Domestic political implications of global value chains: Explaining EU responses to litigation at the World Trade Organization

Abstract:

This article shows how mobilized sectors’ degree of integration to global value chains can account for variation in the European Union’s responses to litigation at the World Trade Organization (WTO).

The behavior of the EU demonstrates a puzzling picture in bringing about compliance following WTO disputes, sometimes meeting its trade partners’ demands in a timely manner, while resisting resolving the disputes in others. In order to account for this variance, I aim to answer the research question: under which conditions does the EU meet its trade partners’ demands in a timely manner, rather than resist compliance, in the WTO dispute settlement mechanism?

Combining comparative analysis with case studies, I find that the EU’s behavior in bringing timely compliance to disputes can be explained by mobilized targeted sectors’ level of integration to global value chains (GVCs). As disputes target certain measures that tend to benefit-specific sectors, the level of integration of these targeted sectors shapes the EU’s preference toward pro or against liberalization.

The results of the study corroborate the finding that trade policy is shaped by the interests of domestic economic actors and that those engaged in GVCs foster liberalization multilaterally.