The Economics of Trade Disputes, the GATT's Article XXIII, and the WTO's Dispute Settlement Understanding
AbstractEconomic theory has yet to provide a convincing argument that can explain why the threat of retaliation under the GATT/WTO dispute settlement procedures is not sufficient to prevent countries from violating the agreement. We consider the question of why countries violate the agreed-upon rules in the face of explicit provisions which allow them to legally adjust their trade policy. Using the GATT/WTO institutional structure and the guiding principle of reciprocity, we provide a theory suggesting when countries will choose to implement protection in violation of GATT/WTO rules, as opposed to under the relevant safeguards provisions, when trade policy adjustments are necessary between "negotiating rounds." Copyright Blackwell Publishers Ltd 2002.
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Volume (Year): 14 (2002)
Issue (Month): 3 (November)
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