Working Paper: CEPR ID: DP14477
Authors: Chad P. Bown; Soumaya Keynes
Abstract: On December 10, 2019, the WTO’s 25-year-old system of resolving disputes broke down. This paper explains why. It describes the dysfunctional system that preceded the WTO, when the United States dealt with politically troublesome imports by using voluntary export restraints and increasingly resorted to the “aggressively unilateral” Section 301 policy to resolve trade concerns. The WTO was a compromise between the rest of the world and the United States, whereby the latter accepted some constraints with the expectation that the new system of binding dispute settlement would serve its interests. But although the creation of the WTO resolved some concerns about American unilateralism in the short term, its system of handling disputes turned out to be politically unsustainable.
Keywords: WTO; dispute settlement; appellate body; antidumping; trade remedies
JEL Codes: F13
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| U.S. administration's dissatisfaction with the WTO's dispute resolution mechanisms (F13) | refusal to approve new members for the appellate body (F13) |
| refusal to approve new members for the appellate body (F13) | collapse of the dispute resolution system (J52) |
| U.S. unilateralism (F52) | perception of the WTO as ineffective (F13) |
| U.S. perception of WTO's rulings as biased against its trade remedies (F13) | political reaction that dismantled the dispute resolution framework (D74) |