Legalization and Compliance: How Judicial Activity Undercuts the Global Trade Regime

The crisis facing the World Trade Organization illustrates the trade-off between legalization and compliance in international legal systems. Dispute bodies can sometimes "overreach" in their rulings, leading to resistance from member states. This article looks at one form of legal overreach: the extension of legal precedent. We argue that extending previous decisions can reduce the flexibility that states include deliberately in their agreements. We utilize original data on individual applications of precedent in the World Trade Organization's Appellate Body decisions from 1995 to 2015 and on policy responses to those decisions. We find strong evidence that extending precedent reduces on-time compliance. It also leads to longer delays before members comply. The results speak to the life cycles of international organizations, as well as questions of design and cooperation.