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The Role of Dispute Settlement Procedures in International Trade Agreements

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  • Giovanni Maggi
  • Robert W. Staiger

Abstract

Although disputes are typically treated as synonymous with concerns about enforcement in economic models of trade agreements, in reality most WTO disputes seem to concern the interpretation of vague provisions, or instances where the agreement is silent. And some have suggested that the WTO's Dispute Settlement Body (DSB) could usefully grant exceptions to rigid contractual obligations. These activist DSB roles could help "complete" an incomplete contract. But how activist should the DSB be? Should DSB rulings set precedent? We address these questions by characterizing the optimal choice of contract form and DSB mandate under various contracting conditions. JEL Codes: D02, D78, D86, F13, K12, K33. Copyright 2011, Oxford University Press.

Suggested Citation

  • Giovanni Maggi & Robert W. Staiger, 2011. "The Role of Dispute Settlement Procedures in International Trade Agreements," The Quarterly Journal of Economics, Oxford University Press, vol. 126(1), pages 475-515.
  • Handle: RePEc:oup:qjecon:v:126:y:2011:i:1:p:475-515
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    Citations

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    Cited by:

    1. Chad Bown & Kara Reynolds, 2015. "Trade flows and trade disputes," The Review of International Organizations, Springer, vol. 10(2), pages 145-177, June.
    2. Mostafa Beshkar & Jee-Hyeong Park, 2017. "Dispute Settlement with Second-Order Uncertainty: The Case of International Trade Disputes," Caepr Working Papers 2017-010 Classification-K, Center for Applied Economics and Policy Research, Economics Department, Indiana University Bloomington.
    3. Petros C. Mavroidis, 2016. "Dispute Settlement in the WTO. Mind over Matter," RSCAS Working Papers 2016/04, European University Institute.
    4. Vincent Anesi & Giovanni Facchini, "undated". "Coercive Trade Policy," Development Working Papers 376, Centro Studi Luca d'Agliano, University of Milano.
    5. Beshkar, Mostafa & Bond, Eric W. & Rho, Youngwoo, 2015. "Tariff binding and overhang: Theory and evidence," Journal of International Economics, Elsevier, vol. 97(1), pages 1-13.
    6. Conconi, Paola & DeRemer, David R. & Kirchsteiger, Georg & Trimarchi, Lorenzo & Zanardi, Maurizio, 2017. "Suspiciously timed trade disputes," Journal of International Economics, Elsevier, pages 57-76.
    7. Kyle Bagwell & Chad P. Bown & Robert W. Staiger, 2016. "Is the WTO Passé?," Journal of Economic Literature, American Economic Association, pages 1125-1231.
    8. Bown, Chad P. & Reynolds, Kara M., 2015. "Trade Agreements and Enforcement: Evidence from WTO Dispute Settlement," CEPR Discussion Papers 10571, C.E.P.R. Discussion Papers.
    9. Kuenzel, David J., 2017. "WTO dispute determinants," European Economic Review, Elsevier, vol. 91(C), pages 157-179.
    10. Julian Schumacher & Christoph Trebesch & Henrik Enderlein, 2015. "What Explains Sovereign Debt Litigation?," CESifo Working Paper Series 5319, CESifo Group Munich.
    11. Christina Davis, 2015. "The political logic of dispute settlement: Introduction to the special issue," The Review of International Organizations, Springer, vol. 10(2), pages 107-117, June.
    12. Maggi, Giovanni, 2014. "International Trade Agreements," Handbook of International Economics, Elsevier.
    13. Johannesson, Louise, 2016. "Supporting Developing Countries in WTO Dispute Settlement," Working Paper Series 1120, Research Institute of Industrial Economics.
    14. Giovanni Maggi & Robert W. Staiger, 2017. "Learning by Ruling and Trade Disputes," NBER Working Papers 23774, National Bureau of Economic Research, Inc.
    15. repec:inu:caeprp:2014004 is not listed on IDEAS
    16. Mostafa Beshkar, 2014. "Arbitration and Renegotiation in Trade Agreements," Caepr Working Papers 2014-004, Center for Applied Economics and Policy Research, Economics Department, Indiana University Bloomington.
    17. David R. DeRemer, 2015. "Opportunities for Cooperation in Removing Prohibitive Trade Barriers," IEHAS Discussion Papers 1533, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences.

    More about this item

    JEL classification:

    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • K12 - Law and Economics - - Basic Areas of Law - - - Contract Law
    • K33 - Law and Economics - - Other Substantive Areas of Law - - - International Law

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