The WTO at 20: an economist’s perspective

Abstract

Purpose – This paper aims to clarify the role that economic methodology and approach can help the World Trade Organization (WTO) Appellate Body (AB)make better decisions. The author discusses two prominent disputes to demonstrate how economics could have resulted in improved AB decision. First, there is the question of whether countervailing duties can continue to be imposed subsequent to privatization of state-owned enterprises. Second, there is the frequently challenged zeroing issue. Design/methodology/approach – The author uses a case study method. He reviews the details of specific disputes and explains how standard microeconomic methods would have produced greater clarity in the determinations and hence promoted a more efficient dispute resolution process. Findings – In this commentary, however, the author addresses a frustration with the AB, namely, the reluctance of the AB to embrace economics in its decision-making. He argues that economic methods would produce superior determinations. Originality/value – This paper fulfils an identified need to document how economic methods would have led to better AB decisions.