Limits of International Law

Transformation of the GATT to the WTO in 1995 is successful. The Members comply the WTO’s concessions and other obligations more than the former GATT. The WTO Members are the utility-maximizers. Transaction costs are critically reduced in the multilateral tables in the WTO. However, the WTO is soft to retaliate their agreements; therefore, the effectual sanctions may not result to chill the Members to comply the multilateral rules. The game theory in the WTO is to know how the Members behave followed by their self-interested choices under their bounded rationality. The natural difference between the strong states and weak states does not mean that the strong states always win over the weaker ones because each state has different risk-type; risk-aversive, risk-neutral, or risk-loving. Prospect Theory tells how the states shift its risk type depending on their interests. The WTO shall fairly liberalize the trade among the states. The analyses help them to think about the WTO’s enforcement power. The author appreciates if the book is read by professors and students of international law, law & economics, and the WTO officials.