Fulbright Economics Teaching Program
2006-2007
Trade: Institutions and impact
Ari Kokko 1
Lecture 7
Trade disputes
WTO dispute settlement procedures
Sanctions
Examples
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What’s a trade dispute in WTO?
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One member government believes that
another member government is violating
an agreement or a commitment made to
the WTO
– “Unfair” antidumping levies
– Non-tariff barriers
– Administrative practices
Note: initial antidumping determination purely
national process
Fulbright Economics Teaching Program
2006-2007
Trade: Institutions and impact
Ari Kokko 2
Lecture 7
Ari Kokko
The WTO dispute settlement process
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Emphasis on consultations and
voluntary settlement of disputes

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Appeals
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The panel’s ruling can be appealed by
either party
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Appeals examined by three person
group from permanent 7-member
Appellate Body
– Appellate Body report in 60-90 days
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New report accepted or rejected by
DSB within 30 days
– rejection requires consensus
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After adoption of panel report
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Country at fault must reform its policy
according to recommendations
– statement of intent within 30 days
– compliance required within “reasonable” period of
time
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Alternative is to negotiate payment of
mutually acceptable compensation
– 20 days for negotiations
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Trade sanctions can be authorized by DSB if
compensation is not agreed upon
Fulbright Economics Teaching Program

2006-2007
Trade: Institutions and impact
Ari Kokko 5
Lecture 7
Ari Kokko
Retaliation authorized in 5 cases
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Foreign sales corporations
– EU complaint about tax benefits to exports.
Level of retaliation: USD 4,043 million.
Implemented from March 2004.
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US Antidumping Act of 1916
– EU request to adopt similar system with
“triple damages”.
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Airplane subsidies
– Canadian complaint about Brazilian
subsidies. Level of retaliation: CAD 344
million. Not yet implemented
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Retaliation authorized in 4 cases
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Bananas
– Latin American countries and US complaint
about EU banana import regime. Value of
retaliation: USD 393 million. Withdrawn
after agreement.
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Hormones