David Feldman argues in a Baltimore Sun op-ed that the EU should crush Iran with massive trade retaliation for the Iranian boycott against Denmark.
He notes correctly that sanctions under the WTO dispute resolution procedure actually kick into gear much slower than without the formal negotiation framework. The EU could, if it wanted to do so, impose massive trade sanctions against Iran tomorrow. The WTO acts as a brake against hot-headed escalation. It does not introduce new sanctions, but on the contrary restricts existing ones.
It is of course a completely different question if massive trade sanctions make sense. If the goal is to have the Iranians retract their boycott against Denmark, which can't work anyway, this is probably counterproductive.
For the very least, I would advocate the same approach that the EU takes against America under WTO rules. For example with the sanctions against the illegal American "Foreign Sales Corporation" scheme, the EU started out with a lower amount and increased that every month. The illegal subsidy scheme is still in place, however. The EU announced yesterday plans to reinstate sanctions against America.
In contrast, if you start out with a total trade war, there is no threat left short of another illegal invasion.
I am opposed to this kind of overreaction, which is exactly the same mistake the Iranians made in the first place.
They should just have banned imports of the newspaper in question (arguably legal under Article 20 (a) GATT, protection of public morals).
Posted by Karl-Friedrich Lenz at February 14, 2006 11:24 AM