We believe that the explanation for these provisions lies in the desire of signatories to
facilitate efficient breach, and in the relative superiority of a liability rule approach to that task.
At first blush this claim may seems surprising, because the harm done to political officials by a
breach of promise in the WTO is no doubt difficult to measure precisely, and when “damages”
are hard to calculate, that fact is usually thought to be a heavy thumb on the scale favoring a
property rule over a liability rule. But there is a countervailing consideration here that is
compelling. Under the most-favored-nation principle of the WTO, 25 trade concessions must
extend equally to all WTO Members (WTO membership includes 144 countries at this
writing26). Hence, under a property rule, a nation seeking to depart from a prior concession
would have to secure the permission of potentially dozens of other nations. It would then face
an acute hold-out problem as each of the many promisees tried to capture as much as possible
of the gain that the promisor could realize from avoiding the concession. Such strategic
behavior might prevent agreement from being reached at all, or at least delay it uneconomically
while negotiation and posturing dragged along. The liability rule approach of Article XXVIII
averts this problem.