David's Sling: Cross-Agreement Retaliation in International Trade Disputes

(2011) 45(2) Journal of World Trade 457–488

33 Pages Posted: 5 Jun 2015

See all articles by Andrew D. Mitchell

Andrew D. Mitchell

University of Melbourne - Law School

Constantinos Salonidis

Foley Hoag LLP

Date Written: June 5, 2015

Abstract

Cross-retaliation, where a World Trade Organization (WTO) member whose rights have been infringed under one WTO Agreement retaliates against the offending member under another WTO Agreement, is seen by some commentators as a way to counteract the deficiencies of conventional trade retaliation and mitigate the asymmetry of power in the WTO dispute settlement system. However, the potential of cross retaliation as an effective remedy remains unclear. This article argues that a credible and probable threat of cross-agreement retaliation could provide a powerful incentive for ex ante compliance. The credibility of the threat is established by reference to the WTO Agreement that is targeted. The suspension of Trade-Related Aspects of Intellectual Property Rights (TRIPS) obligations, in particular, holds great promise. The probability of the threat depends on the likelihood of the Dispute Settlement Body (DSB) authorization to suspend concessions, the outcomes of previous threats, and actions to operationalize cross-retaliation.

WTO jurisprudence has fleshed out the requirements of Article 22.3 of the Dispute Settlement Understanding (DSU), allowing relatively safe assumptions as to the likelihood of DSB authorization to suspend concessions across agreements where significant economic disparities exist between the disputing parties. Previous cases featuring the threat of cross-retaliation reveal a modest influence on the policies of disputing parties. Finally, the operationalization of cross agreement retaliation pursuant to the TRIPS Agreement is riddled with legal and policy problems, mainly in connection with the personal and territorial scopes of the suspension, the justiciable nature of intellectual property (IP) rights, the quantification of the suspension, the continuous supply of IP-dependent goods, and the consistency of the suspension with other, non-WTO international obligations. However, these problems do not prohibit developing countries from reaping the benefits of asymmetric information, so long as they create the impression of carefully structured retaliation plans that are ready to be triggered in the event of DSB authorization.

Keywords: WTO, TRIPS, cross-retaliation, trade disputes

Suggested Citation

Mitchell, Andrew D. and Salonidis, Constantinos, David's Sling: Cross-Agreement Retaliation in International Trade Disputes (June 5, 2015). (2011) 45(2) Journal of World Trade 457–488 . Available at SSRN: https://ssrn.com/abstract=2614807

Andrew D. Mitchell (Contact Author)

University of Melbourne - Law School ( email )

University Square
185 Pelham Street, Carlton
Victoria, Victoria 3010
Australia
+61383441098 (Phone)
+61393472392 (Fax)

HOME PAGE: http://www.law.unimelb.edu.au/staff/Andrew%20Mitchell

Constantinos Salonidis

Foley Hoag LLP ( email )

155 Seaport Boulevard
Boston, MA 02210-2600
United States

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