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The Politics of WTO Enforcement Mechanisms

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  • Pao-Li Chang

Abstract

This paper analyzes the influence of domestic political considerations by disputing governments on the WTO enforcement outcome, following a violation ruling against the defendant. Since a different mix of import or export sectors in the disputing countries will benefit from the alternative enforcement outcomes – compliance, compensation, retaliation, and the status quo, they become competing forces that steer the strategic interactions between the disputing governments. This paper first studies the complainant’s retaliation capacity and strategy in formulating the retaliation list, and then examines the scope of settlement possibilities between the disputing parties. The results of the paper provide a synopsis of the disputing governments’ political payoffs under the alternative enforcement scenarios and the conditions that determine the outcome of the implementation

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Bibliographic Info

Paper provided by Econometric Society in its series Econometric Society 2004 Australasian Meetings with number 117.

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Date of creation: 11 Aug 2004
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Handle: RePEc:ecm:ausm04:117

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Keywords: trade sanction; enforcement failure; compliance; compensation; political economy;

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  1. Kym Anderson, 2002. "Pecularities of Retaliation in WTO Dispute Settlement," Centre for International Economic Studies Working Papers 2002-07, University of Adelaide, Centre for International Economic Studies.
  2. Grossman, G.M. & Helpman, E., 1992. "Protection for Sale," Papers 21-92, Tel Aviv.
  3. Hungerford, Thomas L., 1991. "GATT: A cooperative equilibrium in a noncooperative trading regime?," Journal of International Economics, Elsevier, vol. 31(3-4), pages 357-369, November.
  4. Butler, Monika & Hauser, Heinz, 2000. "The WTO Dispute Settlement System: First Assessment from an Economic Perspective," Journal of Law, Economics and Organization, Oxford University Press, vol. 16(2), pages 503-33, October.
  5. Pao-li Chang, 2007. "The Evolution and Utilization of the GATT/WTO Dispute Settlement Mechanism," Trade Working Papers 22062, East Asian Bureau of Economic Research.
  6. Ludema, R.D., 1990. "Optimal International Trade Agreements And Dispute Settlement Procedures," UWO Department of Economics Working Papers 9101, University of Western Ontario, Department of Economics.
  7. Giovanni Maggi, 1999. "The Role of Multilateral Institutions in International Trade Cooperation," American Economic Review, American Economic Association, vol. 89(1), pages 190-214, March.
  8. Wilfred J. Ethier, . "Punishment and Dispute Settlement in Trade Agreements," EPRU Working Paper Series 01-14, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
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