Trade disputes and the implementation of protection under the GATT: an empirical assessment

This paper is a first attempt to empirically determine why countries choose to violate or adhere to GATT rules when making trade policy adjustments between negotiating rounds. We use a previously unexploited set of data in which countries implemented two ‘types’ of protection under the GATT system between 1973 and 1994: (i) ‘legal’ protection in which countries utilized the GATT’s safeguards provisions; and (ii) ‘illegal’ protection in which the protection was provided outside of the safeguards provisions, resulting in a formal trade dispute. We find substantial evidence that concerns for retaliation affect government policy decisions in ways which contribute to the explanation of the existence of trade disputes.