Resolving Trade Disputes

How might international courts—which have no enforcement power—be able to resolve trade disputes?

Takeaway Points

1. It is better to agree to a slightly inequitable trade agreement than to have no trade agreement at all.
2. Thus, states face a coordination problem.
3. Signals resolve coordination problems by telling actors to commit to certain decisions.
4. International trade courts can therefore make effective rulings despite having no enforcement power.