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The Politics of WTO Enforcement Mechanisms

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  • Pao-Li Chang

Abstract

This paper analyzes the influence of domestic political considerations by disputing governments on the WTO enforcement outcome, following a violation ruling against the defendant. Since a different mix of import or export sectors in the disputing countries will benefit from the alternative enforcement outcomes – compliance, compensation, retaliation, and the status quo, they become competing forces that steer the strategic interactions between the disputing governments. This paper first studies the complainant’s retaliation capacity and strategy in formulating the retaliation list, and then examines the scope of settlement possibilities between the disputing parties. The results of the paper provide a synopsis of the disputing governments’ political payoffs under the alternative enforcement scenarios and the conditions that determine the outcome of the implementation

Suggested Citation

  • Pao-Li Chang, 2004. "The Politics of WTO Enforcement Mechanisms," Econometric Society 2004 Australasian Meetings 117, Econometric Society.
  • Handle: RePEc:ecm:ausm04:117
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    References listed on IDEAS

    as
    1. Anderson, Kym, 2002. "Peculiarities of retaliation in WTO dispute settlement," World Trade Review, Cambridge University Press, vol. 1(02), pages 123-134, July.
    2. 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.
    3. Grossman, Gene M & Helpman, Elhanan, 1994. "Protection for Sale," American Economic Review, American Economic Association, vol. 84(4), pages 833-850, September.
    4. Wilfred J. Ethier, "undated". "Punishment and Dispute Settlement in Trade Agreements," EPRU Working Paper Series 01-14, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
    5. Giovanni Maggi, 1999. "The Role of Multilateral Institutions in International Trade Cooperation," American Economic Review, American Economic Association, vol. 89(1), pages 190-214, March.
    6. Ludema, Rodney D., 2001. "Optimal international trade agreements and dispute settlement procedures," European Journal of Political Economy, Elsevier, vol. 17(2), pages 355-376, June.
    7. Dan Kovenock & Marie Thursby, 1992. "Gatt, Dispute Settlement And Cooperation," Economics and Politics, Wiley Blackwell, vol. 4(2), pages 151-170, July.
    8. Hungerford, Thomas L., 1991. "GATT: A cooperative equilibrium in a noncooperative trading regime?," Journal of International Economics, Elsevier, vol. 31(3-4), pages 357-369, November.
    9. Butler, Monika & Hauser, Heinz, 2000. "The WTO Dispute Settlement System: First Assessment from an Economic Perspective," Journal of Law, Economics, and Organization, Oxford University Press, vol. 16(2), pages 503-533, October.
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    More about this item

    Keywords

    trade sanction; enforcement failure; compliance; compensation; political economy;

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • K33 - Law and Economics - - Other Substantive Areas of Law - - - International Law
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law

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