5. Currency War

The terms will be used interchangeably. The term “currency war” is credited to Brazil’s former finance minister Guido Mantega, see The Economist (2018w), p. 14; Bergsten and Gagnon (2017), p. 10; Lastra (2015), paras 2.35 (fn. 33) and 14.202 (fn. 262); examples for the use of financial war can be found here: Rickards (2011), p. 17; Zarate (2013b).

For instance Bracken (2007), p. 689; Katz (2013), p. 79 (emphasis added): “Accordingly, economic warfare is circumscribed to attacks on the enemy’s ability to produce and distribute goods and services; financial warfare is confined to attacks on the credit and monetary foundations that underlie production and distribution”.

Cf. The CORE Team (2017), pp. 410, 679; Krugman and Obstfeld (2016), pp. 375–377; on a legal definition of money Mann (1982), pp. 3–28.

Society for Worldwide Interbank Financial Telecommunication (2018), p. 29. By comparison, the Chinese renminbi only accounted for 0.98 percent.

Bhala (2013a), pp. 137–138.

See, for example, Katz (2013) and Zarate (2013a).

Katz (2013), p. 77.

Katz (2013), p. 79.

For instance, the increase of United States tariffs on Turkish steel and aluminum in August 2018 had a massive impact on the (already dwindling) Turkish lira, but was not effected by means of financial warfare (see The Economist 2018f); it would thus qualify as measure of trade war within this work.

Kirshner (1995). A narrower concept of currency war, viz. “when countries seek an advantage in international trade by positioning their currencies at a lower level than justified by fundamental economic forces and market outcomes […] by directly weakening their currencies through […] devaluation […] or depreciation […] [or] competitive nonappreciation.” (Bergsten and Gagnon 2017, p. 2) is not pursued here. It is too narrow in the present context due to its link to trade and the small number of means captured by it.

Kirshner (1995), pp. 8–18.

Monetary dependence refers to the creation of currency zones, areas, or blocs, which not only insulate its members but also lead to a dominance of certain, powerful members over others (for instance, the Sterling system, perhaps even the euro area); systemic disruptions do not aim to inflict harm on a currency but on its underlying system, for instance by destroying it (for instance, France’s attack on the Gold-Exchange Standard during 1927 to 1931), see in detail Kirshner (1995), pp. 115 et seqq., 170 et seqq.

Kirshner (1995), pp. 46–48.

Kirshner (1995), pp. 46, 265.

Kirshner (1995), pp. 266–267.

Historically, for instance the British pound sterling or French franc during colonial times; at the time of publication, the United States dollar (Kirshner 1995, pp. 263–264). Today, the euro could probably be added to the list.

McDougal and Feliciano (1958), p. 794. On the effects of deflating or overvaluing a currency see Zimmermann (2011a), p. 438. For a history of currency war see Bergsten and Gagnon (2017), pp. 3–10.

The CORE Team (2017), pp. 684–687; cf. Lastra (2017b), p. 550.

Cf. the overview at The CORE Team (2017), p. 685; Lastra (2017b), pp. 549–550 (also on other central bank functions).

Rickards (2011), p. 135 calls quantitative easing “the perfect currency war weapon”. For a different view see Bergsten and Gagnon (2017), pp. 11, 34–35, who argue that quantitative easing has little or no effect on the current accounts of states with high capital mobility. Thereby lacking a link to international trade, the policy is beyond their concept of currency war (fn. 10 above).

In addition, the example leads to hitherto neglected instruments of international law regarding international monetary law whereas discussion of other cases such as the Argentine debt crisis would reopen the discussion of BITs and their (security) exceptions (see Kämmerer 2018, para. 11).

Boughton (2000), pp. 16–20; Kirshner (1995), pp. 63–82 (for a comprehensive study of historical examples see pp. 51 et seqq.); Bracken (2007), pp. 689–690 and Bhala (2013a), para. 7-18 (both with additional examples); Katz (2013), pp. 78–79, who also explains that the United States viewed British withdrawal necessary to be able to credibly oppose the Soviet intervention in the Hungarian Revolution of 1956. In 2019, the United States also accused the European Central Bank of currency manipulation (see The Economist 2019a).

Cf. Bracken (2007), p. 689; for a history of currency wars see Bergsten and Gagnon (2017), pp. 3–8; Rickards (2011), pp. 37–142.

Buchheit (1974), p. 1008.

Posner and Sykes (2013), p. 325.

Herrmann (2010b), p. 40; for an explanation of the underlying (technical) economic aspects of currency war see Bergsten and Gagnon (2017), pp. 17–46.

Staiger and Sykes (2010), p. 589.

 Art. IV, Sec. 2 (b) IMF Statute; the text was changed by International Monetary Fund (1978); see International Monetary Fund (2006), pp. 4–7, 21; Herrmann (2010b), p. 40; Viterbo (2012), p. 291.

