This research project analyzes how the WTO Dispute Settlement Understanding performs when dealing with a particular cluster of trade disputes. These disputes are characterized by trade barriers imposed for environmental and public health reasons; in this paper, they are referred to as T&E disputes. T&E disputes have been channeled through the WTO dispute settlement mechanisms, which contain strong enforcement mechanisms that are expected to deter non-compliance. Nonetheless, empirical evidence suggests that these disputes have a low probability of reaching a settlement and often generate final rulings that are not complied with (Busch and Reinhardt 2004; Davey 2005a). The study concentrates on three T&E disputes decided by the WTO between 1996 and 2001, identifies several aspects that distinguish these disputes, and argues that an alternative dispute resolution (ADR) procedure proposed by Brams and Taylor (1996, 1999), called Adjusted Winner (AW), may increase the chances of compliance and present the parties with a superior outcome. An application of AW based on data from interviews with government officials and policy experts generates an ADR outcome for each of the three cases. This is followed by a comparison between this outcome and the actual adjudication outcome in each dispute. The analysis shows that recourse to AW may provide more opportunities for compliance by presenting the parties with an outcome that is more fair, in terms of three criteria: efficiency, envy-freeness, and equitability. Turning to ADR is particularly appropriate when states’ concerns with their reputation have a limited role as an enforcement mechanism. I argue that developments of compliance theory that focus on this limited role of reputation offer a plausible explanation for the poor record of compliance that T&E disputes display. Based on Downs and Jones (2002, 2004), I argue that the WTO regime encompasses multiple sub-regimes with specific and segmented reputational consequences. I propose that the pattern of non-compliance observed in T&E disputes can be explained by the opportunity to insulate negative reputational consequences from other areas of the international trade regime that states value higher.