Handbook on International Trade Policy
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Handbook on International Trade Policy

Edited by William A. Kerr and James D. Gaisford

The Handbook on International Trade Policy is an insightful and comprehensive reference tool focusing on trade policy issues in the era of globalization. Each specially commissioned chapter deals with important international trade issues, discusses the current literature on the subject, and explores major controversies. The Handbook also directs the interested reader to further sources of information.
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Chapter 48: Trade Related Aspects of Intellectual Property: Enforcement Issues

William A. Kerr


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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