This paper analyzes the dispute between Korea and the United States regarding the method of calculating anti-dumping duties. The case mirrors other recent WTO disputes involving zeroing. Even though it ceased zeroing in original investigations in December 2006, the United States implemented the policy change only prospectively. As a result, the margins applied to the products in this dispute remained unchanged because they had been calculated prior to the policy change. The United States did not contest Korea's claims. The Panel confirmed that zeroing was used and, following the long line of Panel and Appellate Body rulings, found the practice inconsistent with the Anti-Dumping Agreement. After the Panel Report was adopted, the United States recalculated the margins without zeroing. It, however, refused to refund unliquidated cash deposits that were based on zeroing, highlighting the United States's continued lukewarm compliance with WTO rulings on zeroing. This dispute offers an opportunity to ponder on weaknesses of the WTO Dispute Settlement and the ability of one Member to take advantage of it. Since the facts and their legal assessment were undisputed, why was litigation necessary? Can compliance with WTO law be improved with broader findings and more incisive remedies?

This paper provides a legal-economic assessment of issues arising in the Panel Report over the WTO's India–Agricultural Products dispute, one of a growing list of disputes arising at the intersection of the WTO and domestic regulatory policy over human, animal, or plant health. This dispute featured allegations that India's import measures applied against avian influenza- (AI-) infected countries over poultry and related products were too restrictive, in light of the World Organisation for Animal Health's (OIE's) scientifically motivated standards and guidelines. We rely on insights from a set of economic models of commercial poultry markets in the presence of negative externalities such as AI. We use such models to motivate critical tradeoffs arising at the intersection of government regulatory regimes designed to deal with AI and how they fit alongside trade agreements such as the WTO and standard-setting bodies such as the OIE, which combine to impose constraints on regulatory and trade policy. While we find the institutional design of the OIE to be well-motivated and we are in broad agreement with the overall thrust of the Panel Report in the dispute, we also highlight a number of subtle issues which pose long-term challenges for the multilateral trading system's ability to balance trade rules with public health concerns.

With its narrow focus on price-based policies and ‘explicit’ carbon prices, the EU carbon border adjustment mechanism (CBAM) aims to prevent carbon leakage by ensuring that imported products ‘bear’ the same exact economic costs ‘borne’ by EU products. The proposed US border carbon adjustment (BCA) and the recent proposal for a global steel and aluminium arrangement (GSAA), by contrast, reflect a broader focus on environmental equivalence and recourse to punitive or quasi-punitive remedies. All recently proposed carbon border measures suffer from specific limitations. Further, albeit to a different extent, they are all associated with problematic aspects in terms of WTO law compatibility. This research note enquires whether the GSAA could be fine-tuned at the regulatory design stage in such a way as to provide an environmentally effective and WTO law compatible way forward. The analysis illustrates that recourse to an installation-based approach, emission limit values and product standards would achieve these goals. Nonetheless, the implementation of this ambitious strategy would be fraught with political obstacles.

The emergence of Airbus transformed the market structure of the LCA industry into a duopoly of similar-sized full-range manufacturers. The financing of Airbus's upfront investment expenditures came in a significant proportion from public funds, which violated, in the US's opinion the SCM Agreement. While the Appellate Body follows this view of things to a large extent, it does so in a measured way: the category of per se illegal export subsidies is interpreted with a view to the manipulation of normal market conditions; the distortion on competitive conditions matters, not the increase of exports as such. Other aspects of subsidies law clarified are the relationship between effect and subsidy. They are closely related but not identical; rightly, the report operates from the premise that the SCM Agreement's regime focuses on the effect, and not on the subsidy as such, which is a manifestation of a political choice by a sovereign Member state. The Appellate Body affirms that a subsidy has a ‘life’, a shorthand for a beginning and an end: it follows that the effect of a subsidy is not bound to be permanent but is bound to terminate. It is to be regretted that the Appellate Body avoided clarifying to what extent partial privatization, hence sale of assets at market prices to private investors, ‘extinguish’ subsidies.

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.

This paper examines the World Trade Organization's Article 22.6 arbitration report on the dispute over the United States’ country of origin labeling (US–COOL) regulation for meat products. At prior phases of the legal process, a WTO Panel and the Appellate Body had sided with Canada and Mexico by finding that the US regulation had negatively affected their exports of livestock – cattle and hogs – to the US market. The arbitrators authorized Canada and Mexico to retaliate by over $1 billion against US exports – the second largest authorized retaliation on record and only the twelfth WTO dispute to reach the stage of an arbitration report. Our legal–economic analysis focuses on several issues in the arbitration report. First, the complainants requested that, to compute the permissible retaliation limit, the arbitrators consider a new formula that would include the effects of domestic price suppression. We present a simple, economics-based model to explain the arbitrators’ rejection of this proposal. Second, we provide market context for the $1 billion finding. The arbitrators relied on the trade effects’ formula, which sets the retaliation limit as equivalent to the perceived loss of export revenue from the WTO violation. We argue that this amount was implausibly large, given the conditions in the US market for cattle and hogs during this period. We then describe the challenges facing arbitrators as they construct such estimates, including those likely to have arisen in this dispute.

