There are two widely accepted explanations of why politically motivated governments make trade agreements. There is an informal explanation, which I shall call the ‘practitioners' story’, even though it is most economists' informal view as well. And there is a formal explanation in the economics literature, which I shall call the ‘standard model’, referring to the basic structure shared by the Bagwell–Staiger and Grossman–Helpman models. Unfortunately, the practitioners' story and the standard model contradict each other at every crucial point. For example, in the practitioners' story, trade agreements are about reducing politically motivated protectionism; and getting an agreement depends on political support from exporters. But in the standard model, trade agreements never reduce such protectionism; and politics plays no role in securing an agreement. This paper expounds the contradictions between the practitioners' story and the standard model, which have gone largely unremarked. It refutes suggestions by defenders of the standard model that the contradictions are illusory. It identifies the different assumptions made by the two explanations that generate the contradictions. It gives reasons for skepticism about the standard model. And it discusses why all of this matters.

The papers in this Symposium issue complement two other compilations of research on the multilateral trading system published in Evenett and Hoekman (2006) and Hoekman and Vines (2007) and are a final output of the UK Department for International Development supported Global Trade and Financial Architecture project. The genesis of this Symposium was a CEPR workshop hosted by the OECD in March 2012 with support from DG Research (grant: PEGGED Collaborative Projects under the EU's Seventh Framework Programme, Contract no. SSH-CT-2008-217559). Draft papers were presented at a conference at the Elliott School of International Affairs, George Washington University, hosted by Michael Moore in April 2013. We are very grateful to Frank van Tongeren at the OECD and Mike Moore at the Elliott School for their support of the meetings, to Michelle Chester and Rebecca Martin at the World Bank for help with logistics, to the participants in both events, especially the discussants, and to Alan Winters and an anonymous referee for comments on the submitted papers.

International institutions have acquired an almost obvious presence in international politics and the question of their design has received prominent attention in recent years. Apart from key organizational characteristics like size of their membership, policy scope, depth of cooperation, decision-making rules, and their degree of openness towards non-state actors, one of their most striking features is their differing degree of legalization or judicialization (Goldstein and Martin, 2000; Zangl, 2008). Some institutions possess strong enforcement mechanisms or rules, while others rely on voluntary cooperation by their members.

With its stringent requirements for scientific evidence, the SPS Agreement is commonly considered a greater constraint on WTO Members' regulatory autonomy than the TBT Agreement. It is consequently feared that Members may ‘forum shop’ by reconstructing SPS measures as TBT regulations and hereby circumvent WTO obligations. This article revisits these assumptions in the light of recent TBT jurisprudence and explores the respective challenges of defending policy preferences under the two technical regimes. It argues that in some respects – the characterization of a measure and the chosen level of protection – the SPS Agreement provides a securer basis for Members to defend regulatory choices. While evidential burdens are more explicitly demanding under SPS rules, the challenge of justifying a TBT measure's rationality should not be understated. In light of these reflections, this article concludes that ‘forum shopping’ is an unpromising strategy for protecting controversial SPS measures.

In the first dispute on renewable energy to come to WTO dispute settlement, the domestic content requirement of Ontario's feed-in tariff was challenged as a discriminatory investment-related measure and as a prohibited import substitution subsidy. The Panel and Appellate Body agreed that Canada was violating the GATT and the TRIMS Agreement. But the SCM Article 3 claim by Japan and the European Union remains unadjudicated, because neither tribunal made a finding that the price guaranteed for electricity from renewable sources constitutes a ‘benefit’ pursuant to the SCM Agreement. Although the Appellate Body provides useful guidance to future Panels on how the existence of a benefit could be calculated, the most noteworthy aspect of the new jurisprudence is the Appellate Body's reasoning that delineating the proper market for ‘benefit’ analysis entails respect for the policy choices made by a government. Thus, in this dispute, the proper market is electricity produced only from wind and solar energy.

