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When do international institutions promote economic cooperation among countries? The World Trade Organization (WTO) is central to the multilateral trade regime and a benchmark for international dispute resolution. Yet it remains unclear whether it has been effective in restoring trade cooperation. This article uses WTO disputes to examine the impact of domestic politics in the defendant country on compliance with adverse legal rulings. I build a novel data set on compliance. Using the method of synthetic case control, I estimate the effect of adverse rulings on trade flows between disputant countries using product-level time-series trade data. I infer the defendant complied if trade flows increased after the dispute, relative to estimated levels that would have occurred in the absence of the ruling. The results show domestic political divisions—measured by veto players—hinder compliance.

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Do legal rulings from the Court of Justice promote European economic integration? This article examines lawsuits where governments are found guilty of breaching their commitment to the common market. In these cases, governments are required to adopt reforms which, correctly applied, should promote intra-European trade. Using a novel dataset of trade-liberalizing rulings, I show that although they do prompt some increases in trade, the effect is contingent on domestic politics. When the defendant government has many political constraints, both institutional and partisan, it is less likely to expand its trade with the European Union. Domestic politics obstructs the policy reforms—and active enforcement—necessary to deepen economic integration. The findings highlight obstacles to the completion of the single market and limitations of the court.

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.