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What If? Tinkering with the Counterfactual: A Comment on US–Washing Machines (Article 22.6-US)

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  • Balistreri, Edward J.
  • Mavroidis, Petros C.
  • Prusa, Thomas J.

Abstract

Typically, the WTO Arbitrator, when charged with evaluating the permissible level of countermeasures (suspension of concessions), has chosen a counterfactual state of the world where the challenged (illegal) measure has not been adopted at all. The Arbitrator then would calculate the trade lost because of the adopted (illegal) measure, and thus, decide on the level of permissible countermeasures. In US–Washing Machines (Article 22.6-US), deviating from this custom, the Arbitrator adopted a different counterfactual, assuming that the complainant had adopted a different, ‘reasonable’ measure. The Arbitrator then evaluated the trade lost based on the distance between the adopted (illegal) and the ‘reasonable’ measure and calculated the level of countermeasures. In this paper, we explain the multitude of perils facing dispute settlement if this approach is adopted in future disputes. We also advance a few thoughts on rethinking the workings of the Arbitrator when measuring the level of permissible countermeasures, since similar slippery slopes risk being reproduced in future cases.

Suggested Citation

  • Balistreri, Edward J. & Mavroidis, Petros C. & Prusa, Thomas J., 2021. "What If? Tinkering with the Counterfactual: A Comment on US–Washing Machines (Article 22.6-US)," World Trade Review, Cambridge University Press, vol. 20(4), pages 421-435, October.
    • Handle: RePEc:cup:wotrrv:v:20:y:2021:i:4:p:421-435_4
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    References listed on IDEAS

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    1. Bown,Chad P. & Pauwelyn,Joost (ed.), 2010. "The Law, Economics and Politics of Retaliation in WTO Dispute Settlement," Cambridge Books, Cambridge University Press, number 9780521119979.
    2. Patrick A. Messerlin, 2001. "Measuring the Costs of Protection in Europe: European Commercial Policy in the 2000s," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 102, October.
    3. Mavroidis, Petros C. & Prusa, Thomas J., 2018. "Die Another Day: Zeroing in on Targeted Dumping – Did the AB Hit the Mark in US–Washing Machines?," World Trade Review, Cambridge University Press, vol. 17(2), pages 239-264, April.
    4. Patrick Messerlin, 2001. "Measuring the costs of protection in Europe : European commercial policy in the 2000s," Post-Print hal-03394451, HAL.
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    JEL classification:

    • K40 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - General

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