Chapter 16 Retaliatory Trade Measures in the WTO Dispute Settlement Understanding: Are There Really Alternatives?

The appropriateness of retaliatory trade measures in the World Trade Organization dispute settlement process have increasingly come under scrutiny in recent years. Several Members and commentators alike have recommended large-scale amendments to the Dispute Settlement Understanding (DSU) to provide alternatives to retaliatory measures, with the most notable including compensation, collective retaliation, and increased special and differential treatment for developing countries and/or widespread loss of privileges for non-conforming respondents. Unfortunately, many of the proposals failed to first identify the aims and objectives of the retaliatory phase, or even of dispute settlement more generally. This chapter takes a more holistic approach in its analysis of whether any of the current proposals will improve (or harm) the system. In doing so, this chapter will first assess the effectiveness and appropriateness of retaliatory trade measures by evaluating the goals and objectives in which it is designed to achieve. It will then evaluate some of the more prominent proposals for amending the DSU under the same framework. Taking such an approach will allow for a more comprehensive review and will reveal not only the problems with retaliatory trade measures, but also its positive aspects, and not only the positive aspects of the suggested alternatives but also where they may be detrimental to the system.