This article examines World Trade Organization (WTO) jurisprudence on the question as to if the purpose of suspending concessions or other obligations is to induce compliance, to rebalance concessions, or both. WTO jurisprudence on this issue can be systematized into three steps. First, inducing compliance is the general purpose of suspension as complaining parties have the right to request the authorization to suspend concessions or other obligations as long as they meet the requirements spelled out in the WTO Dispute Settlement Understanding. The second step relates to the level of suspension. In general, WTO jurisprudence has accorded a higher hierarchy to the purpose of rebalancing concessions or other obligations, with some exceptions made regarding disputes on prohibited subsidies and diachronically variable suspension levels. As a third step, WTO jurisprudence has bestowed complaining Members freedom concerning the suspension's content, so as to induce the defending party to comply. Keeping these three steps in mind will hopefully make understanding WTO jurisprudence on suspension of concessions or other obligations easier.

Fossil fuel subsidies undermine efforts to mitigate climate change, and they damage the trading system. Multilateral discussion is hampered by inconsistent definitions and incomplete data, which could increase the risks of WTO disputes. Members do not notify such subsidies as much as they should under the Agreement on Subsidies and Countervailing Measures (ASCM), which limits the usefulness of the SCM Committee. The reports of the Trade Policy Review Mechanism on individual countries and on the trading system draw on a wider range of sources, creating an opportunity for non-governmental organizations (NGOs) to provide the missing data from publicly available sources. We suggest a new template that could be used for such third-party notifications. The objective is to shine a light on all fossil fuel subsidies that cause market distortions, especially trade distortions. The result should be better, more comparable data for the Secretariat, governments, and researchers, providing the basis for better-informed discussion of the incidence of fossil fuel subsidies and rationale for their use.

The most favoured nation (MFN) clauses in preferential trade agreements (PTAs) under GATT Article XXIV or under GATS Article V entrench the preferential trade relations between the PTA parties because the trade liberalization in future PTAs with third parties will be constrained by the existing PTA MFN clauses. Trade liberalization based on PTA MFN clauses cannot be considered part of the internal trade liberalization required by GATT Article XXIV:8 or GATS Article V:1. The exclusionary effects caused by trade liberalization through PTA MFN clauses increase the burden on trade with third parties. As a result, PTA MFN clauses do not meet the necessity test under the Appellate Body's decision in Turkey–Textiles, as reasonable alternatives to the PTA MFN clauses are available. For these reasons, PTA MFN clauses fail the requirements for legal defences under GATT Article XXIV or GATS Article V for their violations of the general MFN clauses under GATT Article I and GATS Article II. For those products or services subject to existing PTA MFN clauses, any preferential liberalization based on PTA MFN clauses should be accorded non-discriminatorily to all WTO members in accordance with GATT Article I or GATS Article II.

Numerous WTO members pursue regional economic integration with both other members and non-WTO-members. The resulting derogation from the most-favoured-nation principle needs to be justified in accordance with the relevant WTO provisions. Regional integration in the service sector is expressly allowed between WTO and non-WTO members pursuant to GATS Article V. In the absence of clear regulation, it has been questioned whether the same is true for regional trade agreements (RTAs) covering trade in goods. Providing a comprehensive interpretation, this paper argues that neither GATT Article XXIV nor the Enabling Clause require the WTO membership of all the parties to an RTA.

The literature on escape clauses in international commerce focuses on the workings of trade remedies. The logic is that, by adhering to a strict methodology that is subject to legal review, trade remedies credibly signal that the government is only temporarily defecting from free trade. And yet, countries often turn, instead, to a measure that does not adhere to a strict methodology and is not subject to legal review: binding overhang, or the gap between a country's bound and applied tariffs. What explains a government's decision to use trade remedies or binding overhang? We argue that trade remedies are used where import surges are big enough that injury can be proven, but low enough that governments have incentive to prove it. Otherwise, binding overhang is their flexibility measure of choice. We conduct a variety of empirical analyses concerning 22 emerging economies with access to both trade remedies and binding overhang. The results strongly bear out our hypothesis, shedding new light on governments' incentives over the design of the law governing flexibility provisions.

European Union (EU) anti-dumping duties imposed on Chinese leather footwear imports led to a challenge before the WTO Dispute Settlement body. The Panel ruled that the EU's presumption that Chinese exporters are subject to economy-wide non-market-economy anti-dumping duties was inconsistent with WTO obligations. The EU declined to appeal this outcome and subsequently changed its anti-dumping regulation in response. This dispute also illustrates the rapidly changing structure of global manufacturing and how these changes can scramble the traditional political economy of import restrictions. In addition, the case highlights how EU members' positions on trade remedy actions can depend importantly on national production patterns and firms' responses to economic pressures from globalization and the further development of global supply chains.

