Transparency, one of the fundamental norms of the trading system, is increasingly seen as an essential tool in the governance of international trade. Enhanced monitoring and surveillance of emergency measures was central to the international effort to mitigate the effects of the financial crisis that began in 2008. This paper develops a new analytic framework for thinking about WTO transparency provisions. We apply this framework to a detailed case study of the Agreement on Subsidies and Countervailing Measures, and then compare this experience to other domains within the WTO. We show that the WTO's windows on the trading system are cloudier than they ought to be. We conclude with some recommendations for improving WTO transparency tools.

The success of existing GATT/WTO safeguard or flexibility provisions to sustain long-run liberalization stems from their procedural criteria (e.g., transparent and participatory decisions to impose new import restrictions) overcoming their suspect economic criteria (e.g., injury). The proposed SSM includes no procedural and minimal notification requirements. It would expand by arithmetic formulas the bounds within which a Member might unilaterally impose new import restrictions. Simulations indicate that the formulas provide a poor guide for policy – they would (a) allow an import restriction more often in situations when it is not beneficial than when it is, and (b) in situations in which an import restriction would help, they more often ban it than allow it. If procedural requirements are out – i.e., developing Members insist on a ‘usable’ safeguard – then the simple rule ‘bound rates may be exceeded for a maximum of [x] tariff lines at any one time’ is better economics than the proposed price and volume triggers. (No economic criteria are better than bad economic criteria.) Each Member would have the flexibility to change its lists of Special Products and Sensitive Products, there being a limit on the numbers of products on the lists at any one time.

The Trade Policy Review Mechanism (TPRM) has been an integral part of the GATT/WTO since 1989 and shoulders a fundamental responsibility in making the regime more transparent. This paper asks: how has the TPRM responded to demands from developing countries for information and transparency? The paper uses a typology of information systems to explain the evolution of surveillance in the trade regime and asks whether the TPRM was assigned the functions of an ideal-type information system. The paper, then, evaluates the performance of the TPRM against its given mandate of increasing transparency to promote improved adherence with trade rules. It presents, for the first time, empirical evidence on the content of reports and the participation of countries, to highlight persisting content- and participation-related challenges. It discusses the capacity challenges within the WTO Secretariat and briefly outlines efforts made by developing countries to boost surveillance capacity at home. The paper ends by outlining priorities for monitoring in the trade regime: generating specific information that developing countries need, supporting domestic capacity for surveillance (including from non-official sources), and concentrating on improved peer review and follow-up procedures.

The WTO Dispute Settlement System (DSS) has been the object of many studies in politics, law, and economics focusing on institutional design problems. This paper contributes to such studies by accounting for the argumentative nature and sophisticated features of the DSS through a philosophical analysis of the procedures through which it is articulated. Jürgen Habermas's discourse theory is used as a hermeneutic device to disentangle the types of ‘orientations’ (compromise, consensus, and mutual understanding) pertaining to DSS procedures. We show that these latter are oriented primarily to put the parties in a position to reach mutual understanding. Such an orientation is no mere idiosyncrasy of the DSS but is the only one consistently conducive to the WTO's general aims, in response to the various types of disputes that may arise between its Members. Before closing, we bring our procedural considerations to bear on the reform proposals of the DSS.

This study offers new conclusions on the economic cost of a failed Doha Development Agenda (DDA). We assess potential outcome of the Doha Round as well as four protectionist scenarios using the MIRAGE Computable General Equilibrium (CGE) model. In a scenario where applied tariffs of World Trade Organization (WTO) economies would go up to currently bound tariff rates, world trade would decrease by 9.9% and world welfare by US$353 billion. The economic cost of a failed DDA is here evaluated by the difference between a cooperative scenario (DDA) and a protectionist one (US$412 billion in terms of welfare). Another point of view is to compare a resort to protectionism when the DDA is implemented with a resort to protectionism when the DDA is not implemented. The findings show that this trade agreement could prevent the potential reduction of US$809 billion of trade and, therefore, acts as an efficient multilateral ‘preventive’ scheme against the adverse consequences of trade ‘beggar-thy-neighbor’ policies.

Central bank intervention in foreign exchange markets may, under some conditions, stimulate exports and retard imports. In the past few years, this issue has moved to center stage because of the foreign exchange policies of China. Numerous public officials and commentators argue that China has engaged in impermissible ‘currency manipulation’, and various proposals for stiff action against China have been advanced. This paper considers the relationship between exchange rate policy and international trade, and addresses the questions of whether and how currency manipulation should be addressed by the international trading system. Our conclusions are at odds with much of what is currently being said by proponents of multilateral or unilateral actions against China. In particular, we question whether China's practices can be adjudicated to be ‘manipulation’ under international law, and doubt that their trade effects can be identified with the degree of confidence necessary to ascertain whether the practices ‘frustrate the intent’ of WTO/GATT commitments. The difficulty of identifying the trade effects of currency practices undermines the ability of the WTO dispute resolution system to address them, and calls into question the wisdom and legitimacy of unilateral countermeasures that have been proposed in various quarters.

It is a well-established theoretical result that the trade policy of a large country can directly affect its own and other countries' welfares by affecting international goods' prices. However, there exist very few empirical studies that analyze the effect of trade policy on international prices. With detailed data on unit values and tariffs, I show how policy actions in Europe disrupted the global shrimp market in a non-negligible way and set the stage for the anti-dumping case in the United States. The loss of Thailand's preferential trade status in Europe and the international differences in food-safety standards during the antibiotics crisis shifted especially Thai, Vietnamese, and Chinese shrimp exports away from Europe toward the United States in the late 1990s and early 2000s. I document how those shifting markets have decreased US prices for shrimp significantly compared to those in Europe.

