Rethinking WTO Trade Sanctions

Abstract

The most salient feature of dispute settlement in the World Trade Organization (WTO) is the possibility of authorizing a trade sanction against a scofflaw member government. This feature, however, is a mixed blessing. On the one hand, it fortifies WTO rules and promotes respect for them. On the other hand, it drains away the benefits of free trade and provokes “sanction envy.” Undoubtedly, putting teeth in the WTO was one of the key achievements of the Uruguay Round ending in 1994, and a very significant step in the evolution of international economic law.1 Yet after six years of experience, WTO observers are questioning whether the availability of trade enforcement is sensible.2 This article undertakes an appraisal of trade sanctions as a WTO instrument, and concludes that this practice undermines the trading system. In view of this dysfunction, the article explores alternatives to trade enforcement and points to some softer measures that might have promise.