Preferential trade agreements (PTAs) have to be consistent with the WTO. Their monitoring at the multilateral level has failed so far for various reasons. The question arises what to do? Completion of the contract (‘legalization’) has failed repeatedly, and, in light of vested interests and incentives, there is no reason to believe it can succeed now. Judicialization can be discarded as well, since the incentives to enforce the WTO contract in this respect are lacking. The good arguments thus lie in favour of building bridges between the WTO and PTAs, and the weaker arguments with an effort to enhance enforcement against PTAs through either judicialization or legalization of the monitoring process.

In US–COOL, the Appellate Body (AB) of the World Trade Organization (WTO) found that the US measure imposing country of origin labelling (COOL) requirements on livestock of domestic, foreign, and mixed origin was in violation of the obligation to avoid discrimination embedded in Article 2.1 of the WTO Agreement on Technical Barriers to Trade (TBT). We argue that the AB could not and should not have reached this decision based on the information available to it. The AB adopted an erroneous methodology: under its view, the consistency of a measure coming under the purview of the TBT can be examined under Article 2.1 irrespective of its evaluation under Article 2.2 thereby making the two obligations distinct. The AB also failed to address the central question raised by this dispute: Does there exist an alternative to COOL that is less trade restrictive? We argue that the over-arching issue in this case should have been to determine what, if anything, the TBT Agreement did to alter or enhance the obligation of non-discrimination that was already embedded in the arsenal of the multilateral trading rules. Unless the AB asks this question in subsequent case law pertaining to the TBT, we risk seeing repetitions of similar mistakes in the future.

WTO rules prohibit Free Trade Areas (FTAs) that provide tariff-free access or services liberalization in only one or a few sectors. In this sense, a narrow, sectoral approach to concluding an FTA between the EU and the UK would contravene WTO law. However, assuming the EU and the UK were able to agree a substantially broad tariff-free FTA, WTO rules would not prevent them from moving further to maintain the bulk of the benefits of the Customs Union and the Single Market in a few key sectors. They could establish customs union-like conditions by coordinating external tariffs in some sectors and agreeing on relaxed Rules of Origin (RoOs) administered lightly and Single Market-like access could be approximated through sectoral Mutual Recognition Agreements. Such an approach would enable continued deep integration, whose desirability has been signalled on both sides. It would fall short of current market access levels even in the selected sectors, and, in the case of tariff coordination, re-create some of the limits to an independent trade policy that Brexit aimed to remove. If the trade-off were deemed desirable, however, the approach could be reconciled with WTO rules including the ‘Most Favoured Nation’ requirement that equal treatment be awarded to all WTO Member States.

The Aid for Trade Initiative needs to be revamped. This article describes the challenges the Initiative faces and describes the pros and cons of possible reforms. The Aid for Trade Initiative succeeded in mobilizing quickly a large amount of financial resources. However, because the Doha Round talks stalled, the aid mobilized could not support the implementation of a multilateral agreement. Instead, it was spent on various projects, some of them not clearly related to trade. This affected developing countries confidence in the Initiative. To make matters worse, in the midst of a fiscal crisis that threatens development budgets, the Initiative had difficulties showing convincing results. In order to preserve resource mobilization, the WTO is expanding the scope of the Initiative to new areas only remotely related to trade and the trade and development nexus. This is unlikely to build confidence. The WTO should rather narrow the scope of the Initiative in order to make it more focused and efficient.

The WTO's Appellate Body (AB) dealt with a number of issues for the first time in this Report. Importantly, it discussed the consistency of the European Union (EU) regulation with the multilateral rules on the conditions for deviating from the obligation to calculate individual dumping margins. Although China formally won the argument, the AB may have opened the door to treat China as a nonmarket economy (NME) even beyond 2016 when China's NME status was thought to expire under the terms of China's 2001 WTO Accession Protocol. The AB further dealt with numerous other issues ranging from statistical sampling to the treatment of confidential information. In handling its investigation, the EU authorities made a number of questionable decisions regarding the collection of information, and this aspect of the process was central to China's legal challenges.

There is growing concern over the use of domestic product regulations as technical barriers to trade on the one hand, and the WTO's incursion into domestic regulatory autonomy on the other. The TBTA seeks to balance competing interests – acknowledging but disciplining Members' regulatory control over traded goods. The effectiveness of these disciplines is limited by the exclusion of many modern domestic regulations from the scope of the TBTA; the surest way to prevent abuse of process-based product specifications is to subject them to the TBTA's disciplines. The WTO dispute settlement tribunals have affirmed the importance of the use or adoption of international standards. While Members are still entitled to introduce their own measures in some circumstances, the emphasis on international standards raises the status of standard-setting bodies. Despite their important new role, the composition, accountability, and decision-making procedures have so far escaped the kind of civil society scrutiny to which WTO deliberations are now subject. To achieve the TBTA's harmonization objectives, the development, and use of international standards and their legal recognition within the WTO regime should be revised to safeguard legitimate non-trade regulatory objectives.

