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Calculating Trade Damages in the Context of the World Trade Organization's Dispute Settlement Process
Author(s) -
Bernstein Jason,
Skully David
Publication year - 2003
Publication title -
applied economic perspectives and policy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.4
H-Index - 49
eISSN - 2040-5804
pISSN - 2040-5790
DOI - 10.1111/1467-9353.00145
Subject(s) - damages , world trade , context (archaeology) , international trade , settlement (finance) , process (computing) , business , international economics , economics , political science , geography , law , computer science , finance , payment , operating system , archaeology
Since its inception in 1995, the World Trade Organization (WTO) dispute settlement system has received over 250 notifications of trade disputes. While most have been settled, in a few cases the WTO arbitrators had to approve damage awards. This paper will use one of these cases ( Hormones ) to explain the methodology arbitrators use to calculate damages and how this methodology differs from an efficiency‐based measure of welfare that economists would instinctively provide. Yet, there are rational reasons for this difference and the arbitrator's methodology does a better job of providing incentives for countries not to violate trade agreements.