Seeking Escape: The Use of Escape Clauses in International Trade Agreements

In agreements that include flexibility enhancing mechanisms such as escape clauses, how do institutions realize the benefits of flexibility while preventing its abuse? The conventional wisdom is that escape clauses must be made costly, but I show this claim to be at odds with empirical observation. In the GATT/WTO, the institution where escape clauses are most prevalent, compensation following escape was only widespread in the 1950s. Since then, it has been progressively abandoned, in favor of appeals to exception. This alternative mechanism relies on an institution's ability to verify the severity and exogeneity of the domestic circumstances of states seeking temporary escape. Relying heavily on GATT archives, I show how early on in the institution, members had made the link between costless escape and increased monitoring, and pursued reforms to achieve both objectives. The success of members' ability to verify escapees' domestic circumstances is observed in the record of safeguard disputes throughout the GATT/WTO's history. Finally, I use the hypothesized link between verifiable information and the chosen escape mechanism to explain an otherwise puzzling GATT incident, that of French emergency trade measures in 1968.