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Does Limited Punishment Limit The Scope For Cross Retaliation?

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  • Richard Chisik
  • Harun Onder

Abstract

This paper analyzes two prominent institutional rules in the international trading system: a limited cross-retaliation rule characterized by the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU) Article 22.3 and a limited punishment rule characterized by the General Agreement on Tariffs and Trade (GATT) Article XXVIII. In general, both rules are designed to limit the countermeasures upon a violation; however, the former rule specifies the limits of composition in retaliation, whereas the latter one designates the limits of retaliation magnitude. We show that, albeit seemingly unrelated, the limited cross-retaliation rule complements the limited punishment rule in per- mitting greater trade liberalization. Specifically, we show how the limited cross-retaliation rule also helps limit the incentives to violate the trade agreement when the limited punishment rule prevails.
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Suggested Citation

  • Richard Chisik & Harun Onder, 2017. "Does Limited Punishment Limit The Scope For Cross Retaliation?," Economic Inquiry, Western Economic Association International, vol. 55(3), pages 1213-1230, July.
  • Handle: RePEc:bla:ecinqu:v:55:y:2017:i:3:p:1213-1230
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    File URL: http://hdl.handle.net/10.1111/ecin.12431
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    References listed on IDEAS

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    1. Paola Conconi & Carlo Perroni, 2002. "Issue Linkage and Issue Tie-in in International Negotiations," ULB Institutional Repository 2013/5839, ULB -- Universite Libre de Bruxelles.
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    8. 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.
    9. Conconi, Paola & Perroni, Carlo, 2002. "Issue linkage and issue tie-in in multilateral negotiations," Journal of International Economics, Elsevier, vol. 57(2), pages 423-447, August.
    10. Josh Ederington, 2001. "International Coordination of Trade and Domestic Policies," American Economic Review, American Economic Association, vol. 91(5), pages 1580-1593, December.
    11. repec:bla:ecinqu:v:55:y:2017:i:3:p:1213-1230 is not listed on IDEAS
    12. Robert Z. Lawrence, 2003. "Crimes and Punishments?: Retaliation under the WTO," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 372.
    13. Richard Chisik & Harun Onder, 2017. "Does Limited Punishment Limit The Scope For Cross Retaliation?," Economic Inquiry, Western Economic Association International, vol. 55(3), pages 1213-1230, July.
    14. Chad P. Bown & Bernard M. Hoekman, 2005. "WTO Dispute Settlement and the Missing Developing Country Cases: Engaging the Private Sector," Journal of International Economic Law, Oxford University Press, vol. 8(4), pages 861-890, December.
    15. Josh Ederington, 2003. "Policy Linkage and Uncertainty in International Agreements," Economic Inquiry, Western Economic Association International, vol. 41(2), pages 305-317, April.
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    Cited by:

    1. Richard Chisik & Chuyi Fang, 2017. "Limited Cross-retaliation and Lengthy Delays in International Dispute Settlement," Working Papers 066, Ryerson University, Department of Economics.
    2. Onder, Harun, 2012. "Trade and Climate Change: An Analytical Review of Key Issues," World Bank - Economic Premise, The World Bank, issue 86, pages 1-8, August.
    3. Richard Chisik & Harun Onder, 2017. "Does Limited Punishment Limit The Scope For Cross Retaliation?," Economic Inquiry, Western Economic Association International, vol. 55(3), pages 1213-1230, July.
    4. Bowen, Renee, 2011. "Forbearance in Optimal Multilateral Trade Agreements," Research Papers 2085, Stanford University, Graduate School of Business.
    5. repec:eee:reveco:v:54:y:2018:i:c:p:274-288 is not listed on IDEAS

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