Shining Light on Regulatory Policies: The Impact of WTO Rulings on Notification Patterns

An effective international legal system not only resolves specific disputes but con- tributes to broader cooperation. This paper shows that WTO disputes support coop- eration at a systemic level beyond the parties involved in the dispute. Enforcement actions increase the credibility of the legal system and jurisprudence fills gaps in treaty interpretation, and we expect governments will adjust their behavior toward compli- ance. We empirically test this argument by analyzing the spillover effects of WTO disputes on cooperation with reporting obligations to uphold policy transparency. Notifications about domestic regulatory changes represent an important type of co- operation that helps governments balance the need to apply standards while avoid- ing hidden protectionism. We examine original data from the Agreement on Sani- tary and Phytosanitary Measures and the Technical Barriers to Trade Agreement that records 78,683 notifications registered with the WTO by 135 countries from 1995 to 2022. Using a difference-in-difference design, we find that countries that participate in the WTO dispute as third parties or have high trade in the affected products are more likely to notify policy changes in the next year. We conclude that WTO disputes incentivize related countries to update their perception of law and improve trans- parency over policy. The paper offers insights into how the multilateral trade rules govern non-tariff barriers and our findings present evidence that enforcement pro- motes systemic cooperation with rules.