The creation of the World Trade Organization (WTO)'s disputesettlement system (DSS) in 1995 remains one of the most puzzling outcomes ininternational politics and international law in the 1990s. We provide a newexplanation for this move to law. We argue that important contextual variablesof the negotiations have been largely overlooked by existing explanations,namely ‘experiential learning’. While negotiations tocreate institutions are characterized by uncertainty about distributionaleffects, negotiators will look for clues that moderate uncertainty. In thecontext of the Uruguay Round negotiations, a significant amount of informationwas drawn from actual practice and experience with the existing GeneralAgreement on Tariffs and Trade (GATT) dispute settlement system. In short,experience gained with judicial institutions and outcomes is important tounderstand the key results of the negotiations: a legalization leap, morespecifically a judicialization of the existing dispute settlement system. Wefocus on the two dominant actors in the negotiations (the United States and the(then) European Community) and provide evidence for our argument based on ananalysis of GATT cases in the 1980s, GATT documents, and in-depth interviewswith negotiators who participated in the negotiations.

The commonplace tendency is to blame the difficulties of the Doha Round of multilateral trade negotiations on the World Trade Organization (WTO) itself. In contrast, I suggest in the first section of this article that exogenous structural factors, especially changing commodity prices and trade flows, fatally undermined the Round. In the second section, I discount the significance of endogenous institutional factors such as the number of participants, the size of the agenda, or the Single Undertaking, although design failures, notably in the ‘modalities’ for negotiation, did hurt. But what hurt even more was the way the WTO, in common with most multilateral organizations, has not caught up with the shifting centre of gravity in global governance. The trading system is no longer a transatlantic bargain. The regulatory issues on the twenty-first century trade policy agenda will inevitably be negotiated in Geneva, but only after a new trans-Pacific accommodation recognizes China's central role.

Beyond removing restrictions, trade reform in Latin American in the 1980s and 1990s was in significant part an attempt to change the domestic politics of trade and to reformulate the culture of policy management by introducing procedural characteristics that WTO trade remedy rules advance. This paper examines how trade reform in Peru and Argentina has gone since the reforms of the 1990s. Peru provides a valuable example of sustaining reforms. Leaders have used negotiations and other international instruments to disseminate among Peruvians a positive vision of Peru in the international economy, and to extend the application of WTO-based governance principles. Peru has introduced few new restrictions and all of them have been through WTO-sanctioned policy instruments. Argentina, on the other hand, has introduced multiple restrictions, through procedures that eschew WTO governance principles. Moreover, leaders there have returned trade politics to the dependencia philosophy that sees the international economy as an exploitive environment.The paper brings out the weakness of international obligations to limit Argentina's return to import substitution and the pains at which Peru has gone to maintain the management of its economy within the same rules that Argentina has so easily violated. To have commercial value, the GATT/WTO principle that members apply only approved methods of trade control must have operational expression in national institutions.

This paper sets out to examine the pattern of WTO committee chair appointments by nationality since the WTO's founding in 1995. Chairs of the General Council (GC), subsidiary and negotiating committees play important roles in the outcome of trade negotiations and in administrative and implementation issues in Geneva. The GC selects most committee chairs, and must consider the balance of member representation and the quality of the candidates in its choices. Regression results indicate that the selection of a chair by nationality generally reflects the country's mission size in Geneva, the country's years of experience as a WTO member, and its economic interests in trade. The experience of individuals and continuity in committee leadership also appear to play important roles. Among developing countries, emerging markets (EMs) tend to have the largest proportional representation. The GC thus appears to follow a human capital model of chair selection, geographical constraints and especially development status balance considerations. Continued investments among all WTO members, but especially EM and other developing countries, in WTO representation and leadership capacity will be required in order to promote multilateral trade liberalization in the future.

Measured by the standards of the relevant GATS provisions, in Article V, a very significant share of current regional trade agreements (RTAs) in services is deficient. This includes agreements involving the 50 odd WTO Members that are currently negotiating a Trade in Services Agreement (TISA). While these agreements might have improved significantly on many commitments contained in current GATS schedules, mostly submitted two decades ago, they also introduced new restrictions for which no GATS equivalents exist. Moreover, in a number of cases the parties fiddled with the definitional framework provisions and generally binding obligations and disciplines of the GATS. Should these attempts continue, TISA could not live up to its proclaimed objective of promoting future multilateral liberalization.

