Is Retaliation Useful? Observations and Analysis of Mexico’s Experience under WTO and NAFTA

What is it about?

This article presents cases where Mexico as complainant was required to decide whether or not to take retaliation in trade disputes under WTO and preferential trade agreements. We use the data to make observations on the efficiency of retaliation as a legal remedy and the political economy considerations at this procedural stage.

Featured Image

Why is it important?

The chocolate cake scenario—the defendant retains more chocolate by facing retaliation than by complying—diminishes the effectiveness of retaliation, along with negative incentives for compliance and compensation. The sensitivity of the goods/services covered has a large role on efficiency. Mexico did not retaliated in a number of cases, giving the defendant grater control of the outcome. The selection of the goods subject to retaliatory measures is addressed, with relevant considerations.