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How Important Can the Non-violation Clause Be for the GATT/WTO?

Author

Listed:
  • Robert W. Staiger
  • Alan O. Sykes

Abstract

The "non-violation" clause of GATT is Exhibit A for the proposition that international trade agreements are incomplete contracts. According to the terms-of-trade theory of trade agreements, it underpins the success of the GATT/WTO's "shallow integration" approach. Yet the observed role of the non-violation complaint is minimal. We develop a model of non-violation claims in trade agreements, demonstrate that it predicts a minimal on-equilibrium-path role for non-violation claims under reasonable parameter restrictions, and show that the non-violation clause may nevertheless play an important off-equilibrium-path role in the GATT/WTO.

Suggested Citation

  • Robert W. Staiger & Alan O. Sykes, 2017. "How Important Can the Non-violation Clause Be for the GATT/WTO?," American Economic Journal: Microeconomics, American Economic Association, vol. 9(2), pages 149-187, May.
    • Handle: RePEc:aea:aejmic:v:9:y:2017:i:2:p:149-87
    Note: DOI: 10.1257/mic.20150139
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    Cited by:

    1. Koh, Yumi & Lee, Gea M., 2023. "R&D subsidies in permissive and restrictive environment: Evidence from Korea," Research Policy, Elsevier, vol. 52(1).
    2. Gene M. Grossman & Phillip McCalman & Robert W. Staiger, 2021. "The “New” Economics of Trade Agreements: From Trade Liberalization to Regulatory Convergence?," Econometrica, Econometric Society, vol. 89(1), pages 215-249, January.
    3. Ossa, Ralph & Staiger, Robert W. & Sykes, Alan O., 2023. "Standing in international investment and trade disputes," Journal of International Economics, Elsevier, vol. 145(C).
    4. Maggi, Giovanni & Staiger, Robert W., 2020. "Learning by ruling and trade disputes," Journal of International Economics, Elsevier, vol. 126(C).
    5. Kara M. Reynolds & Chad P. Bown, 2014. "Trade Flows and Trade Disputes," Working Papers 2014-05, American University, Department of Economics.
    6. Chad Bown & Kara Reynolds, 2015. "Trade flows and trade disputes," The Review of International Organizations, Springer, vol. 10(2), pages 145-177, June.
    7. Ralph Ossa & Robert W. Staiger & Alan O. Sykes, 2020. "Disputes in International Investment and Trade," NBER Working Papers 27012, National Bureau of Economic Research, Inc.

    More about this item

    JEL classification:

    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • K33 - Law and Economics - - Other Substantive Areas of Law - - - International Law

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