Nevertheless, a closer look at some RTAs previously concluded by TISA parties also suggests that, with political will, there is a possibility to avoid aberrations: a clause providing that in the event of inconsistencies with WTO/GATS provisions, the latter shall prevail. The incorporation of such a clause might be viewed as a litmus test on participants' continued commitment to multilateralism.

Trade-restrictiveness is a familiar concept across various provisions and agreements of the World Trade Organization (WTO), but its precise meaning remains vague. In many WTO disputes, the existence or degree of trade-restrictiveness of a challenged measure is simply assumed or addressed in a few brief sentences. Yet whether a measure is more trade-restrictive than necessary, or more trade-restrictive than a proposed alternative measure, is crucial to the legality of a range of measures currently in place around the world, some under challenge in the WTO. A careful analysis of the existing case law and treaty text – focusing on Article 2.2 of the Agreement on Technical Barriers to Trade and the general exceptions in the General Agreement on Tariffs and Trade 1994 and the General Agreement on Trade in Services – demonstrates that while the existence of discrimination is likely to restrict trade, discrimination is not necessary to establish trade-restrictiveness, which also necessarily arises from direct barriers to market access such as import bans. In the absence of an explicit barrier to imports, a WTO panel is likely to focus on the extent to which a challenged measure negatively affects the competitive opportunities of imported products vis-à-vis domestic products.

This article discusses the future of benchmarking after the Canada–Renewable Energy/FIT case. This decision left us with bad law. Assuming that any momentous shift, especially in the current regulatory framework that does not provide for any express justification for good subsidies, is difficult, we speculate on what may lie ahead for future litigants and the dispute settlement. Either ‘a wide’ or ‘a narrow road’ can now be followed. After outlining the risks that a normalization and expansion of this ruling may pose (the ‘wide road’), we have responded to the call for clarification and narrowing of this case (the ‘narrow road’) and speculated on how this could be done. The EU Altmark decision of the European Court of Justice, which was certainly on the minds of the EU litigators and whose ethos the Appellate Body embraced by referring to the use of ‘price-discovery mechanisms’, has inspired the analysis. The exercise has, however, exposed many challenges and difficulties, many of them having already occurred in EU law. The amount of helpful clarification the WTO judicature could offer is thus limited, and would probably be restricted to taking the link between market definition and benchmarking seriously. This unsatisfactory conclusion leads to suggest, once again, law reform as the only solution to the current status quo.

What are the lessons from the Doha Development Agenda (DDA) from a forward-looking point of view? A decade of negotiations is likely to go nowhere. This paper argues that absence of a landing-zone was in the data. Quantitative tools modelling the detail of the modalities predicted failure but were not taken seriously: the design of the negotiations implied that any achievements of the Round could only be limited. Such a weakness was induced by the way multilateral negotiations were organized – in separate groups, without much consideration for, or understanding of, how the different elements added up to more than the sum of the parts. We put sensible figures on that argument by using a dynamic computable general equilibrium model of the world economy, addressing exceptions, flexibilities, as well as the non-linear design of the liberalization formulas, a reduction in domestic support, the phasing out of export subsidies in agriculture, and trade facilitation. Our conclusion is that negotiators have to go back to simplicity and re-bundle the topics if they wish to revamp multilateral negotiations.

In the current multilateral trade regime, members often negotiate under the shadow of WTO law. This article develops a formal explanation of the way in which the credible threat to resort to and the actual use of WTO litigation can influence multilateral trade negotiations. We contend that the ability to impose costs on a defendant by way of litigation increases the complainant's bargaining power, opening a bargaining window and ultimately increasing the chances for cooperation in multilateral trade negotiations. On the other hand, the complainant's preference for loss-mitigation over gains from retaliation and its expectations about the likelihood that the defendant will not comply with an adverse ruling can augment the defendant's bargaining leverage. Thus, contrary to conventional wisdom, increased enforcement does not necessarily make actors shy away from further cooperation, although the credibility of the defendant's non-compliant threats crucially affects the location of any potential negotiated agreement. Empirically, we show that the argument can account for how Brazil, a potential complainant, and the EU and the US, two potential defendants, approached and bargained agricultural negotiations in the Doha Round.