SDR are international reserve assets which can potentially be exchanged for (convertible) currencies of IMF member states. They were created in 1969 by the IMF in order to supplement the official reserves of its member states. As of 2 January 2020, the value of the SDR is determined by the British pound sterling, the Chinese renminbi, the euro, the Japanese Yen, and the United States dollar. See in detail International Monetary Fund (2005), pp. 99–100 (para. 440) and International Monetary Fund (2020).

Posner and Sykes (2013), p. 313.

Posner and Sykes (2013), p. 314.

International Monetary Fund (2019), pp. 4–5.

Herdegen (2016), p. 504.

International Monetary Fund (2019), pp. 4–8.

Bergsten and Gagnon (2017), pp. 8–10, 70–76 (also on other “currency aggressors”); Mattoo and Subramanian (2008), pp. 3–5; Hufbauer et al. (2006), pp. 16–17. For comprehensive references see Goldstein and Lardy (2008), p. 38. Cf. also Krugman (2010); with a balanced account of the United States-Chinese (“Chimerican”) interdependence Ferguson (2009), pp. 335–337. Summary and references to critics: Staiger and Sykes (2010), p. 589.

While referred to as renminbi in China, international custom refers to the currency as (Chinese) yuan. This denomination is ambiguous since yuan is also the currency’s primary unit.

International Monetary Fund (2019), p. 6. On earlier arrangements see Bhala (2013a), paras 7-007–7-009, 7-012–7-018; Mercurio and Leung (2009), pp. 1260–1262.

Morrison (2016), p. 1; on the history of Chinese currency policy briefly Herrmann (2010b), pp. 32–33.

See Yahoo Finance (2021f). On 5 August 2019, the currency weakened beyond seven CNY per USD for the first time since 2008 due to a decision by the Chinese central bank, which is read by some to be a reaction to the tariffs imposed by the United States (The Economist 2019b, p. 53). For a brief overview of the historical development see Krugman and Obstfeld (2016), pp. 732–734; Morrison (2016), p. 1.

Ferguson (2009), p. 335; Mercurio and Leung (2009), pp. 1262–1263; Posner and Sykes (2013), p. 321; Morrison (2016), p. 2. Some authors estimate that China spent USD 4 trillion between 2003 and 2013 to prevent its currency from appreciating, averaging around USD 2 billion per day in the peak year 2007 (Bergsten and Gagnon 2017, p. 75). If market valuation of the renminbi is above the peg, the currency comes under appreciation pressure which the central bank has to contravene by selling renminbi for foreign currency; vice versa, the central bank has to buy renminbi with foreign currency to avoid its depreciation in case of a market valuation below the peg.

The Economist (2018v); Mercurio and Leung (2009), p. 1268.

Krugman and Obstfeld (2016), p. 732.

Blustein (2019), p. 92; Krugman and Obstfeld (2016), p. 732; Herrmann (2010b), pp. 32–33.

Krugman (2015); Mitchell and Donnan (2015); for an earlier observation cf. Bhala (2013a), para. 7-65. For a different view cf. Bergsten and Gagnon (2017), p. 75.

For some time during the 2000s, it seemed as though China “owned” the United States because China was running a significant current account surplus while the United States ran an equally impressive current account deficit (Herrmann 2010b, pp. 31–32). In other words, the (on average much poorer) Chinese citizen loaned money to the (on average far richer) American citizen. For some time, this was a comfortable arrangement, with the United States being able to finance itself by selling bonds to the Chinese central bank at interest low rates and profiting from cheap imports. See in detail Ferguson (2009), pp. 333–341.

Overview by Bacchus and Shapiro (2007); see also Krugman (2010); Gadbaw (2017b), p. 555; Ciobanasu and Denters (2008), pp. 68–69; Viterbo (2012), pp. 308, 311–314; and Mercurio and Leung (2009), p. 1259 for further references.

Cf. Herrmann (2010b), p. 35.

Staiger and Sykes (2010), pp. 604, 624–626; inclined to agree is Zimmermann (2011a), p. 439.