EC–Seal Products has been characterized as a contest between local moral preferences about animal welfare, on the one hand, and global commitments to trade disciplines on the other. But that description fails to take into account the development of international legal norms concerning animal welfare and their relevance to this case, as well as to other potential disputes involving animal welfare measures that affect trade. The international dimension of animal welfare implicates two ongoing debates in international trade law: what the relationship should be between WTO law and general international law, and the extent to which ‘public morals’ under Article XX(a) of GATT can be locally defined or need to be internationally shared. This Article examines the argument that there is a general principle of international law concerning animal welfare, and analyzes the role that international norms regarding animal welfare should play in EC–Seal Products.

In this paper we empirically examine the determinants on utilization of the Korea–ASEAN Free Trade Agreement (KAFTA) by employing a database provided by the Korea Customs and Trade Development Institute. We find that, although three effects, namely preferential margin (margin effect), rules of origin restrictiveness (ROO effect), and average export volume (scale effect), contribute to determining the utilization of the FTA, the scale effect has the greatest impact. Our results suggest that, since firms with relatively small volumes of trade are usually small and medium-size enterprises (SMEs), policy assistance for reducing administrative costs should be geared toward SMEs. Our results further indicate that policymakers should also try to negotiate more extensive tariff reductions on products not only where MFN rates are high but also where shipments are large.

Many national governments around the world applied export restrictions in order to achieve domestic market stabilization during the 2007/8 world food price crisis. However, current literature says little about how these export restrictions interact with existing domestic support measures in jointly determining domestic market outcomes. This paper analyzes this interaction by providing a quantitative assessment on how increased spending on agricultural domestic support in China offset the negative effects on grain production caused by the country's export restrictions and how these two types of measures jointly moderated rises of domestic grain prices. In particular, domestic and trade measures on key agricultural inputs such as fertilizers are shown to contribute significantly to expand grain outputs and reduce domestic market prices. While the short-term goal in stabilizing domestic grain prices was achieved through these measures, large fiscal and efficiency costs were incurred, especially considering how the short-term export restrictions seemingly necessitated the extra spending on input-based domestic subsidies. We also demonstrate that the costs to China and the rest of the world of these complicated policy interventions may be partially avoidable with a simpler and less distorting instrument.

The legal-economic implications of how WTO members apply an import-restricting safeguard measure become more complex in light of the increasing web of trade concessions undertaken through their preferential trade agreements (PTAs) in addition to their WTO commitments. This paper examines a number of complex issues that arose in the WTO litigation between five new PTA partners through the Dominican Republic–Safeguard Measures disputes. First, we highlight the difficulties in assessing the extent to which safeguards imposed following a PTA are the result of PTA concessions relative to developments that pre-date or are otherwise unrelated to the PTA. Second, we examine how the WTO Panel resolved a number of previously unanswered questions in the WTO's safeguards jurisprudence that arose in these cases. We suggest that the Panel rightly foreclosed a number of potentially dubious practices that WTO members might otherwise have pursued when using safeguards to circumvent trade concessions. Third, we identify how safeguard-related provisions within a PTA may give rise to constraints that subsequently affect how a country may apply safeguards available under the WTO Agreements, and we describe some implications for PTA design and negotiation. Finally, we analyze the broader implications that arise from the interplay of PTAs, safeguards, and dispute settlement in light of the availability of both relatively substitutable policy instruments and dispute resolution forums.

Every third dispute brought to the WTO and not withdrawn early is settled amicably through a mutually agreed solution (MAS). This includes high-profile and long-standing WTO disputes such as EC–Bananas or Softwood Lumber. By offering a negotiated solution to hard cases, MAS have added stability to the multilateral trading system. MAS, however, also raise concerns. Settlements favour the instant resolution of disputes, but may conflict with third party interests and collective stakes. Where WTO members use their MAS to contract out of WTO law (‘WTO+’/‘WTO–’MAS), the multilateral trading system may be at risk. In addition, new forms of bilateral (interim-)settlements not foreseen in the DSU have recently emerged which currently escape multilateral disciplines. This article assesses how well the DSU balances the competing interests involved in amicable settlements, preserving the contractual flexibility of disputants while safeguarding multilateral interests. Contributing to current DSU reform debates, the article rejects the need for greater MAS enforceability, endorses the strengthening of procedural and substantive safeguards protecting collective stakeholders in settlements, and calls for new DSU disciplines on interim-settlements.

