Crimes and Punishments

The World Trade Organization was designed to promote freer trade. One of its unique aspects is that it authorizes members to retaliate against violations by raising tariffs. Yet by allowing retaliation as a response to violations, the WTO system could actually undermine its stated goal. Indeed, at last count, the WTO authorized more protection on US exports to Europe than were removed on these exports as a result of the Uruguay Round. Critics also contend that the WTO system has failed...
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The World Trade Organization was designed to promote freer trade. One of its unique aspects is that it authorizes members to retaliate against violations by raising tariffs. Yet by allowing retaliation as a response to violations, the WTO system could actually undermine its stated goal. Indeed, at last count, the WTO authorized more protection on US exports to Europe than were removed on these exports as a result of the Uruguay Round. Critics also contend that the WTO system has failed to induce members to comply with its rules, undermines national sovereignty, and is inherently unfair. Robert Lawrence appraises these concerns by considering the rationale for retaliation and how it is implemented in practice. He also presents a novel proposal for establishing a system of contingent liberalization commitments that would improve on the current system while preserving its essential character. Adopting this system could eliminate increased protection as a response to violations. It could also improve compliance while at the same time respecting national sovereignty and making the system fairer.