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The Role of Economic Theory in WTO Arbitrations


  • Michele Ruta


How can economic theory be useful in WTO arbitrations? Motivated by this question, this paper reviews the approach that is often used to determine the level of permissible retaliation in international trade disputes (the, so called, "trade effect" approach), and its implementation under specific policy scenarios (tariffs, quotas, subsidies). Through these examples, the paper argues that economic theory, in addition to quantitative economics, can play a useful role in assisting WTO arbitrators in understanding the pros and cons of the trade effect approach and in implementing this approach under different policy scenarios.

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  • Michele Ruta, 2013. "The Role of Economic Theory in WTO Arbitrations," RSCAS Working Papers PP2013/02, European University Institute.
  • Handle: RePEc:rsc:rsceui:pp2013/02

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    References listed on IDEAS

    1. Varian, H.R., 1993. "What Use is Economic Theory?," Papers 93-14, Michigan - Center for Research on Economic & Social Theory.
    2. 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.
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    WTO Arbitrations; Economic Theory; Permissible Retaliation;

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