The GATS (General Agreement on Trade in Services) is a highly complicated legal instrument and prone to various interpretations because of the embedded ambiguity. It should not come as a surprise that in the context of all disputes concerning services, WTO panels and the Appellate Body reached diametrically opposite conclusions on the same issues. Un-appealed panel reports, on the other hand, have not been welcome either. One of the major, if not the major, issue is the legal relationship between Arts. XVI and XVII GATS, which regulate market access. The manner in which this relationship has been interpreted inescapably leads to constructing the GATS as a move beyond negative integration. This is at odds with the intent of the founding fathers, the letter and the spirit of the GATS itself. Subjecting Art. XVI to Art. XVII GATS guarantees respect of the negative integration character of GATS. It thus avoids internationalizing issues that WTO Members want to keep in their domaine reservé. Counter-intuitively probably, it allows for more trade liberalization. Using the unfortunate US–Gambling report as an example, this report suggests an approach to understanding Art. XVI as a sub-set of Art. XVII GATS.

This paper attempts to fill a gap in the trade literature by providing a comprehensive overview of services liberalization commitments in the new generation of preferential trade agreements (PTAs) as compared to prevailing GATS commitments and Doha Round offers. The paper reviews the commitments undertaken by 36 WTO Members (counting the EC as one) under mode 1 (cross-border supply) and mode 3 (commercial presence) in 32 PTAs negotiated since 2000. Among other things, the results suggest that, overall, PTA commitments tend to go significantly beyond GATS offers. Countries that have signed PTAs with the United States have made spectacular improvements, but GATS+ commitments are not limited to such agreements. The paper also discusses the potential economic costs arising from these preferential agreements and implications for the role of GATS and for multilateral services negotiations. The paper concludes by exploring possible approaches to overcome the downsides of services PTAs, including suggestions for a more pro-active role for the WTO in the surveillance of these agreements.

This paper reviews psychological reasons why the enthusiasm of the general public for free international trade might be less than that of the economist. Six specific reasons are advanced: (1) lay views of utility emphasize employment over consumption; (2) status quo bias results from loss aversion; (3) people think altruistically but parochially; (4) people often consider fairness in bargaining situations; (5) people may hold inappropriate fixed pie beliefs; and (6) people may misunderstand Ricardo's principle of comparative advantage. The reasons vary in their apparent rationality and appear to operate in concert rather than independently.

One goal that both developed and developing countries share is to increase their export earnings. To do this, countries sometimes resort to various export promotion schemes or request ‘special and differential treatment’ for their exports. However, countries have not fully embraced the notion that their own import tariffs act as a tax on their exports. That is, import protection frustrates their goal of increasing exports. This paper presents quantitative estimates of the extent to which import tariffs discourage exports. The results show that for some countries the bias imparted by tariffs is substantial. Therefore, reducing import tariffs is one way to improve export incentives.

Conventional wisdom tells us that in Korea–Beef, the Appellate Body interpreted the word ‘necessary’ in GATT Article XX to require a cost–benefit balancing test. The Appellate Body is supposed to have applied this test also in EC–Asbestos, US–Gambling (involving GATS Article XIV), and Dominican Republic–Cigarettes. In this article I demonstrate, by detailed analysis of the opinions, that the Appellate Body has never engaged in such balancing. They have stated the balancing test, but in every case they have also stated the principle that Members get to choose their own level of protection, which is logically inconsistent with judicial review by cost–benefit balancing. And they have decided every case by reference to the ‘own level of protection’ principle. The Appellate Body is right not to balance. Balancing is not authorized by the treaty texts, and it is not needed to prevent inefficient harm to foreign interests.

Ranging from the denial of direct effect to WTO law by the Court of Justice to a WTO-friendly legislative culture currently booming in the EU's political institutions, different approaches towards WTO law have been adopted within the EU. This article classifies the different approaches into reactive, coactive, and proactive by drawing on their common characteristics. The principal aim is to explore the considerations shaping the development of the different approaches and to argue that these stem from the interaction between the judiciary and the legislature. In doing so, this article purports to provide a comprehensive view of the application of WTO law within the Community legal order.

