Multi-mode Trade Policy Retaliation

The World Trade Organization’s dispute settlement body (DSB) was initially seen as promoting the stability of the global trading system, limiting the unilateral retaliation widespread throughout the 1980s. In this paper, we explore the degree to which countries may be increasingly engaging in unilateral action in response to trade policy disputes as confidence in the WTO DSB falls, with a focus on antidumping, sanitary and phytosanitary measures (SPS), and technical barriers to trade (TBT). Previous studies have found evidence that countries may choose to retaliate against countries for certain trade actions, but what has not been empirically examined is the use of multi-modal retaliation in trade policy. Using an exporter-importer-product panel of antidumping, SPS and TBT actions between 1995 and 2019, we find that the likelihood of a country initiating both an SPS and an AD action significantly increases when they have an ongoing SPS concern against that country, and countries are also more likely to file AD actions against those countries that have filed an AD petition against them during the same year. Moreover, the use of retaliation through both SPS and TBT actions seems to have increased since 2016, but primarily by emerging markets against high-income partners.