The WTO'S problematic "last resort" against noncompliance

Trade-restricting remedies provide a ‘last resort’ mechanism for the WTO to address non-compliance. This paper evaluates the experience so far in using trade measures to respond to non-compliance, and argues that the disadvantages of the approach outweigh its advantage. It suggests that the WTO should abandon the use of trade coercion to enforce its rules, and instead needs to better utilize the power of public opinion.

The paper argues that neither of the two purposes to the trade restricting remedies justify their use:

• The first purpose, ‘rebalancing’ (whereby the complaining government undoes prior trade concessions or commitments that the given to the wrongful government, which restores the bilateral balance that existed prior to the breach) focuses on rebalancing the bilateral equilibrium but provokes disequilibrium in third countries and the rule-based system as a whole, while
• the second purpose, ‘sanction’ (to enforce WTO rules by inducing compliance) may not be coercive enough to induce compliance

While this second point may imply that trade measures should be given more bite, this paper takes the opposite view and argues that the WTO abandon the use of trade coercion to enforce rules.

The paper recommends that the WTO could improve its implementation process by engaging public opinion within the defendant country to encourage more self-responsibility for compliance. This could be promoted by creating more transparency in the WTO dispute-settlement procedure, for example by:

• convening a public hearing when a government fails to comply
• encouraging WTO members to commit to a detailed domestic procedure for implementing an adverse panel decision