Edited by William A. Kerr and James D. Gaisford
Chapter 48: Trade Related Aspects of Intellectual Property: Enforcement Issues
William A. Kerr Introduction In trade policy, the imposition of retaliatory tariﬀs has been the accepted method of sanctioning countries that are judged to have not lived up to their multilateral commitments. This sanctioning provision was enshrined in the 1947 General Agreement on Tariﬀs and Trade (GATT 1947) although it was seldom called upon largely because the Contracting Parties tended to abide by their commitments. If there was an accusation of ‘nulliﬁcation of beneﬁts’, the consensus-based dispute resolution system, which required the agreement of the country accused of not living up to its multilateral commitments, usually meant that Panel recommendations were not accepted. Eﬀectively, this meant that retaliatory tariﬀs could not be imposed. The use of tariﬀs as a punishing mechanism in trade was also well understood in the pre-GATT 1947 era where tit-for-tat ramping up of tariﬀ levels was a hallmark of bilateral ‘trade wars’. The lose–lose outcome of tit-for-tat retaliations, however, was well understood by economists and trade policy makers. Thus, while it was understood that some form of enforcement mechanism was required in multilateral trade agreements, it was important that it did not lead to a destructive cycle of ever increasing tariﬀs. Thus, accepted retaliation became a central principle of the GATT 1947 (Kerr and Perdikis 1995). Accepted retaliation meant that a country that could not comply with the judgment of a GATT panel would accept retaliation from the Contracting Party(ies) that the panel ruled in favour...
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