China's accession to the WTO in 2001 is widely accepted as a landmark event for the multilateral trade system and for the country. The large-scale WTO-plus commitments have nevertheless received unceasing criticism and discussion. This article is concerned with the resulting policy implications for the Chinese initiative to become a global producer of large civil aircraft at the next stage of development. A real-life case study is expected to provide robust evidence for inquiring whether China and emerging economies alike can smoothly advance up the global value chain while honouring their WTO obligations in good faith. The article confirms the widespread opinion that there are vast legal uncertainties ahead for China throughout this journey, and for that reason, a rigorous market-orientation effort is needed to strengthen its ability to compete in the commercial aviation sector.

This paper attempts to model trade facilitation in a multi-regional and multi-sectoral computable general equilibrium (CGE) model, MIRAGE. It follows Decreux and Fontagné (2009) in modeling trade facilitation and in assuming that administrative barriers are an iceberg cost. I extend their model using more comprehensive measures of ad-valorem equivalents (AVEs) of red tape costs, which are computed from a gravity model, and are introduced in the CGE model. The novelty in using those AVEs is that they take into account the effects of bureaucracy, internet coverage, corruption, and geographical barriers on the time to trade. The paper has four major findings. Gains derived from trade facilitation are more significant for developing economies (especially for the Middle East and North Africa region and Sub-Saharan countries) than for developed ones, whether in terms of welfare gain (either in the short or long run) or increase in trade. Second, long-run welfare effects of trade facilitation are much higher than in the short run. Third, trade facilitation helps boost both intra-regional trade and inter-regional trade. Fourth and most interestingly, it also helps improve export diversification, leading to an expansion in those sectors that are more sensitive to time, such as food, textiles, and electronics.

Based on the new conceptualization of the world trading system as the world trade ‘community’, this Article illuminates its internal operation based on legal discourse. The Article first defines WTO norms as lingua franca of the world trade community that enables various forms of discourse among members of the community. It then introduces three main institutionalized forms of the WTO discourse, namely adjudication, peer review, and consultation/negotiation. These three forms of WTO discourse are mainly responsible for the diurnal operation of the world trade community. The Article also explores the intermodal dynamics among these three forms of WTO discourse and demonstrates that such dynamics might generate both positive and negative consequences.

In July 2009, Chinese steel producers of grain oriented electrical steel filed anti-dumping (AD) and countervailing duty (CVD) cases against US and Russian producers. The US challenged the duties for a variety a reasons, many of which involved deficiencies in the producers' application to China's investigating authority, the Ministry of Commerce of the People's Republic of China (MOFCOM). The US also challenged certain aspects of MOFCOM's injury analysis. The Panel and Appellate Body ruled in favor of the US on virtually every issue. Given the deficiencies in the application and China's handling of the case, the Panel and AB decisions were justified. In a larger sense, however, we believe China may well emerge as the ‘winner’ in this dispute as this case establishes important standards for allegations and evidence in applications, standards that other countries (including the US) likely have failed to meet when they have imposed AD and CVD orders on the largest target country, China.

Despite many legal rulings to clarify the WTO inconsistency of zeroing practices, in practically all aspects of antidumping proceedings, the United States declined to categorically rectify the illegal antidumping duties based on zeroing calculation methods. This dispute is merely example of a number of disputes where the US government had to exhaust the whole process for proper implementation of the WTO rulings under its domestic legal system. The US approach is starkly contrasted with the position taken by the European Union that categorically terminates zeroing practices pursuant to the WTO rulings. While the WTO system indeed recognizes individual Member's peculiar regulatory systems and policies during implementation phases, the current situation in which WTO Members must individually resort to the dispute settlement system in order to rectify the US zeroing practices raises a serious concern regarding the legitimacy and integrity of the WTO dispute settlement system. Maybe it is time for WTO Members to agree on better implementation mechanisms before more Members try to develop overly burdensome and complicated regulatory processes for compliance.

This section is intended for occasional contributions from on-the-ground practitioners. Our hope is that the definition of this category of paper will inspire practitioners to submit notes and articles – typically in the range of 2,000 to 10,000 words – to the World Trade Review. As with all notes and articles submitted to the World Trade Review, manuscripts in this category will be reviewed by independent referees. However, the focus is intended to be practice oriented and at least one of the two referees will be a fellow practitioner.

On 16 December 2011, Russia gained the approval of 153 other member states to join the World Trade Organization (WTO). During its arduous eighteen-year accession, Russian officials reformed a wide range of laws and policies that could affect trade.1 Russia made these changes because senior Russian officials believed that improved governance would pay off in greater foreign investment, and that investment in turn would stimulate economic growth.2 President Vladimir Putin acknowledged ‘countries compete in the attractiveness of their business climate … quality of state institutions and effectiveness of the court and legal system’. Ivan Tchakarov, chief economist at the Russian brokerage Renaissance Capital, asserted ‘By becoming a WTO member, Russia will have to import … rules and regulations that will address the very issues that foreign investors usually complain about, like corruption, the protection of minority shareholders, the independence of the judiciary.’3