25 Pages Posted: 31 Oct 2003
Date Written: September 12, 2003
This essay explains the WTO's enforcement mechanism in terms of interest group theory. Under the Dispute Settlement Understanding, a WTO member that fails to comply with a ruling in a trade dispute is subject to "retaliation" from the complaining member: the complaining member may raise tariffs against the offending member's products. This remedy creates incentives for exporters in the offending country to lobby their government in favor of compliance. As a result, the retaliation remedy promotes compliance without intruding directly on national institutions. It is thus superior to suggested reforms, like direct effect, that would commandeer courts or other national governmental bodies. The retaliation remedy resolves a dilemma at the heart of the world trade regime: how to give the WTO sufficient power to promote global trade without conferring so much power that the organization becomes a threat to sovereignty and representative government.
Keywords: WTO, compliance, interest groups, direct effect
Suggested Citation: Suggested Citation