Tuesday, May 7, 2013

Too much legalese at the WTO

The World Trade Organization exists to foster free trade and to resolve disputes about unfair trade practices. It is thus an organization that treats with legal issues over an eminently economic matter. How much is Economics used in the process? Or has the WTO been captured by lawyers.

Thomas Prusa looks at three recent decisions in the dispute process. While it is not possible to see what happened inside the WTO, it seems pretty clear from the decisions that the Economics in them is lacking. It just looks like a situation where economists have been bypassed and the decision may make legal sense, but certainly not economic sense. Prusa argues that lawyers should not have been afraid of complex, abstract economics in the cases he looks at, as simple Masters' or even undergraduate level economics would have helped reach a better decision. While there is no doubt the cases have a strong legal aspect. at least some economics would have been good.

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