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date: 10 April 2021

Abstract and Keywords

What is the purpose of the World Trade Organization (WTO) dispute settlement mechanism (DSM)? This seemingly simple question has become a source of considerable academic debate. All commentators agree that one purpose of the system is to encourage compliance with WTO obligations, at least some of the time. Beyond this point of partial agreement, however, lie a variety of additional perspectives. This article investigates the extent to which the purpose of the DSM is to ensure compliance, pointing to differing views on whether the system is meant to facilitate efficient breach (and hence the limits of retaliation) or if it is meant to rebalance concessions following breach of obligations. It looks at the legal debate on the purpose of the DSM and explains how it allows members the option to violate WTO obligations for a measured ‘price’ that is tied to the harm done by the violation to the complainants. The article argues that the logic of the system can be best understood ‘as a way to facilitate efficient adjustment of the bargain over time’.

Keywords: compliance, World Trade Organization, dispute settlement mechanism, breach, concessions, obligations, bargain

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