Trade Disputes and Settlement

Abstract

We develop a model of trade agreements with renegotiation and imperfectly verifiable information. In equilibrium, trade disputes can occur and can be resolved in a variety of ways: Governments may settle “early” or trigger a court ruling, and in the latter case, they may implement the ruling or reach a post‐ruling settlement. The model yields predictions on how the dispute outcome depends on the contracting environment and how it correlates with the optimal contract form. We find support for a key prediction of our model using data on the outcomes of actual trade disputes in the General Agreement on Tariffs and Trade/World Trade Organization.

Corporate Social Responsibility and Sustainable Development in China: Current Status and Future Perspectives

“…But how will that play out in the future? The centralized and dominant nature of the government will undoubtedly play a major role, especially in a world where trade disputes may become more common [5,68]. However, pressures from consumer markets around the world, and the expectations of those consumers, will also be important [69,70].…”

The economics of investor protection: ISDS versus national treatment

“…Note that ρ t(s 1 , s * 2 , θ 2 ) measures the marginal effect of s 2 on expected domestic welfare through the expected compensation payments in cases where θ 2 ≥ θ 2 (s 1 ). 29 We use…”

“…A number of comments are in order. First, the ISDS provision implicitly defines a 29 For low values of θ 2 < θ 2 (s 1 ), the second-order condition is satisfied since by assumption π (•) < 0, and for high values of θ 2 ≥ θ 2 (s 1 ) the second-order condition is satisfied by the assumption that ∂ 2 µ(•)/∂s 2 2 ≥ 0, which implies a non-decreasing marginal effect of s 2 on the likelihood of the panel awarding compensation.…”

“…For instance, inMaggi and Staiger (2015) the DSB has no interesting role to play in implementing the rule, it simply enforces a non-contingent level of damages to be compensated. In contrast, Maggi and Staiger (2011),Beshkar (2016) andMaggi and Staiger (2018) assume that the DSB acts upon receiving a noisy signal about the welfare-value of the escape option (protection) to the countries in question and determines the level of damages depending on this signal 25. Furthermore, in the context of trade policy, compensation takes the form of a retaliatory policy…”

The Economics of Investor Protection: ISDS versus National Treatment

“…25 24 For instance, in Maggi and Staiger (2015) the DSB has no interesting role to play in implementing the rule, it simply enforces a non-contingent level of damages to be compensated. In contrast, Maggi and Staiger (2011), Beshkar (2016) and Maggi and Staiger (2018) assume that the DSB acts upon receiving a noisy signal about the welfare-value of the escape option (protection) to the countries in question and determines the level of damages depending on this signal. 25 Furthermore, in the context of trade policy, compensation takes the form of a retaliatory policy…”