What explains change in third party dispute settlement in regional international organizations (RIOs)? This paper confronts this question by exploring the extent to which different explanations of institutional change hold in the context of trade RIO third party dispute settlement. The paper considers the role of three variables in explaining dispute settlement reform: the balance of power, the level of trade interdependence between member states and the nature of the organization's founding contract. A truth table reveals that although power and trade interdependence can explain some cases of institutional reform, the nature of the organization's founding contract is the strongest predictor for change in dispute settlement. Nevertheless, the analysis shows that not all cases can be explained, and that the influence of other institutions on the same issue can also play an important role. A case study of the Latin American Free Trade Association illustrates the importance of the institutional environment in which the RIO operates for institutional reform.

The new WTO Trade Facilitation Agreement (TFA) is a significant step forward for the international trading regime, representing new hope for the relevance of the WTO.

The TFA is the first multilateral agreement since the creation of the WTO in 1995 and includes novel measures to help developing countries build capacity, while also taking into consideration regulatory concerns of WTO members through the application of the general GATT exceptions to the new agreement. While the TFA may appear narrow in scope, with regards to goods it is arguably the broadest WTO Agreement besides the GATT, since all goods that cross national borders find themselves subject to trade facilitation measures. If the TFA is properly interpreted, the combination of capacity-building measures, a focus on technological improvements and the judicious invocation of Article XX could result in a win-win situation wherein routine positive trade is streamlined, reducing time required to cross borders, while negative trade is more easily controlled and regulated at the border.

Despite regulatory questions concerning implementation, it is likely that the TFA will reduce the cost of trading across borders, while improving trade for developing countries and allowing WTO members to better control trade flows, through a combination of procedural streamlining and regulatory discretion.

This paper views tariff-cutting formulas as a potential solution to the free-rider problem that arises when market opening is negotiated bilaterally and extended on a most-favored-nation basis. The negotiators in the Doha Agenda chose formulas that are ideal from an economic efficiency viewpoint in that they most sharply reduce the highest – and most economically – costly tariffs. When the political support that gave rise to the original tariffs is considered, however, this approach appears to generate very high political costs per unit of gain in economic efficiency. The political costs associated with the formulas appear to have led to strong pressure for many, complex exceptions, which both lowered and increased uncertainty about members' market access gains. Where tariff cuts focus on applied rates, it seems likely that a proportional cut rule would reduce the political costs of securing agreements. However, detailed examination of the Doha proposals with their product exceptions suggests that negotiators are likely to find cuts with exceptions politically attractive but economically costly when cuts are based on bound tariffs with different degrees of binding overhang.

Many governments provide subsidies to shift from ‘dirty’ but cheap fossil fuels to ‘clean’ but expensive renewable energy. Recently, public incentives in the renewable energy sector have been challenged through both dispute settlement procedures of the World Trade Organization and domestic countervailing duty investigations. One may expect that trade frictions in this field will intensify over time. This article argues that the Agreement on Subsidies and Countervailing Measures – a multilateral trade treaty on subsidization and anti-subsidy measures – should be revised to give more policy space to national authorities in implementing their low-carbon programmes. The Appellate Body made a few climate-friendly interpretations in Canada–Renewable Energy/Canada–Feed-In Tariff Program. It is now members’ turn to carry out meaningful rule-making reforms. This article explores some ways to ‘green’ the existing disciplines.

This article examines the relationship between antidumping duties and strategic industrial policy. We argue that the dynamic between the two instruments is more complex and elaborate than that offered by the conventional account. We use the recent China–X-Ray Equipment dispute as a case study to show that linkage between the two instruments may not be the consequence of a government-led policy but instead a result of firm-driven responses to an industrial policy. This in turn may lead to antidumping tit-for-tat behavior between WTO members. We also analyze how WTO litigation serves as a means to alter the payoff and discuss the implications and unresolved questions that remain following the China–X-Ray Equipment ruling by the WTO.