Why Compensation Cannot Replace Trade Retaliation in the WTO Dispute Settlement Understanding

World Trade Review, Vol. 8, No. 2 pp. 315-338, 2009

Posted: 17 Apr 2009

See all articles by Bryan Christopher Mercurio

Bryan Christopher Mercurio

Chinese University of Hong Kong - Faculty of Law; University of New South Wales - Faculty of Law

Date Written: April 17, 2009

Abstract

Throughout the course of the DSU Review, Members and commentators alike have proposed numerous modifications to the WTO DSU covering a wide range of areas. One area which has received quite a bit of attention is that of retaliatory measures in the implementation phase of the dispute settlement process. This article does not attempt to recap the debate over the appropriateness of trade retaliation or even to discuss all potential amendments targeting this issue. It does, however, identify some of the key criticisms of trade retaliation before analyzing and evaluating the worthiness of trade and/or financial compensation as an alternative. The article finds that neither trade nor financial compensation will do much to resolve the prominent criticisms of trade retaliation while also finding both options would add several uncertainties to the system and, far from increasing compliance with the rulings and recommendations of the DSB, could in fact increase the instances of noncompliance.

Keywords: WTO, dispute settlement, trade retaliation, compensation, noncompliance

JEL Classification: F1, F13, K10, K33, K42

Suggested Citation

Mercurio, Bryan Christopher, Why Compensation Cannot Replace Trade Retaliation in the WTO Dispute Settlement Understanding (April 17, 2009). World Trade Review, Vol. 8, No. 2 pp. 315-338, 2009. Available at SSRN: https://ssrn.com/abstract=1389196

Bryan Christopher Mercurio (Contact Author)

Chinese University of Hong Kong - Faculty of Law ( email )

6/F Western Teaching Complex
Shatin, New Territories
Hong Kong
(852) 2696 1139 (Phone)

University of New South Wales - Faculty of Law

Kensington, New South Wales 2052
Australia

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