I came across this piece (also a book) titled "The Law, Economics and Politics of Retaliation in WTO Dispute Settlement" by Joost Pauwelyn which brilliantly captures the complexities involved with the principle and practice of "retaliation" in trade disputes under the WTO regime.
"When a country violates WTO rules, the remedy of last resort is bilateral, state-to-state trade sanctions. Such trade sanctions are imposed against the violating country by one or more other WTO members that took the initiative to challenge the breach. WTO retaliation must, however, be multilaterally authorized by the WTO following, first, an elaborate procedure establishing (continued) breach in the first place and, second, an arbitration on whether the retaliation is 'equivalent' or 'appropriate' in light of the harm caused by the original violation. This is where the law comes in: Arbitrators must apply legal criteria to assess the harm caused by a WTO violation, select benchmarks and counterfactuals to do so, as well as decide, where requested, on whether the conditions for so-called cross-retaliation are met (that is, retaliation in the form of, for example, suspending intellectual property rights in response to a WTO-inconsistent import restriction)."
The paper brings to the fore, inter alia, the following aspects:
1. The close interplay of law and economics in understanding and determination of trade disputes, especially retaliation is evident in dispute settlement proceedings. Normally articles on international trade law are either focussing on the "economic" aspect of trade to the detriment of the legal principles or vice versa. This book recognises the close interplay and interconnectedness bringing out the "economist-lawyer" perspective on trade retaliation.
2. The effectiveness of WTO remedies in the context of realities of trade is also discussed. Does a developing country or LDC benefit from a trade retaliation remedy against a strong trading partner or is the Panel report just on paper? Does not the reality of trading power overshadow the legal principle of retaliation? In other words, a country may succeed in imposing retaliatory measures under the WTO system, but how effective or relevant this would be in the context of its trading power with the "violating" developed country needs to be critically analysed.
3. The importance of data, information, economic models and calculations in disputes is brought to the fore in the narrative. This re-emphasizes the inevitable coalition of economists, trade experts, data specialists, lawyers and public policy makers to be part of a team that either fights a case or that needs to be consulted by the panelists to come to a conclusion. Multi-disclipinary appraoches are the key.