The World Trade Organization authorizes its members to retaliate against violations of free trade by raising tariffs. The problem is that retaliation undermines the WTO objective of free trade. The system is further eroded when the WTO fails to induce compliance with its own rules, as observed recently in the behavior of the US and EU. Not surprisingly, small countries like Egypt find this system unfair, which makes it imperative to look for more effective ways of dealing with the issue of retaliation. In this lecture, Robert Lawrence discussed:
1. The reasons for retaliation; 2. How it is implemented in practice; and 3. Present a proposal that could deal with the system’s current flaws.