This paper discusses the 2005 dispute between the European Community (EC) and the United States (US) regarding the customs classification of two specific products and the ambit of Art. X GATT (Publication and Administration of Trade Regulations). The Dispute Settlement Panel and the Appellate Body (AB) essentially upheld the position advocated by the EC, with one exception that is of no practical import, as the EC had already modified its regime. While the AB followed prior case law, it added two new findings. First, the WTO-consistency of laws can be challenged under Art. X GATT if they concern the implementation or application of laws concerning customs administration and enforcement. Second, the obligation included in Art. X.3(b) GATT to establish tribunals or procedures to review and correct administrative actions relating to customs matters concerns courts of first instance only. Thus it is quite possible that their decisions might not be uniform, and absence of uniformity at this level is not a violation of Art. X.3(b).

The EC-Biotech dispute exposed the WTO dispute settlement system to a more challenging test than any previous dispute. Not only did the Panel have to take a stand on the limits of science, or technocratic regulatory controls, to protect against objective risk, but in this regard faced more complex issues than ever addressed before by an adjudicating body. The dispute also concerned an extremely charged political issue, partly because of inherent ethical sensitivities with regard to foodstuffs, partly due to public skepticism about the role of science, and partly due to a common public perception of the complaint as being driven by the interests of an untrustworthy industry. Because of these and other challenges, the Panel faced an almost impossible task. This paper discusses how the Panel addressed some of these issues. The recently (after our report was drafted) decided appeal in EC–Hormones Suspension is likely to reduce the significance for WTO jurisprudence of some of the Panel's findings in EC–Biotech, given the apparently different approach of the AB to fundamental interpretative issues under SPS concerning the meaning of risk assessment and precaution.

This paper provides a legal-economic analysis of the Appellate Body decision in Brazil–Retreaded Tyres. We develop a simple economic model that we use to analyze the market structure and environmental externalities that were most relevant to this case. We start by analyzing Brazil's policies in a model in which tyre retreading generates a positive production externality through the delay it provides society before a used tyre becomes a waste product with the potential to harm society through its adverse impact on human health and the environment. We examine the different welfare implications of (i) a production subsidy for retreading of once-used Brazilian tyres, (ii) a tariff on imports of retreaded tyres, and (iii) a ban on imports of retreaded tyres. While a production subsidy is the first-best instrument to address this type of externality, there are reasons to believe that it might be infeasible. The welfare implications of the other measures depend importantly on the magnitude of the positive production externality. From the lens provided by this economic analysis, we draw three primary insights. First, we identify the critical piece of empirical information that the Panel and Appellate Body require to make a rational judgment of the utility of the Brazilian policies contested in the dispute – i.e., the size of the underlying externality associated with retreading. Second, if the justification for the original import ban on retreaded tyres was based on the argument that it was a second-best Brazilian policy designed to combat a large externality, then Brazil's failure to enforce a ban on used-tyre imports has the troubling result of eroding those potential welfare gains through a reduction in equilibrium production (and consumption) of Brazilian retreaded tyres. Third, the Brazilian policy that exempted from the ban retreaded imports from MERCOSUR partners also has the same troubling feature. The second and third points are congruent with the reasons for the Appellate Body's determination that the Brazilian policy did not qualify under the chapeau of Article XX. We examine the WTO jurisprudence of Article XX(b), in order to compare the methodology developed under this jurisprudence to the type of examination of changes to total welfare from implementing one policy relative to a postulated alternative policy that most economists would follow. We find that the WTO jurisprudence in this area is internally incoherent, and also fails to evaluate the types of concerns that an economic-welfare analysis would evaluate.

At face value, Turkey–Rice is not the most complex or important WTO dispute ever litigated. The facts of the case give strong reason to believe that Turkey's restrictions on rice imports from the United States were not GATT-consistent. Turkey's steadfast refusal to provide exonerating evidence in its defence and the Panel's drawing of appropriate inference were probably the most remarkable issues of the case. Nevertheless, Turkey–Rice raises at least one interesting legal and economic question: How ‘activist’ are dispute panels today, and how interventionist should they be during the litigation process? We discuss the justification and role of activist panels and assess the consequences for parties' strategic behavior and incentive to provide accurate information.

This paper examines issues that came before the Appellate Body in two disputes, US–Zeroing (EC) and the US–Zeroing (Japan). The core issue in both the disputes involves the US Department of Commerce's practice of zeroing. The scope of the claims in both cases was considerably broader than in the previous WTO disputes involving zeroing. The two arguments in support of the practice were that (a) the practice of zeroing has been a standard administrative practice for many years and (b) the Antidumping Agreement does not clearly prohibit it and hence deference must be given to national authorities. While, the Appellate Body was arguably correct in prohibiting the use of zeroing under the main methods of Article 2.4.2 AD Agreement as well as in various reviews, we consider that it overreached in considering zeroing to be in violation of Article 2.4 AD Agreement and possibly as inconsistent with Article 2.4.2, exceptional method. Finally, while the AB found zeroing in reviews violated Article 2.4.2 AD Agreement, we believe it would have been preferable for the AB to have limited its findings of inconsistency to Article 9.3 AD Agreement.

This article analyzes the decision of the WTO's Appellate Body in the dispute between Japan and Korea over Japan's imposition of countervailing duties on DRAMs imported from Korea. The legal analysis comments on the analysis of evidence, the lack of remand authority in the WTO system, and the meaning of a ‘direct transfer of funds’. The economic analysis discusses several issues related to determining the magnitude of the benefit to a firm of a financial bailout and the appropriate duration of a countervailing duty to offset the injury caused by a non-recurrent subsidy. We offer legal and economic criticisms of the Appellate Body's conclusion regarding the relationship between subsidies and injury to the domestic import-competing industry. We conclude that the Appellate Body's decision weakens the requirement of a causal link between subsidies and injury and, consequently, may open the door to protectionist abuse of the Subsidies and Countervailing Measures Agreement.