Economists have increasingly become involved in trade remedy and litigation matters that call for economic interpretation or quantification. The literature on the use of econometric methods in response to legal requirements of trade policy is rather limited. This article contributes to filling this gap by demonstrating the efficacy of using a simple ‘probabilistic’ model in analyzing the ‘likelihood’ of injury to the local industry concerned, following a finding of continuation or recurrence of dumping (or countervailable subsidies). The legal concept of ‘likelihood’ is not only particularly well-suited to illustrate the systemic need for trade lawyers and economists to cooperate. It is also of imminent practical relevance with a groundswell of ‘sunset’ reviews looming on the horizon. We discuss the significance of economic analysis for trade remedy investigations by reviewing the literature, the applicable WTO rules, and, in particular, the pertinent case law. The potential value of probabilistic simulations for ‘likelihood’ determinations is exemplified using a real-world application. Using data from past United States International Trade Commission investigations, we find that a probabilistic model that takes account of the uncertainty surrounding economic parameters reduces the risk of misjudging the effect on the domestic industry of a termination of trade remedies.

The arcane distinction between ‘rules’, ‘exceptions’, and ‘autonomous rights’ has troubled WTO dispute settlement since its earliest days, primarily with respect to procedural burden-of-proof questions. Yet in its report, the EC–Biotech panel relied on a techno-textual understanding of this distinction to interpret the substantive applicability of Articles 2.2, 5.1, and 5.7 SPS – the WTO’s fundamental rules on the degree of scientific certainty of risk required to allow a state to restrict imports of goods due to human, animal, or plant health or life concerns. This article critiques the panel’s approach on the backdrop of WTO jurisprudence and deontic logic, arguing that the norm-category of ‘autonomous rights’ does not actually exist; that the Article 2.2–5.1/5.7 SPS relationship should be more straightforwardly construed than the panel’s analysis would suggest; and that the disorderly and incoherent outcome of the panel’s analysis serves as a cautionary tale against excessive textualism in WTO dispute settlement.

The Appellate Body decision in the steel dispute is the latest in a line of unsatisfactory decisions in the safeguards area. The problem stems from the fact that the treaty text regarding the preconditions for the use of safeguard measures is badly deficient. The Appellate Body with its usual emphasis on textualism has done little to resolve the puzzles that the text creates. WTO members are left with little guidance about the proper use of safeguards beyond some confusing and sometimes incoherent standards. We review these issues as they have arisen in prior decisions, and then discuss the details of the steel dispute. Our emphasis there is on the panel decision more than the Appellate Body report, as the latter breaks little new ground.

Kapstein begins by stating that ‘If any norm characterizes international economic relations, it is probably that they should be carried out on a “level playing field”’ (p. xi). He then sets out to offer his vision of what such leveling would amount to. The book offers what he calls a ‘liberal internationalist’ perspective on global economic justice, a view defined in opposition to two other views introduced and explored throughout: communitarianism, on the one hand, which according to him takes states too seriously by denying, beyond a certain minimal level, obligations to those who do not belong to them; and cosmopolitanism, on the other hand, which he thinks does not take states seriously enough by failing to acknowledge, to a sufficient degree, the special moral importance of shared citizenship. By way of contrast, liberal internationalism takes states as given, but acknowledges that there are moral obligations tying together states into a society of states, a society that, according to Kapstein's ideal, is supposed to be inclusive, participatory, and welfare-enhancing for all states.

It is commonly perceived that much of the initiative for removal of distortions in trade in agriculture has to come from the developed world. This generalization is not valid across all agricultural products, in particular for tropical products that are predominantly produced in developing countries and constitute a large share of their exports. It emerges that export of most of these products suffers not because of barriers in advanced countries, but from those in the developing world. This implies reciprocal benefits from growth in counter-trade if developing countries agree on more stringent trade liberalization measures for them. Cotton, sugar and bananas are important exceptions; they face trade barriers in some developed economies, so they deserve specific attention of trade negotiators.

The WTO, we hope, is an institution that mutes the importance of raw power – provides a system for working out problems among countries in which the interests of smaller countries are not always overwhelmed by those of larger. The two books reviewed both address this issue, but in different ways. The Odell volume (a collection of studies by different analysts) reviews a number of WTO events in which developed and developing country interests were at odds; e.g., the ‘bananas dispute’ involving Ecuador, the US, and the European Communities. The studies in that volume document the skill of developing country negotiators to use the system to their advantage; they demonstrate that the WTO process often came to outcomes more favorable to smaller countries than a simple weighing of relative power would imply.