World Trade Review

Table of Contents - January 2011 - Volume 10, Special Issue 01 (Special Issue: Seventh report of the American Law Institute project on World Trade Organization Case Law covering 2009)  

Review Article

‘Optimal’ Retaliation in the WTO – a commentary on the Upland Cotton Arbitration

GENE M. GROSSMANa1 c1 and ALAN O. SYKESa2 c1

a1 Princeton University

a2 Stanford University

Abstract

The Upland Cotton case raises a range of interesting issues regarding the rationale for retaliation in the WTO system and the proper approach to its calibration. These include: Should the approach to retaliation differ in cases involving prohibited or actionable subsidies? When should cross-retaliation be allowed? Should retaliation be based only on the harm to the complaining nation, or to other nations as well? And, most importantly, what economic content can be given to the standard of countermeasures ‘equivalent to the level of nullification or impairment’? We address these and other issues from both a legal and economic perspective, with particular attention to the question of what level of retaliation will restore the lost welfare of the complaining nation.

(Online publication March 31 2011)

Correspondence:

c1 Email: grossman@princeton.edu

c2 Email: asykes@stanford.edu