What If? Tinkering with the Counterfactual. A Comment on US-Washing Machines (Article 22.6-US)

Edward Balistreri, Petros C. Mavroidis and Thomas Prusa

No 2020/40, RSCAS Working Papers from European University Institute

Abstract: Typically, the WTO Arbitrator, when charged with evaluating the permissible level of countermeasures (suspension of concessions), has chosen a counterfactual state of the world where the challenged (illegal) measure had not been adopted at all. The Arbitrator then would calculate the trade lost because of the adopted (illegal) measure, and thus, decide on the level of permissible countermeasures. In US-Washing Machines (Article 22.6-US), deviating from this custom, the Arbitrator adopted a different counterfactual, assuming that the complainant had adopted a different, “reasonable” measure. The Arbitrator then evaluated the trade lost based on the distance between the adopted (illegal) and the “reasonable” measure and calculated the level of countermeasures. In this paper, we explain the multitude of perils facing dispute settlement if this approach is adopted in future disputes. We also advance a few thoughts on rethinking the workings of the Arbitrator when measuring the level of permissible countermeasures, since similar slippery slopes risk being reproduced in future cases.

Keywords: de novo review; retaliation; antidumping (search for similar items in EconPapers)
JEL-codes: K40 (search for similar items in EconPapers)
Date: 2020-05
New Economics Papers: this item is included in nep-int and nep-law
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Related works:
Journal Article: What If? Tinkering with the Counterfactual: A Comment on US–Washing Machines (Article 22.6-US) (2021)
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