Template-Type: ReDIF-Paper 1.0
Author-Name: Richard Chisik
Author-X-Name-First: Richard
Author-X-Name-Last: Chisik
Author-Email: rchisik@economics.ryerson.ca 
Author-Workplace-Name: Department of Economics, Ryerson University, Toronto, Canada
Author-Name: Harun Onder
Author-X-Name-First: Harun    
Author-X-Name-Last: Onder
Author-Email: honder@worldbank.org
Author-Workplace-Name:  The World Bank
Title: Does Limited Punishment Limit the Scope for Cross-Retaliation?
Abstract:This paper analyzes two prominent institutional rules in the international trading system: a 
limited cross-retaliation rule characterized by the Understanding on Rules and Procedures Governing the
Settlement of Disputes (DSU) Article 22.3 and a limited punishment rule characterized by the General
Agreement on Tariffs and Trade (GATT) Article XXVIII. In general, both rules are designed to limit
the countermeasures upon a violation; however, the former rule specifies the limits of composition in
retaliation, whereas the latter one designates the limits of retaliation magnitude. We show that, albeit
seemingly unrelated, the limited cross-retaliation rule complements the limited punishment rule in per-
mitting greater trade liberalization. Specifically, we show how the limited cross-retaliation rule also helps
limit the incentives to violate the trade agreement when the limited punishment rule prevails.
Classification-JEL: 
Keywords: 
Length: 36 pages
Creation-Date: 2010-08
Revision-Date: 2016-07
Number: 025
File-URL: http://economics.ryerson.ca/workingpapers/wp025.pdf
File-Format: Application/pdf
Handle: RePEc:rye:wpaper:wp025