The World Trade Organization (WTO) is an incomplete contract among sovereign countries. Trade policy flexibility mechanisms are designed to deal with contractual gaps, which are the inevitable consequence of this contractual incompleteness. Trade policy flexibility mechanisms are backed up by enforcement instruments which allow for punishment of illegal extra-contractual conduct. This book offers a legal and economic analysis of contractual escape and punishment in the WTO. It assesses the interrelation between contractual incompleteness, trade policy flexibility mechanisms, contract enforcement, and WTO Members' willingness to co-operate and to commit to trade liberalization. It contributes to the body of WTO scholarship by providing a systematic assessment of the weaknesses of the current regime of escape and punishment in the WTO, and the systemic implications that these weaknesses have for the international trading system, before offering a reform agenda that is concrete, politically realistic, and systemically viable.
• Contract-theoretic assessment of the WTO sheds light on its nature and objectives, and also the need for flexibility and enforcement mechanisms • Comprehensive review of rationales for trade agreements explains the motivations behind multilateral trade-liberalization treaties (such as the WTO) • Proposes a new system of trade policy flexibility and enforcement that retains the basic WTO principles and contextual constraints
1. Introduction: trade policy flexibility in the WTO - vice or virtue?; Part I. An Introduction to Incomplete Contracting: 2. Complete contracts, and the contracting ideal; 3. Incomplete contracting, and the essence of flexibility; Part II. Theorizing about the WTO as an Incomplete Contract: 4. Adding context: the WTO as an incomplete contract; 5. Analyzing the system of non-performance in the WTO; Part III. Flexibility and Enforcement in the WTO: Towards an Agenda for Reform: 6. Theorizing about the 'WTO' as an efficient 'breach' contract; 7. Towards an efficient 'breach' contract: an agenda for reform.
'Do WTO agreements allow for 'efficient breach?' What purpose is served by WTO instruments regarding flexibility and escape? Are these instruments structured as well as possible? These are the central themes that Schropp examines in this important study. Scholars and policymakers alike will find his analysis valuable and illuminating.' Alan O. Sykes, Stanford University
'First-rate economists and trade lawyers have been increasingly turning their attention to understanding the nature of the WTO 'contract' and its implications for the working of its institutions such as the Dispute Settlement Mechanism. Simon Schropp, who uniquely combines both superb analytical expertise and legal experience in trade litigation, has written an invaluable book that offers novel insights that no serious student of the WTO can afford to ignore. Read, learn and enjoy.' Jagdish Bhagwati, Columbia University
'Schropp's work … is a very welcome input to an ongoing discussion regarding the shaping of the multilateral trading system. Simon Schropp is on top of the literature, and this volume displays it in excellent manner.' Petros C. Mavroidis, Columbia Law School, New York, University of Neuchâtel, and Research Fellow at the Centre for Economic Policy Research (CEPR)