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Stability and Rigidity: Politics and Design of the WTO's Dispute Settlement Procedure  

2011-11-09 07:23:10|  分类: 默认分类 |  标签: |举报 |字号 订阅

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This article attempts to resolve this confusion and does so by clarifying the key role played by the DSP.
The revised DSP enhances the stability of the cooperative regime; it does so not because it has become more rigid, but because it has become more flexible. The DSP now permits "compensation" for violations once authorized and emphasizes that the compensation is limited to an amout proportional to the loss experienced---and consequently adds a degree of flexibility which leads to an enhanced stability of the world trade system. Moreover, a wide variety of countries are more willing to sign an agreement with a DSP procedure of this type than any agreement without. Agreements with such a mechanism are easier to strike ex ante (cf. Fearon 1998).

Whereas only the most patient politicians who value the future very highly can sustain cooperation in an environment without DSP, an appropriately designed DSP can facilitate entry into the agreement by states less "patient", or with a lower valuation of the future.

The "proportionality principle" (that compensation is limited to that which restores "balance" to previously negotiated concessions) is a crucial element of the DSP. If the cost associated with using the DSP was excessively large (the retaliatory punishment exceeds the political gains), countries would not be willing to apply these penalties to themselves and the DSP would lose its teeth.

The DSP therefore takes four crucial actions: (1) it hears evidence of violations;
                                                                   (2) it rules whether or not a violation has occurred;
                                                                   (3) if a violation is identified, it estimates the compensation that is due;
                                                                   (4) it reports that compensation has been made (by virtue of closing of the case).

Following North(1990), an institution is viewed as an equilibrium to a game of strategic interaction. In what follows we specify a pair of strategic for two countries that embody a procedure for dealing with violations of a commitment to cooperate that is consistent with the dispute settlement procedures as articulated in the DSU. If this pair of strategies is a Nash equilibrium to the game of repeated strategic action that describes relations between trading states, then we can say that the DSP is an equilibrium institution. 

 LEMMA 1.
The following pair of strategies constitutes an equilibrium: for some $\tilde{a}$ in the support of a, home plays C if $ a<\tilde{a}$, or plays D if $a>\tilde{a} or if D^{*}$ has been played by foreign in the past; for some $\tilde{\alpha}$ in the support of $\alpha$, foreign plays $C^{*}$ if $ \alpha<\tilde{\alpha}$, or plays $D^{*}$ if $\alpha>\tilde{\alpha}$ or if D has been played by home in the past.
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