Adjudication without enforcement in GATT disputes

Disputes under the General Agreement on Tariffs and Trade (GATT) exhibit a puzzling selection effect. Defendants concede more prior to GATT judgments than afterward, despite GATT's lack of enforcement power. Yet, why would st ates plea-bargain if they know they can spurn contrary rulings? To find out , the article develops an incomplete information model of trade bargaining with the option of adjudication. The plaintiff has greater resolve prior to a ruling, believing that the defendant might be compelled to concede to an adverse judgment-even if that belief later proves false. Surprisingly, thi s resolve induces more generous settlements even from defendants who intend not to comply with any ruling. Alter a ruling, however, this anticipatory effect is irrelevant: adjudication works best when threatened but not reali zed. The prospect of adjudication thus conditions the behavior of states ev en when enforcement is not forthcoming but not through mechanisms identifie d by previous studies.