Imaginary Risk, Public Health Regulation, and WTO Trade Dispute: A Rational Choice Perspective

Abstract

In this essay I seek answers to the following questions: why is it extremely difficult to resolve international trade disputes caused by domestic health risk regulation against a foreign food; why does the WTO legal system not work very well in solving the disputes; and what might be done to resolve the disputes properly, from a perspective of the rational choice model. I argue that it is irrational public fear which gave rise to decades-long, complex, and serious trade disputes. If the public are free from irrational fear, then there might be no pressure to impose an import ban and, consequently, no trade dispute and no non-compliance. Therefore an ultimate solution to trade conflict due to irrational fear should be sought in addressing imaginary risk directly. I suggest that the disputing parties provide consumers with information about their own welfare loss caused by the misguided import ban so that the public can make a rational decision on the imaginary risk problem.