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Should WTO dispute settlement be subsidized?

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  • Wilckens, Sebastian
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    Abstract

    This paper develops a model of the WTO dispute settlement process (DSP) to study the recent proposal by legal scholars to subsidize litigation costs. The high cost of litigation, so the argument, is a major obstacle for developing countries to using the DSP to enforce developed countries? compliance with WTO rules. The paper shows that this proposal may be misguided. In particular, a reduction of litigation costs may lead large countries to impose larger trade impediments where before they may have raised barriers only a little. Thus, a cost reduction may even weaken the smaller countries? position in the DSP. Moreover, the model sheds light on the structure of the dark figure of un-accused offenses, suggesting that the observed record of disputes notified to the WTO is systematically biased. --

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    File URL: http://econstor.eu/bitstream/10419/22020/1/EWP-2007-02.pdf
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    Bibliographic Info

    Paper provided by Christian-Albrechts-University of Kiel, Department of Economics in its series Economics Working Papers with number 2007,02.

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    Date of creation: 2007
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    Handle: RePEc:zbw:cauewp:5439

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    Related research

    Keywords: Developing Countries; Dispute Settlement; GATT/WTO; Tariff Retaliation; Trade Disputes;

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    1. Kyle Bagwell & Robert W. Staiger, 2004. "The Economics of the World Trading System," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262524341, December.
    2. Bagwell,K. & Staiger,R.W., 1998. "An economic theory of GATT," Working papers 15, Wisconsin Madison - Social Systems.
    3. Dan Kovenock & Marie Thursby, 1992. "GATT, Dispute Settlement and Cooperation," NBER Working Papers 4071, National Bureau of Economic Research, Inc.
    4. 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.
    5. Kennan, John & Riezman, Raymond, 1988. "Do Big Countries Win Tariff Wars?," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 29(1), pages 81-85, February.
    6. Horn, Henrik & Mavroidis, Petros C & Nordström, Håkan, 1999. "Is The Use Of The WTO Dispute Settlement System Biased?," CEPR Discussion Papers 2340, C.E.P.R. Discussion Papers.
    7. Chad P. Bown, 2005. "Participation in," World Bank Economic Review, World Bank Group, vol. 19(2), pages 287-310.
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