[howardr]

This is how the WTO is able to enforce its regulations. Because the WTO can't actually forced a country to pay another for unfair trade practices (the WTO doesn't have an army), the WTO is allowed to permit winning plaintiffs to break agreements or enact retaliatory tarrifs to recoup losses[1]

It comes down to comparative advantage[2]: Countries are better off by opening up free trade and thus have an incentive to keep things relatively open. The WTO acts as intermediary to prevent an arms race of tariffs and retaliatory actions that end up hurting countries in the long run. It seems ironic because the WTO is letting another country enact a retaliatory tariff but for the most part the WTO is one of the more effective global institutions at enforcing its principal.

There is a lot more nuance but I hope this helps explain this a little more.

[1] http://en.wikipedia.org/wiki/2002_United_States_steel_tariff [2] http://en.wikipedia.org/wiki/International_trade#Ricardian_m...