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The Economics of Trade Disputes, the GATT's Article XXIII, and the WTO's Dispute Settlement Understanding

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  • Chad P . Bown

Abstract

Economic theory has yet to provide a convincing argument that can explain why the threat of retaliation under the GATT/WTO dispute settlement procedures is not sufficient to prevent countries from violating the agreement. We consider the question of why countries violate the agreed-upon rules in the face of explicit provisions which allow them to legally adjust their trade policy. Using the GATT/WTO institutional structure and the guiding principle of reciprocity, we provide a theory suggesting when countries will choose to implement protection in violation of GATT/WTO rules, as opposed to under the relevant safeguards provisions, when trade policy adjustments are necessary between "negotiating rounds." Copyright Blackwell Publishers Ltd 2002.

Suggested Citation

  • Chad P . Bown, 2002. "The Economics of Trade Disputes, the GATT's Article XXIII, and the WTO's Dispute Settlement Understanding," Economics and Politics, Wiley Blackwell, vol. 14(3), pages 283-323, November.
  • Handle: RePEc:bla:ecopol:v:14:y:2002:i:3:p:283-323
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    References listed on IDEAS

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    1. Finger, J Michael & Nogues, Julio, 1987. "International Control of Subsidies and Countervailing Duties," World Bank Economic Review, World Bank Group, vol. 1(4), pages 707-725, September.
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    Cited by:

    1. Kuenzel, David J., 2017. "WTO dispute determinants," European Economic Review, Elsevier, vol. 91(C), pages 157-179.
    2. Chau, Nancy H. & Färe, Rolf, 2011. "Shadow pricing market access: A trade benefit function approach," Journal of Economic Theory, Elsevier, vol. 146(4), pages 1631-1663, July.
    3. Eromenko, Igor, 2010. "Accession to the WTO. Computable General Equilibrium Analysis: the Case of Ukraine. Part I," MPRA Paper 67476, University Library of Munich, Germany.
    4. Fritz Breuss, 2004. "WTO Dispute Settlement: An Economic Analysis of Four EU–US Mini Trade Wars—A Survey," Journal of Industry, Competition and Trade, Springer, vol. 4(4), pages 275-315, December.
    5. Horn, Henrik & Mavroidis, Petros C., 2006. "A Survey of the Literature on the WTO Dispute Settlement System," Working Paper Series 684, Research Institute of Industrial Economics.
    6. Francois, Joseph & Horn, Henrik & Kaunitz, Niklas, 2008. "Trading Profiles and Developing Country Participation in the WTO Dispute Settlement System," Working Paper Series 730, Research Institute of Industrial Economics.
    7. Chad Bown & Kara Reynolds, 2015. "Trade flows and trade disputes," The Review of International Organizations, Springer, vol. 10(2), pages 145-177, June.
    8. Kokko, Ari & Gustavsson Tingvall, Patrik & Videnord, Josefin, 2017. "Which Antidumping Cases Reach the WTO?," Ratio Working Papers 286, The Ratio Institute.
    9. Bown, Chad P. & Crowley, Meredith A, 2016. "The Empirical Landscape of Trade Policy," CEPR Discussion Papers 11216, C.E.P.R. Discussion Papers.
    10. Götz, Christian & Heckelei, Thomas & Rudloff, Bettina, 2010. "What makes countries initiate WTO disputes on food-related issues?," Food Policy, Elsevier, vol. 35(2), pages 154-162, April.
    11. Tadashi Ito, 2007. "NAFTA and productivity convergence between Mexico and the US," IHEID Working Papers 26-2007, Economics Section, The Graduate Institute of International Studies, revised 27 Nov 2007.
    12. Pao-Li Chang, 2002. "The Evolution and Utilization of the GATT/WTO Dispute Settlement Mechanism," Working Papers 475, Research Seminar in International Economics, University of Michigan.
    13. Eromenko, Igor, 2011. "Accession to the WTO. Computable General Equilibrium Analysis: the Case of Ukraine," MPRA Paper 67535, University Library of Munich, Germany.
    14. repec:nea:journl:y:2017:i:34:p:143-164 is not listed on IDEAS
    15. Bown, Chad P. & Ruta, Michele, 2008. "The economics of permissible WTO retaliation," WTO Staff Working Papers ERSD-2008-04, World Trade Organization (WTO), Economic Research and Statistics Division.
    16. Weller, Christian E. & Scher, Mark J., 1999. "Multinational banks and development finance," ZEI Working Papers B 16-1999, University of Bonn, ZEI - Center for European Integration Studies.
    17. Carsten Herrmann-Pillath, 2006. "Reciprocity and the hidden constitution of world trade," Constitutional Political Economy, Springer, vol. 17(3), pages 133-163, September.
    18. Fritz Breuss, 2004. "WTO Dispute Settlement: An Economic Analysis of four EU-US Mini Trade Wars," WIFO Working Papers 231, WIFO.
    19. Bown, Chad P. & Brewster, Rachel, 2017. "US–COOL Retaliation: The WTO's Article 22.6 Arbitration," World Trade Review, Cambridge University Press, vol. 16(02), pages 371-394, April.
    20. Simon Schropp, 2007. "Revisiting the "Compliance-vs.-Rebalancing" Debate in WTO Scholarship a Unified Research Agenda," IHEID Working Papers 29-2007, Economics Section, The Graduate Institute of International Studies, revised Dec 2007.
    21. Bown,Chad P. & Reynolds,Kara Marie, 2015. "Trade agreements and enforcement : evidence from WTO dispute settlement," Policy Research Working Paper Series 7242, The World Bank.
    22. Bown, Chad P., 2004. "Trade disputes and the implementation of protection under the GATT: an empirical assessment," Journal of International Economics, Elsevier, vol. 62(2), pages 263-294, March.
    23. Bown, Chad P. & McCulloch, Rachel, 2009. "U.S.-Japan and U.S.-China trade conflict: Export growth, reciprocity, and the international trading system," Journal of Asian Economics, Elsevier, vol. 20(6), pages 669-687, November.
    24. Blonigen, Bruce A. & Bown, Chad P., 2003. "Antidumping and retaliation threats," Journal of International Economics, Elsevier, pages 249-273.
    25. Tan LI & Larry D. QIU, 2015. "Beyond Trade Creation: Free Trade Agreements and Trade Disputes," Working Papers DP-2015-28, Economic Research Institute for ASEAN and East Asia (ERIA).

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