RECHERCHE ET ANALYSE: DOCUMENTS DE TRAVAIL
The Economics of Permissible WTO Retaliation
WTO arbitrators rely on economics to establish the permissible retaliation limits authorized by the Dispute Settlement Understanding (DSU) which arguably serves to enforce the overall agreement.
We examine how theoretical and quantitative economic analysis has and can be used in this stage of the DSU process. First, we identify, characterize, and categorize the major classes of disputes — e.g., those affecting import protection versus export promotion — and use the Bagwell and Staiger interpretation of the WTO principle of reciprocity to provide a theoretical framework that arbitrators can use to identify the maximum level of retaliatory countermeasures. Second, we allocate each of the ten DSU arbitrations that have taken place thus far into one of these categories and compare the arbitrators’ actual approach with the theory. Third, we use this framework to identify three crucial elements to the arbitrators' decision-making process for each case: i) the formula that they decide to adopt for identifying appropriate countermeasures, ii) their political-legal-economic decision on a WTO-consistent counterfactual to use to implement the formula, and iii) the quantitative methods they use to necessarily construct the (unobserved) WTO-consistent counterfactual. We examine not only the arbitrations that have taken place thus far, but our approach also illustrates a template for many additional types of arbitrations likely to take place under the DSU. Finally, in the disputes in which this reciprocity approach has not been used, we identify procedural difficulties that arbitrators confront thus highlighting the constraints that hinder their use of economic analysis in practice.
No: ERSD-2008-04
Auteurs:
Chad P. Bown — Brandeis University
Michele Ruta — OMC
Date de rédaction: septembre 2008
Mots clés:
WTO, DSU, arbitrations, reciprocity, retaliation, market access, terms-of-trade externality
Cotes JEL:
F13, F51, K33
Avertissement
Ce document est un document de travail et concerne donc des recherches en cours. Il témoigne de l'opinion personnelle des fonctionnaires ou des universitaires invités et est le produit de recherches professionnelles. Il n'est pas censé représenter la position ou les points de vue de l'OMC ou de ses Membres, ni la position officielle des fonctionnaires de l'OMC. Ses auteurs sont seuls responsables en cas d'erreur. Des exemplaires de ce document peuvent être obtenus auprès du Secrétariat de la division responsable, à l'adresse suivante: Division de la recherche et de l'analyse économiques, Organisation mondiale du commerce, rue de Lausanne 154, CH-1211 Genève 21, Suisse. Veuillez indiquer dans votre demande les cote et titre du document.
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