover, third party participation can be an effective capacity building tool for both government officials and private lawyers, as demonstrated by Brazil, China and several other developing countries. Finally, third party participation enables developing countries to provide their points of view to panels and the Appellate Body and help to shape case law.[footnoteRef:28] [28: Ibid, at 84 ]

Sixth, developing countries should take advantage of the services offered by the ACWL. The ACWL has proven to be a uniquely successful international legal aid organization, but many WTO developing countries do not take advantage of its services, largely because they lack the internal capacity to effectively take advantage of what the Centre has to offer. The proposals for additional legal aid mechanisms are not meaningful.[footnoteRef:29] [29: Ibid, at 93 ]

Finally, there is no doubt that the WTO dispute settlement process could be improved in many ways. However, it is unlikely that a reform of the DSU process will lead to significantly improved developing country participation and greater capacity. Especially the much-touted need to improve WTO remedies is oversold, as the evidence indicates that developing countries can participate very successfully within the system even with limited retaliatory power. In addition, many of the proposed solutions would very likely not be as effective in practice as is often claimed. To be sure, some reforms could be helpful and may be worth pursuing; however, given the political resistance against DSU reform especially in areas such as remedies developing countries should probably not spend excessive amounts of political capital and energy on this front.[footnoteRef:30] [30: Ibid, at 106]

VII. ConclusionAs any legal system, the WTO is far from perfect. It is subject to severe challenges for smaller and poorer members. Yet forsaking such law will not rid the world of systemic disadvantages either. A world without a legalized dispute settlement system for trade conflicts is beset by greater power imbalances. Critics of the WTOs legalized trade dispute settlement system only need to recall the use of more unilateral mechanisms in the years preceding its creation. WTO law can provide leverage to less powerful countries to ward off the threats of the more powerful.The key issue is how countries should adapt to the legal system, on the one hand, and how the systems rules could be modified or jurisprudentially applied so as to reduce structural disadvantages, on the other. A central goal of the article is to provoke consideration of alternative choices in WTO dispute settlement. They include changes in WTO dispute settlement design that involve less legalization (such as the adoption of simplified procedures for smaller claims or claims between smaller countries), or more legalization (such as the provision of stronger remedies which will facilitate the use of outside law firms and their financing by private industry). They also include key jurisprudential choices over rules of evidence, burden of proof, and the setting of clear rules or general (more fuzzy) standards that are more costly to litigate on a case-by-case basis. These design and jurisprudential choices all involve complex tradeoffs that entail imperfect institutional alternatives.Smaller and poorer countries also need to examine strategies for mobilizing legal resources that do not involve a change in dispute settlement rules. They need to do so since the WTO legal system will likely not be significantly changed and, in any case, lies outside of their control except through their use of it. This crucial issue of cost-effective strategies for mobilizing legal capacity to shape and benefit from WTO law is a separate subject. Speaking generally, if developing countries are to participate meaningfully in the WTO dispute settlement system, they will need to continue to increase institutional capacity and coordination of trade policy at multiple levels, from the national to the regional to the global. They will need, in particular, to develop their own coordinative mechanisms to include private sector and civil society representatives.Capacity building endeavours generally will be most sustainable if they permeate broadly throughout institutions and societies. Since developing countries face different contexts, there is no single strategy that fits all of them. Each country will need to determine how best to adapt the strategies that this article explores in light of its particular circumstances. Many countries already have adopted many of them to a varying extent. The articles central purpose is to highlight options and provoke imaginative debate and experimentation with strategies that developing countries and their constituencies may adopt to better defend themselves in the international trading system.