This page intentionally left blank cambridge international trade and economic law As the processes of regionalisation and globalisation have intensified, there have been accompanying increases in the regulations of inter­ national trade and economic law at the levels of international, regional and national laws. The subject matter of this series is international economic law. Its core is the regulation of international trade, investment and cognate areas such as intellectual property and competition policy. The series publishes books on related regulatory areas, in particular human rights, labour, environment and culture, as well as sustainable development. These areas are vertically linked at the international, regional and national level, and the series extends to the implementation of these rules at these different levels. The series also includes works on governance, dealing with the structure and operation of related international organisations in the field of international economic law, and the way they interact with other sub­ jects of international and national law. Series editors: Dr Lorand Bartels, University of Cambridge Professor Thomas Cottier, University of Berne Professor William Davey, University of Illinois Books in the series: Trade Policy Flexibility and Enforcement in the WTO: A Law and Economics Analysis Simon A. B. Schropp The Multilaterization of International Investment Law Stephan W. Schill The Law, Economics and Politics of Retaliation in WTO Dispute Settlement Edited by Chad P. Bown and Joost Pauwelyn ThE LAW, EConomICS AnD PoLITICS of RETALIATIon In WTo DISPuTE SETTLEmEnT Edited by ChAD P. BoWn JooST PAuWELyn CAMBRIDGE UNIVERSITY PRESS Cambridge, New York, Melbourne, Madrid, Cape Town, Singapore, São Paulo, Delhi, Dubai, Tokyo Cambridge University Press The Edinburgh Building, Cambridge CB2 8RU, UK Published in the United States of America by Cambridge University Press, New York www.cambridge.org Information on this title: www.cambridge.org/9780521119979 © Cambridge University Press 2010 This publication is in copyright. Subject to statutory exception and to the provision of relevant collective licensing agreements, no reproduction of any part may take place without the written permission of Cambridge University Press. First published in print format 2010 ISBN-13 978-0-511-67526-3 eBook (NetLibrary) ISBN-13 978-0-521-11997-9 Hardback Cambridge University Press has no responsibility for the persistence or accuracy of urls for external or third-party internet websites referred to in this publication, and does not guarantee that any content on such websites is, or will remain, accurate or appropriate. ConTE nTS List of tables and figures i x Contributors x i Introduction: trade retaliation in WTo dispute settlement: a multi­disciplinary analysis 1 chad p. bown and joost pauwelyn part i Background and goal(s) of WTO retaliation 21 1 The nature of WTo arbitrations on retaliation 2 3 giorgio sacerdoti 2 The calculation and design of trade retaliation in context: what is the goal of suspending WTo obligations? 3 4 joost pauwelyn Comment on chapter 2 6 6 john h. jackson Comment on chapter 2 7 0 alan o. sykes 3 Extrapolating purpose from practice: rebalancing or inducing compliance 7 3 gregory shaffer and daniel ganin part ii A legal assessment after ten arbitration disputes 87 4 The law of permissible WTo retaliation 8 9 thomas sebastian v vi Contents Comment on chapter 4 12 8 nicolas lockhart 5 from Bananas to Byrd: damage calculation coming of age? 13 5 yves renouf part iii An economic assessment after ten arbitration disputes 14 7 6 The economics of permissible WTo retaliation 149 chad p. bown and michele ruta Comment on chapter 6 19 4 l. alan winters 7 Sticking to the rules: quantifying the market access that is potentially protected by WTo­sanctioned trade retaliation 19 8 simon j. evenett part iv The domestic politics and procedures for implementing trade retaliation 23 3 8 The united States’ experience and practice in suspending WTo obligations 235 scott d. andersen and justine blanchet 9 The European Community’s experience and practice in suspending WTo obligations 244 lothar ehring 10 The politics of selecting trade retaliation in the European Community: a view from the floor 267 håkan nordström 11 Canada’s experience and practice in suspending WTo obligations 277 vasken khabayan 12 Is retaliation useful? observations and analysis of mexico’s experience 28 1 jorge a. huerta­goldman Contents vii 13 Procedures for the design and implementation of trade retaliation in Brazil 29 7 luiz eduardo salles 14 Retaliation in the WTo: the experience of Antigua and Barbuda in US–Gambling 31 0 mark e. mendel part v Problems and options for reform 31 7 15 Evaluating the criticism that WTo retaliation rules undermine the utility of WTo dispute settlement for developing countries 31 9 hunter nottage 16 optimal sanctions in the WTo: the case for decoupling (and the uneasy case for the status quo) 33 9 alan o. sykes Comment on chapter 16 35 5 petros c. mavroidis 17 Sanctions in the WTo: problems and solutions 36 0 william j. davey 18 WTo retaliatory measures: the case for multilateral regulation of the domestic decision­ making process 37 3 reto malacrida 19 The WTo Secretariat and the role of economics in panels and arbitrations 391 chad p. bown Comment on chapter 19 43 4 reto malacrida 20 The equivalence standard under Article 22.4 of the DSu: a ‘tariffic’ misunderstanding? 44 6 simon schropp Comment on chapter 20 50 3 fritz breuss viii Contents part vi New frontiers and lessons from other fields 513 21 Cross­retaliation and suspension under the GATS and TRIPS agreements 51 5 werner zdouc 22 Cross­retaliation in TRIPS: issues of law and practice 53 6 frederick m. abbott 23 Preliminary thoughts on WTo retaliation in the services sector 58 9 arthur e. appleton 24 Compensation assessments: perspectives from investment arbitration 62 3 gabrielle kaufmann­kohler 25 Reforming WTo retaliation: any lessons from competition law? 64 1 simon j. evenett Index 64 8