Without a properly functioning dispute process, the obligations in a trade agreement may not be worth much. As part of the NAFTA renegotiation, the NAFTA parties should try to fix certain flaws in the NAFTA Chapter 20 dispute settlement process that emerged a few years after NAFTA came into force. Chapter 20 was used regularly in its early years, but usage dropped considerably after panel selection was blocked in a case involving US restrictions on Mexican sugar. In this paper, we examine recent innovations on panel selection in the TPP, CETA, and JEEPA dispute provisions, and draw from those to develop principles that can guide revisions to the NAFTA Chapter 20 panel selection process.

The WTO Panel report on China – Anti-dumping and Countervailing Duty Measures on Broiler Products from the United States was circulated to Members on 2 August 2013. In the report, the Panel examined a variety of issues challenged by the United States under various provisions of the General Agreement on Tariffs and Trade 1994, the Anti-dumping Agreement and the Agreement on Subsidies and Countervailing Measures. The Panel upheld the United States' claims on the majority of the issues, which covered certain procedural aspects of the anti-dumping and countervailing investigations such as the right to disclosure of ‘essential facts', as well as the substantive determinations including costing issues, the imposition of the ‘all others' rate on the basis of ‘facts available’, the price effects' analyses, the sufficiency of the public notices, and others. Notably the costing issues that came up in the case, although decided mostly on procedural grounds, provide food for thought, and are likely to feature again in future disputes.

This study describes and analyzes trends in China's participation in the WTO dispute settlement system during the first ten years of its membership. China has used the system to challenge differentiated treatment of its exports by its two largest trading partners, a theme related to sensitive aspects of its accession negotiations. The study reviews the record of China's conformity to WTO dispute settlement practices, and its contribution to their development, and finds that China is playing the role of a ‘system-maintainer’. The study concludes by considering a future challenge that the emergence of this large new player may pose for the system.

This article argues that the inclusion of provisions for the settlement of disputes in regional trade agreements enhances, rather than disrupts, the centrality of the World Trade Organization's dispute settlement system. Using a dataset that organizes exclusion clauses and special provisions for dispute settlement in regional trade agreements, the study develops a thematic typology that is used to examine the ways that disputes may be channelled between regional and multilateral dispute settlement institutions. This comparative empirical dimension offers a more accurate picture of the global contours of regionalization as they relate to the juridical aspects of trade governance, suggesting that the decentralization of dispute settlement inferred by the rapid development of regional bodies has been overstated.

The paper examines the global and regional implications of China's revitalized state capitalism model through the sectoral lens of the Chinese automotive industry, which stands at the intersection of both traditional and green industrial policy. At the multinational level, China skillfully facilitates local policy implementation that creates excess capacity by propping up local and national champions through convenient compliance with the WTO. At the bilateral level, China closely links purchasing and coercive diplomacy with protections for Chinese players both at home and abroad. Key endeavors like the Belt and Road Initiative open up overseas markets to develop global champions and secure foreign footholds for Chinese champions. Additionally, China's increasing reliance on exclusionary diplomacy provides political justifications to discriminate against foreign competitors within the Chinese market while moving forward with industrial upgrading of domestic players. When linked together, these factors – all byproducts of China's approach to state-led capitalism – combine to explain China's efforts to create a race to the top.

International Economic Law (IEL) has largely regulated cross-border trade and investment in the post-WWII world. IEL has become an important part of the Liberal International Order that prescribes a set of rule-based relationships for international cooperation based on political liberalism, economic liberalism, and liberal internationalism. However, economic globalization has witnessed a relative decline, especially after the 2008 global financial crisis and the COVID-19 pandemic. This form of ‘de-globalization’ challenges the assumptions upon which modern IEL is premised. This introductory article to the special issue on ‘Domestic Investment Laws and International Economic Law in the Liberal International Order’ explains how domestic law has started playing an increasingly important role in regulating foreign investment. Often overlooked instruments such as Domestic Investment Laws, Investment Screening Mechanisms, and Investment Promotion Agencies are now important tools in promoting or restricting foreign investment flows. Expanding on this premise, the article examines the transition from international to domestic in the Liberal International Order with a focus on Domestic Investment Laws. The move to domestic law does not signal a new era of economic isolation for States. Instead, it presents an effort to achieve similar ends of attracting foreign investors using different means while exercising more control over foreign investment.

This article introduces the various trade impacts of fossil fuel subsidies. There are large direct and pass-through trade impacts. Direct trade impacts are found when producer subsidies affect the markets for crude energy products such as crude oil, natural gas, and coal. Direct trade impacts are also found when consumer subsidies decrease the input costs of various industries, whether they refine crude products into energy carriers (e.g. gasoline, electricity) or they use energy products to produce non-energy products (e.g. iron and steel, plastics). Pass-through trade impacts are found when upstream fossil fuel subsidies lead to a lower-cost product that is then used in downstream production processes. We find that markets for fossil fuels, refined energy products and energy-intensive products are enormous. In 2018, crude fossil fuel exports were worth at least US$1.3 trillion, petroleum product exports at least US$800 billion, and exports of energy-intensive goods at least US$1.3 trillion. Their trade volume and export value, as well as their competition density highlight that fossil fuel subsidies have a direct impact on who wins and who loses in terms of market share.