At first glance, the Appellate Body Report in Bananas III (Article 21.5; Second Recourse) does not seem to be a case for the Guinness Book. The AB upheld most of the Panel's findings, and the EC lost big. This was hardly surprising, given that the contested measure only marginally differed from the measure at issue in the first recourse to a compliance Panel. It is at second sight that this AB Report reveals its interesting facets. We highlight a few remarkable legal and economics aspects, some of a more systemic nature, some offering practical insights: For practitioners, the role of estoppel in WTO litigation, the legal effect of Panel suggestions, and the relevance of Uruguay Round Modalities Papers as interpretative tools may be of interest. Readers more concerned with systemic aspects of the WTO may take interest in the economics of tariff quotas, the inherently discriminatory nature of tariff-quota allocation in the WTO, and the relevance of compliance proceedings for the damage calculation under Article 22.6 of the DSU.

This paper argues that testing the empirical implications of existing theories about institutions yields rich insights into the postwar trade regime. Market-failure theory predicts that the GATT/WTO will exert its strongest impact on trade between its largest member states. A theory based on security externalities implies that a sizeable expansion of trade will also occur between a subset of the contracting parties that alliance ties link. An analysis of the data shows that the evidence is consistent with both theories, making clear the value added of taking explicitly into account the economics and politics that motivated the establishment of the postwar regime and that governed its subsequent operation.

The negotiations under the aegis of the World Trade Organization (WTO) on the creation of rules on domestic regulations affecting trade in services have entered a critical stage. Within a general atmosphere of reflection and reluctance characterizing the Doha negotiations, this is the only front in recent years in which tangible progress is evident. This paper critically analyses the potential rules that Members currently appear to support and attempts to identify their shortcomings as well as those modifications or clarifications which are necessary to improve the impact and efficacy of the forthcoming rules (so-called ‘disciplines on domestic regulation’ in the parlance used in the General Agreement on Trade in Services – GATS). At the heart of the paper lies a thought-provoking proposal for a necessity test applicable across services sectors. Arguably, only a necessity test can allow for the elimination of unnecessary barriers to trade in services and regulatory arbitrariness.

The Doha Round must be concluded not because it will produce dramatic liberalization but because it will create greater security of market access. Its conclusion would strengthen, symbolically and substantively, the WTO's valuable role in restraining protectionism. What is on the table would constrain the scope for tariff protection in all goods, ban agricultural export subsidies in the industrial countries and sharply reduce the scope for distorting domestic support – by 70% in the EU and 60% in the US. Average farm tariffs that exporters face would fall to 12% (from 14.5%) and the tariffs on exports of manufactures to less than 2.5% (from about 3%). There are also environmental benefits to be captured, in particular disciplining the use of subsidies that encourage over-fishing and lowering tariffs on technologies that can help mitigate global warming. An agreement to facilitate trade by cutting red tape will further expand trade opportunities. Greater market access for the least-developed countries will result from the ‘duty free and quota free’ proposal and their ability to take advantage of new opportunities will be enhanced by the Doha-related ‘aid for trade’ initiative. Finally, concluding Doha would create space for multilateral cooperation on critical policy matters that lie outside the Doha Agenda, most urgently the trade policy implications of climate change mitigation.

The United States's enhanced continuous bond requirement [EBR] for goods subject to anti-dumping and countervailing duties was the focus of this dispute. Because of perceived problems with its ability to collect anti-dumping duties, the US amended its bonding requirements in 2004. Under the new rules, importers were required to secure a bond for an amount equal to the cash-deposit rate in effect on the date of entry of the merchandise multiplied by the importer's value of imports from the previous year, as well as pay cash deposits equal to the amount of anti-dumping duties per entry. The US claimed the additional deposit was reasonable and necessary to guarantee duty payment in case the anti-dumping duty increased during the administrative review. Thailand and India claimed that the additional deposit was unreasonable and an additional action against dumping and was therefore impermissible under GATT 1994 and the Anti-Dumping Agreement. The Appellate Body upheld the Panel's findings that while the Ad Note to Article VI:2 and 3 GATT 1994 authorizes the imposition of security requirements during the period following the imposition of an anti-dumping duty order, the additional security requirement resulting from the application of the EBR to shrimp was not ‘reasonable’ within the meaning of the Ad Note. The Appellate Body reversed the legal interpretation by the Panel that there is no obligation under the Ad Note to assess the risk of default by individual importers; however, the AB upheld the Panel's finding that the EBR is not ‘necessary’ within the meaning of Article XX(d) of the GATT 1994. As a result, the AB upheld the Panel's conclusion that the application of the EBR to shrimp was inconsistent with Article 18(1) of the Anti-Dumping Agreement because it was inconsistent with the Ad Note to Article VI:2 and 3 of the GATT 1994 and not justified by Article XX(d). We consider the AB's legal and economic reasoning to be largely correct. The US employed a sledgehammer to kill a mosquito and the AB used the concepts of ‘reasonableness’ in the Ad Note and ‘necessity’ in Article XX(d) to reject what fundamentally was a lack of proportionality, while leaving the door open for more reasonable application of bonding requirements.

This paper provides a legal-economic analysis of the unappealed WTO Panel Report in Mexico–Olive Oil. The case involved a countervailing-duty measure imposed by Mexico on imports of olive oil from the European Communities (in particular, Spain and Italy). The dispute raised important issues regarding the determination of causation of injury, as neither the Panel nor the investigating authority gave much credence to evidence that the main complaint of the domestic industry was the loss of a distribution agreement and brand-name rights with a Spanish exporter. The dispute also raised interesting concerns regarding the remedies for violations of procedural obligations in the conduct of anti-dumping/countervailing-duty investigations and the right of a domestic producer that has ceased production to seek protection under the trade-remedy laws.