DP14477 Why Trump Shot the Sheriffs: The End of WTO Dispute Settlement 1.0

Author(s): Chad P. Bown, Soumaya Keynes
Publication Date: March 2020
Keyword(s): antidumping, Appellate Body, Dispute Settlement, trade remedies, WTO
JEL(s): F13
Programme Areas: International Trade and Regional Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=14477

On December 10, 2019, the WTO's 25-year-old system of resolving disputes broke down. This paper explains why. It describes the dysfunctional system that preceded the WTO, when the United States dealt with politically troublesome imports by using voluntary export restraints and increasingly resorted to the "aggressively unilateral" Section 301 policy to resolve trade concerns. The WTO was a compromise between the rest of the world and the United States, whereby the latter accepted some constraints with the expectation that the new system of binding dispute settlement would serve its interests. But although the creation of the WTO resolved some concerns about American unilateralism in the short term, its system of handling disputes turned out to be politically unsustainable.