The "non-violation" clause of GATT is Exhibit A for the proposition that international trade agreements are incomplete contracts. According to the terms-of-trade theory of trade agreements, it underpins the success of the GATT/WTO's "shallow integration" approach. Yet the observed role of the non-violation complaint is minimal. We develop a model of non-violation claims in trade agreements, demonstrate that it predicts a minimal on-equilibrium-path role for non-violation claims under reasonable parameter restrictions, and show that the non-violation clause may nevertheless play an important off-equilibrium-path role in the GATT/WTO.
Staiger, Robert W., and Alan O. Sykes.
"How Important Can the Non-violation Clause Be for the GATT/WTO?"
American Economic Journal: Microeconomics,
Conflict; Conflict Resolution; Alliances; Revolutions
Economics of Contract: Theory
Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
Trade Policy; International Trade Organizations