I should state at the outset that this book review is written from the viewpoint of an economist, more specifically a trade economist. Readers should note that while trade economists do not understand many things about the subject to which they devote their lives, they do understand the notion of comparative advantage. Accordingly, this review will reflect my comparative advantage as well as my limitations vis-à-vis legal scholars.

Once in a while, when one starts reading a book, the realization quickly sets in that this is the work of an authority. Given the author's expertise, I more or less expected that to be true of the legal discussion and analysis contained in the book. But what truly sets the book apart and makes it highly useful for economists is the dexterity with which the author has managed the interplay between the legal and economic aspects of GATT and other international trade agreements. For example, the discussion of the two major economic theories of international trade agreements – the terms of trade theory and the commitment theory – is nuanced, balanced, and dares to ask a difficult and important question: which aspects of these theories are useful for shedding light on the actual structure of GATT?

Briefly, the terms of trade theory argues that international trade agreements are a means of internalizing the international externalities that countries impose on each other while pursuing trade policies that seek to improve their income (and welfare) at the expense of their trading partners, whereas the commitment theory argues that such agreements help governments make credible commitments to free trade and thereby avoid inefficiencies that arise from domestic lobbying for protectionism. Economists would benefit from the author's penetrating discussion of these theories. This discussion highlights the merits and shortcomings of both theories in being able to explain the actual structure of GATT. Indeed, as the author notes, useful as they are, these economic theories do not negate the importance of non-economic concerns that undoubtedly help shape international trade agreements. After all, international trade is but one aspect of the multi-faceted world of international relations and it is only natural that issues unrelated to trade and commerce should have some bearing on international trade agreements such as the GATT.

Indeed the author's general view in this regard is that ‘GATT is probably there in order to constrain unilateralism’. Combining this view with the economist's insistence that international trade agreements are best thought of as being self-enforcing in nature allows us to state a modified version of this claim: ‘GATT probably exists to constrain unilateralism and since such unilateralism can result in the pursuit of beggar thy neighbor policies that hurt all parties, countries have found it useful to voluntarily accept rules that constrain their own unilateralism conditional on their trading partners doing the same.’

By encompassing the economist's viewpoint into an insightful and comprehensive legal analysis of GATT rules, one that is derived not only from the text of the WTO agreements but also from rulings of WTO panels and the Appellate Body, the author has provided a tremendous social service for all serious students of the multilateral trading system. Indeed, assuming that the economist's goal of analyzing multilateral institutions such as the WTO from the perspectives of efficiency and equity has merit (a reasonable and perhaps somewhat self-serving assumption for this reviewer), this goal is simply unreachable without the help of legal scholars that also understand and appreciate the language and the tool-kit of the economist. Indeed, the back and forth between law and economics that characterizes the author's approach demonstrates his impressive mastery of both subjects and makes this a truly unique book, one that will likely be studied by scholars and students for years to come.

The depth and nuance that characterizes the author's discussion of the economic rationale for multilateral trade agreements is also on display in several other parts of the book. In this context, the discussion of the notion of non-discrimination as captured by the most favored nation clause (which prohibits discrimination in the use of border instruments (such as tariffs) when imposed on foreign producers selling like goods) and the principle of national treatment (which requires that domestic instruments not discriminate between domestic and foreign firms selling like or substitutable goods) is especially rigorous and detailed. While economists have devoted significant attention to analyzing the rationale behind the most favored nation clause – understood by many observers to be the central idea underlying the multilateral trading system – the economic analysis of national treatment has only gathered steam in recent years. The author's conceptual discussion of the economics of the national treatment clause is beautifully interspersed with critical legal analyses of WTO trade disputes centered on the clause. This discussion of actual WTO cases will prove invaluable for all readers, especially economists who might feel sufficiently emboldened after reading the book to try and consult actual case documents of the WTO themselves.

As the author notes, antidumping duties have now become the most widely used tool for trade protection and are a major cause for concern. The book correctly points out the shortcomings of the idea that antidumping duties protection can be a means for combating predatory dumping – the notion that a foreign firm charges low prices (even sometimes below cost) in order to drive domestic competitors out of the market only to raise prices once it acquires (near) monopoly status. What is less commonly known by trade economists (and others lacking familiarity with the US antitrust system) is that the predatory pricing rationale for policy intervention is basically viewed as being implausible by US courts. As the author notes, this position is rather reasonable given that the predatory pricing/dumping argument suffers from a fatal flaw: why wouldn't the eventual price increase by the predatory foreign firm invite entry by rival firms? If price does increase in the future and entry occurs, the predatory pricing rationale becomes internally inconsistent and cannot be used to justify protection via antidumping. If it does not (i.e., the low price of the foreign firm is permanent), better all the more – the whole point of trade is to import goods at prices lower than those that prevail locally. To a skeptic such as this reviewer, the predatory pricing rationale for antidumping is almost comical due to its twisted nature: we should impose duties today to raise prices so that foreign firms are unable to do so in the future!

In this context, the author raises another related issue in a pointed manner: what does the ‘anti’ in antidumping refer to? J. Michael Finger, one of the foremost experts on antidumping, has described the antidumping process as a game in which only one side (i.e., the domestic industry) is allowed to score. If the domestic industry is able to obtain protection, it wins and consumers lose; if it does not, the status quo prevails and there is a draw. So what appears to be ‘anti’ foreign firms is perhaps more aptly described as ‘anti’ domestic consumers.

The existence of GATT Article VI and the Antidumping Agreement of the WTO raises urgent questions for legal scholars and economists: why has the multilateral trading system with its stated goal of global trade liberalization embraced the antidumping process so heartily? And how does the inclusion of antidumping in the GATT/WTO system square with whole notion of constraining unilateralism? One answer that the author discusses is that antidumping duties can help provide quick relief from foreign competition and can be attractive for governments in times of great political pressure – i.e., like safeguards they may allow countries to back out of previously granted concessions. Furthermore, the ability to use such a safety valve might encourage governments to undertake trade liberalization that they otherwise would not. However, as the author notes, since such protection is already available under GATT Article V, why do we also need antidumping duties?

The book makes a rather insightful point about the antidumping process: while the country seeking protection has to establish that the domestic industry has been injured due to import competition, the level of antidumping duty that it can impose is basically unrelated to the level of injury suffered. In the author's words, AD duties are ‘imposed to counteract the dumping margin and not the resulting injury’. This lack of a connection between injury and market pricing makes one question the manner in which the antidumping process works at the WTO even more.

Book reviews without complaints run the risk of losing credibility. So what gripes do I have about the book? Not many. The main one is length: digesting over 500 pages of detailed discussion of legal and economic matters related to the GATT requires some serious stamina. In this short review, I have tried to provide the reader some illustrative examples of the many fresh insights that are found through-out the book.

I end with one piece of advice for the reader: to get the most out of this book, the reader will require patience and also a plan. What do I mean by a ‘plan’? The organization of the book makes it easy for one to consider each major issue separately. The first chapter is a marvelous overview of the GATT and most readers will glide through it. All of the subsequent chapters are detailed and focused on specific areas of the GATT and related agreements of the WTO. These chapters will undoubtedly demand a bigger investment on the part of the reader both in terms of time and effort. But then what worthwhile task does not? Since these chapters are relatively more self-contained, the reader will benefit by treating each of them as a mini-treatise on a separate topic. At least for me, this approach has yielded great dividends. Indeed, the benefits should continue to roll in over the years since I expect to consult the book frequently in the future.