Rethinking Retaliation in the Wto Dispute Settlement System: Leveling the Playing Field for Developing Countries in Asymmetric Disputes

Abstract

This chapter examines the effectiveness of the retaliation remedy and recommends ways to improve compliance and level the playing for developing countries in asymmetric disputes. It discusses the WTO's dispute settlement process and the remedies available to injured parties under the Dispute Settlement Understanding (DSU). It then examines the principle of retaliation, or negative reciprocity, and the logic behind retaliation as a tool to enforce compliance with international trade rules. The chapter analyzes the seven WTO cases resulting in authorized retaliation thus far in order to determine whether the imposition of countermeasures, or the threat thereof, has been effective at inducing violators to comply with their WTO obligations. It examines three alternative approaches to the WTO's existing bilateral retaliation scheme, focusing specifically on cross sector retaliation as a way to facilitate compliance and level the playing field for developing countries in asymmetric disputes. Keywords: asymmetric disputes; cross sector retaliation; developing countries; Dispute Settlement Understanding (DSU); international trade rules; retaliation remedy; WTO Dispute Settlement