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How Important can the Non-Violation Clause be for the GATT/WTO?

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  • Robert W. Staiger
  • Alan O. Sykes

Abstract

The "non-violation" clause was a major focus of the drafters of GATT in 1947, and its relevance was revisited and reaffirmed with the creation of the WTO in 1995. And according to the terms-of-trade theory of trade agreements, it has an important role to play in facilitating the success of the "shallow integration" approach that the GATT/WTO has adopted. Yet despite the prominence given to the non-violation clause by its legal drafters and suggested by economic theory, in GATT/WTO practice the observed performance of the non-violation complaint has been weak. Can a model account for the observed features of the usage and outcomes of non-violation claims? And if so, what is implied by these weak performance measures about the (on- and off-) equilibrium impacts of the non-violation clause on the joint welfare of the GATT/WTO member governments? We develop a model of non-violation claims in trade agreements, demonstrate that it can account for the observed features of the usage and outcomes of non-violation claims, and show that the weak performance measures of observed non-violation claims are not inconsistent with a valuable role for the non-violation clause in the GATT/WTO.

Suggested Citation

  • Robert W. Staiger & Alan O. Sykes, 2013. "How Important can the Non-Violation Clause be for the GATT/WTO?," NBER Working Papers 19256, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:19256
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    References listed on IDEAS

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    1. Chad P. Bown, 2005. "Trade Remedies and World Trade Organization Dispute Settlement: Why Are So Few Challenged?," The Journal of Legal Studies, University of Chicago Press, vol. 34(2), pages 515-555, June.
    2. Kyle Bagwell & Robert W. Staiger, 2001. "Domestic Policies, National Sovereignty, and International Economic Institutions," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 116(2), pages 519-562.
    3. Bagwell, Kyle & Staiger, Robert W., 2010. "Backward stealing and forward manipulation in the WTO," Journal of International Economics, Elsevier, vol. 82(1), pages 49-62, September.
    4. Giovanni Maggi & Robert W. Staiger, 2011. "The Role of Dispute Settlement Procedures in International Trade Agreements," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 126(1), pages 475-515.
    5. Oecd, 2006. "Case Law," Nuclear Law Bulletin, OECD Publishing, vol. 2005(2), pages 63-68.
    6. Kyle Bagwell & Robert W. Staiger, 2006. "Will International Rules on Subsidies Disrupt the World Trading System?," American Economic Review, American Economic Association, vol. 96(3), pages 877-895, June.
    7. Oecd, 2005. "Case Law," Nuclear Law Bulletin, OECD Publishing, vol. 2005(1), pages 95-110.
    8. Horn, Henrik & Johannesson, Louise & Mavroidis, Petros C., 2011. "The WTO Dispute Settlement System 1995-2010: Some Descriptive Statistics," Working Paper Series 891, Research Institute of Industrial Economics.
    9. Schwartz, Warren F & Sykes, Alan O, 2002. "The Economic Structure of Renegotiation and Dispute Resolution in the World Trade Organization," The Journal of Legal Studies, University of Chicago Press, vol. 31(1), pages 179-204, January.
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    Cited by:

    1. Gene M. Grossman & Phillip McCalman & Robert W. Staiger, 2021. "The “New” Economics of Trade Agreements: From Trade Liberalization to Regulatory Convergence?," Econometrica, Econometric Society, vol. 89(1), pages 215-249, January.
    2. Koh, Yumi & Lee, Gea M., 2023. "R&D subsidies in permissive and restrictive environment: Evidence from Korea," Research Policy, Elsevier, vol. 52(1).
    3. Ralph Ossa & Robert W. Staiger & Alan O. Sykes, 2020. "Disputes in International Investment and Trade," NBER Working Papers 27012, National Bureau of Economic Research, Inc.
    4. Maggi, Giovanni & Staiger, Robert W., 2020. "Learning by ruling and trade disputes," Journal of International Economics, Elsevier, vol. 126(C).
    5. Chad Bown & Kara Reynolds, 2015. "Trade flows and trade disputes," The Review of International Organizations, Springer, vol. 10(2), pages 145-177, June.
    6. Ossa, Ralph & Staiger, Robert W. & Sykes, Alan O., 2023. "Standing in international investment and trade disputes," Journal of International Economics, Elsevier, vol. 145(C).
    7. Kara M. Reynolds & Chad P. Bown, 2014. "Trade Flows and Trade Disputes," Working Papers 2014-05, American University, Department of Economics.

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    More about this item

    JEL classification:

    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • F1 - International Economics - - Trade
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • K12 - Law and Economics - - Basic Areas of Law - - - Contract Law
    • K33 - Law and Economics - - Other Substantive Areas of Law - - - International Law

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