Shadow Unilateralism: Enforcing International Trade Law at the WTO

Abstract

This short essay briefly traces the evolution of trade law enforcement from the the GATT to the WTO regime. The WTO's Dispute Settlement Understanding (DSU) is widely viewed as a major innovation from the GATT regime in that it subordinates unilateral enforcement of trade law to a rule-based system of multilateral enforcement. I recognize the successes of the WTO regime but the institution effective permits (if not encourages) the unilateral enforcement of trade law outside of the DSU framework Specifically, I examine how the DSU system only provides a prospective remedy - that is, the DSU permits retaliation only for injuries that take place after the WTO litigation is concluded. The DSU thus immunizes violations of WTO trade law from retaliatory sanctioning so long as the offending measures are withdrawn at the end of the litigation process, which is often several years later. This immunity, which I refer to as the "stall-and-withdraw" loophole, leaves injured governments with no immediate remedy for WTO violations under the DSU system, regardless of how great the trade effects of the violation are. I suggest that the institutional design of the DSU effectively creates a need for the unilateral enforcement of trade rules and, oddly, provides legal protection for unilateral sanctions. I conclude by attempting to provide a view of the DSU that acknowledges its advances from its origins in the GATT regime but acknowledge its inability to completely control unilateral retaliation.

Keywords: international trade, international law, enforcement, unilateralism, GATT, WTO, DSU, sanctions, retaliation, trade

JEL Classification: F13, K33, K42, N70