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The case for tradable remedies in WTO dispute settlement

Author

Listed:
  • Bagwell, Kyle
  • Mavroidis, Petros C.
  • Staiger, Robert W.

Abstract

In response to concerns over the efficacy of the WTO dispute settlement system, especially in regard to its use by developing countries, Mexico has tabled a proposal to introduce tradable remedies within the Dispute Settlement Understanding. The idea is that a country that has won cause before the WTO, and who is facing non-implementation by the author of the illegal act but feels that its own capacity to exercise its right to impose countermeasures is unlikely to lead to compliance, can auction off that right. The attractiveness of this idea is that it offers an additional possibility to injured WTO members to get something from the dispute settlement mechanism without putting into question the legal nature of the existing contract, that is, the predominantly decentralized system of enforcement in the WTO. Examining all disputes brought to the WTO since its inception, the authors find some support for Mexico's perception that developing countries face a practical problem when they attempt to carry through with effective retaliation within the WTO system. And based on the formal results of Bagwell, Mavroidis, and Staiger (2003), they describe arguments that lend some support to the efficacy of Mexico's proposed solution from the perspective of formal economic theory.

Suggested Citation

  • Bagwell, Kyle & Mavroidis, Petros C. & Staiger, Robert W., 2004. "The case for tradable remedies in WTO dispute settlement," Policy Research Working Paper Series 3314, The World Bank.
  • Handle: RePEc:wbk:wbrwps:3314
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    File URL: http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2004/07/27/000112742_20040727165316/Rendered/PDF/wps3314.pdf
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    References listed on IDEAS

    as
    1. Haile, Philip A., 2000. "Partial Pooling at the Reserve Price in Auctions with Resale Opportunities," Games and Economic Behavior, Elsevier, vol. 33(2), pages 231-248, November.
    2. David Ettinger, 2008. "Auctions and Shareholdings," Annals of Economics and Statistics, GENES, issue 90, pages 233-257.
    3. Jehiel, Philippe & Moldovanu, Benny, 2001. "Efficient Design with Interdependent Valuations," Econometrica, Econometric Society, vol. 69(5), pages 1237-1259, September.
    4. repec:adr:anecst:y:2008:i:90:p:09 is not listed on IDEAS
    5. Bagwell,K. & Mavroidis,P.C. & Staiger,R.W., 2003. "The case for auctioning countermeasures in the WTO," Working papers 14, Wisconsin Madison - Social Systems.
    6. Horn, Henrik & Mavroidis, Petros C & Nordström, Håkan, 1999. "Is The Use Of The WTO Dispute Settlement System Biased?," CEPR Discussion Papers 2340, C.E.P.R. Discussion Papers.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Fritz Breuss, 2004. "WTO Dispute Settlement: An Economic Analysis of four EU-US Mini Trade Wars," WIFO Working Papers 231, WIFO.
    2. Bown, Chad P. & Hoekman, Bernard, 2007. "Developing Countries and Enforcement of Trade Agreements: Why Dispute Settlement Is Not Enough," CEPR Discussion Papers 6459, C.E.P.R. Discussion Papers.
    3. repec:spr:revint:v:13:y:2018:i:1:d:10.1007_s11558-017-9278-z is not listed on IDEAS
    4. Limão, Nuno & Saggi, Kamal, 2008. "Tariff retaliation versus financial compensation in the enforcement of international trade agreements," Journal of International Economics, Elsevier, vol. 76(1), pages 48-60, September.
    5. Bown, Chad P. & Crowley, Meredith A., 2006. "Policy externalities: How US antidumping affects Japanese exports to the EU," European Journal of Political Economy, Elsevier, vol. 22(3), pages 696-714, September.
    6. Simon Schropp, 2007. "Revisiting the "Compliance-vs.-Rebalancing" Debate in WTO Scholarship a Unified Research Agenda," IHEID Working Papers 29-2007, Economics Section, The Graduate Institute of International Studies, revised Dec 2007.
    7. Benjamin Liebman & Kasaundra Tomlin, 2015. "World Trade Organization sanctions, implementation, and retaliation," Empirical Economics, Springer, vol. 48(2), pages 715-745, March.

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