In or Out? Standards, Discretion, Compliance and the WTO

• Published in: World economy Vol. 39; no. 6; pp. 738 - 754
• Main Author: Hartigan, James C.
• Format: Journal Article
• Language: English
• Published: Oxford Blackwell Publishing Ltd 01.06.2016
• Subjects: Agreements; Compliance; Discretion; Disputes; Economic analysis; Enforcement; Game theory; International agreements; Negotiation; Safeguards; Studies; Uncertainty
• ISSN: 0378-5920; 1467-9701
• DOI: 10.1111/twec.12385

Self‐enforcement in international agreements in the presence of uncertainty in the form of shocks and imperfect information regarding the extent of compliance by other members is enhanced by the use of standards in performance of commitments. Standards are less precise than rules. They must be sufficiently demanding that undercompliance is distinguishable from non‐compliance. Discretion permits undercompliance as an alternative to renegotiation of commitments, safeguards and the filing of disputes. Undercompliance, particularly when restrained, is a lower cost and less confrontational resolution to addressing adverse shocks. Signatories are restrained in undercomplying so that the effects of their actions are imperfectly distinguishable from the effects of shocks. Compliance and evidentiary standards for formal disputes define the accomplishments of the agreement. Evidentiary standards serve as an important discipline to undercompliance even in the absence of formal disputes.