Bite the Bullet: Trade Retaliation, EU Jurisprudence and the Law and Economics of 'Taking One for the Team'
AbstractThis paper discusses the Fedon case law of the European Court of Justice (ECJ), which involved a claim for compensation by Fedon (an Italian producer of eye glass cases) from the EU for the imposition of WTO-authorized retaliatory trade barriers by the United States following the failure by the EU to comply with an adverse ruling by the WTO regarding its import-regime for bananas. As a result of the EU non-compliance, European banana distributors and some bananas producers benefitted from WTO-illegal protection, at the expense of a set of EU exporters, including Fedon, that were hit by US countermeasures. By not complying with its international (WTO) obligations, the EU redistributed income across producers in different sectors as well as between suppliers and consumers of bananas. Fedon contested the non-compliance by the EU before the ECJ and sought compensation. This paper assesses the ECJ ruling against Fedon and argues that the ECJ got it wrong, both in terms of legal principle and as a matter of legal technicalities. An alternative approach is proposed that would better balance individual rights to property against the 'general' EU interest whether or not to comply with adverse WTO rulings.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by European University Institute in its series RSCAS Working Papers with number 2013/32.
Date of creation: May 2013
Date of revision:
Trade agreements; retaliation; dispute settlement; compensation; EU law; WTO;
Other versions of this item:
- Hoekman, Bernard & Mavroidis, Petros C, 2013. "Bite the Bullet: Trade Retaliation, EU Jurisprudence and the Law and Economics of â€˜Taking One for the Teamâ€™," CEPR Discussion Papers, C.E.P.R. Discussion Papers 9496, C.E.P.R. Discussion Papers.
- F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
- K41 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Litigation Process
- K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
This paper has been announced in the following NEP Reports:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- LimÃ£o, Nuno & Saggi, Kamal, 2006.
"Tariff Retaliation versus Financial Compensation in the Enforcement of International Trade Agreements,"
CEPR Discussion Papers, C.E.P.R. Discussion Papers
5560, C.E.P.R. Discussion Papers.
- Limão, Nuno & Saggi, Kamal, 2008. "Tariff retaliation versus financial compensation in the enforcement of international trade agreements," Journal of International Economics, Elsevier, vol. 76(1), pages 48-60, September.
- Limao, Nuno & Saggi, Kamal, 2006. "Tariff retaliation versus financial compensation in the enforcement of international trade agreements," Policy Research Working Paper Series 3873, The World Bank.
- Levy, Philip I & Srinivasan, T N, 1996. "Regionalism and the (Dis)advantage of Dispute-Settlement Access," American Economic Review, American Economic Association, vol. 86(2), pages 93-98, May.
- Hoekman, Bernard M. & Kostecki, Michel M., 2009. "The Political Economy of the World Trading System," OUP Catalogue, Oxford University Press, Oxford University Press, edition 3, number 9780199553778, October.
- Marco Bronckers & Naboth van den Broek, 2005. "Financial Compensation in the WTO," Journal of International Economic Law, Oxford University Press, vol. 8(1), pages 101-126, March.
- Robert Z. Lawrence, 2003. "Crimes and Punishments?: Retaliation under the WTO," Peterson Institute Press: All Books, Peterson Institute for International Economics, Peterson Institute for International Economics, number 372, July.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (RSCAS web unit).
If references are entirely missing, you can add them using this form.