To reach these conclusions, Staiger and Sykes (2010), pp. 594–599, 601–605, 620–627 asked a simple question: Which (combination of) trade policies (potentially illegal under WTO law) bear equivalent effects as does the monetary policy of restraining the renminbi from appreciating (although, for the sake of simplicity, the authors assumed that the Chinese central bank was even depreciating the renminbi)? Assuming flexible prices, i.e. the adjustment of prices in the long run, Staiger and Sykes found no real effects of a devaluation of the renminbi in terms of Chinese exports or imports. If prices are flexible, as they are commonly assumed to be in the long run, currency devaluation is nothing more than a change of the measuring unit: Goods formerly costing CNY 1 now cost CNY 10 and USD 1 (assuming its price was CNY 1 before the devaluation) now costs CNY 10. In other words, measurement now is taken in millimeters instead of centimeters. However, the relative prices, for instance the value of one Chinese car against one United States car (i.e. the terms of trade between China and the United States), remain unchanged by such devaluation, so that currency devaluation has no real effect assuming flexible prices (i.e. in the analogy the actual distance measured stays constant). The equivalent of a currency devaluation—which is a uniform, unexpected, permanent ad valorem export subsidy on all export goods in conjunction with an import tariff on all import goods—also has no real effect on the terms of trade because the effects of the export subsidy (drawing resources to the export sector) is entirely offset by the import tariff (drawing resources to the import sector). Only by looking at either the effects of the export subsidy or the import tariff (and not the combination thereof, which is in fact the (only real) equivalent to currency devaluation) can popular opinion maintain its allegations against China. Thus, reason Staiger and Sykes, popular opinion is in error in at least two regards: First, one cannot view currency devaluation only as export subsidy or only as import tariff, but only as a combination thereof. Second, one cannot react to currency devaluation in form of countervailing duties and tariffs as one would react to each of these equivalent policy measures as if they came without the other. This would ignore the fact that only in combination they form the equivalent of a currency devaluation, i.e. that only in combination would an export subsidy and an import tariff cause real effects on the terms of trade. Since the assumption of flexible prices is doubtful in the short run (and governments engaging in monetary intervention seem to believe that their actions have some effect), Staiger and Sykes also conduct their analysis based on the assumption of sticky (that is fixed) prices. In this analysis, the outcome is heavily dependent on whether exporters price their goods in their own, domestic currency (“producer currency pricing”), in the buyer’s currency (“local currency pricing”), or in a third state vehicle currency (“dollar pricing”). In the first case, currency depreciation would make imports for Chinese producers more expensive and Chinese export goods would become cheaper (in line with the arguments of the critics of Chinese currency policy); the effect is not that of an export subsidy, however, because the price of the “subsidized” goods remains the same in China and in the United States (by contrast, an export subsidy would only make the good cheaper on the United States market, to which it is exported) and because China’s terms of trade would deteriorate. In the third case, it is obvious that an appreciation of the renminbi would have no bearing on Chinese exports because they are priced in the (unchanged) vehicle currency. While currency devaluation has no effects on relative prices and the terms of trade in the first and the third case, it does impose change under the assumption of local currency pricing: Chinese exporters receive more renminbi (for the USD they take in) while United States exporters can exchange the fixed renminbi prices they receive for less USD at home. The trade policy equivalent is an import tariff. It is questionable whether the local currency pricing assumption (i.e. Chinese exporters denominating their prices in USD, United States exporters denominating theirs in CNY) is realistic and—if it is—whether it could be proven before an international adjudicative body, such as the WTO dispute settlement system.

Staiger and Sykes (2010), pp. 594–595.

Questions of international investment law will not be addressed here as they were subject to Sect. 4.​3 above. In this regard, see Jennings et al. (1992b), p. 916 (para. 407) (fn. 14) summarizing that states have not been found responsible for indiscriminatory currency devaluations and Kämmerer (2018), paras 11–18.

Bergsten and Gagnon (2017), pp. 130–131; Staiger and Sykes (2010), pp. 606, 612; Viterbo (2012), pp. 304–307.

PCIJ (12 July 1929) Case Concerning the Payment of Various Serbian Loans Issued in France, Judgement, Publications of the PCIJ, Series A. - No. 20/21, para. 96; Mann (1982), p. 465; Herrmann (2010b), pp. 38–40; Mercurio and Leung (2009), p. 1268; Lastra (2017a), p. 548; on the concept of monetary sovereignty in extenso Zimmermann (2013).

Herrmann (2010b), p. 39; see similarly Mercurio and Leung (2009), pp. 1269–1270.

Viterbo (2012), p. 290; Mann (1982), p. 465: “depreciate or appreciate its value”.

On other, rather quixotic attempts to construe a breach of GATT obligations via a non-violation complaint or on the basis of the national treatment provision of Art. III GATT see Staiger and Sykes (2010), p. 606 (fn. 47).

Cf. Posner and Sykes (2013), p. 321; for a discussion of a violation of the Antidumping Agreement see Viterbo (2012), pp. 313–314; Zimmermann (2011a), p. 457 (who both reject a violation).

Cf. Hufbauer et al. (2006), pp. 17–19 (also noting that the GATS holds no comparable provision); Gadbaw (2017b), p. 555.

Adamantopoulos (2010), para. 28.

Cf. Tietje (2015a), para. 163.

Bhala (2013a), para. 22-007.

World Trade Organization (1995), p. 78.

Panel (26 November 2004 (adopted 19 May 2005)) Dominican Republic — Import and Sale of Cigarettes, Report of the Panel, WT/DS302/R, para. 7.114; Bhala (2013a), para. 22-008.

Currency undervaluation is clearly neither “an ordinary customs duty, nor a tax or duty” in the sense of Art. II:2 GATT.

World Trade Organization (1995), pp. 78–82; Bhala (2013a), para. 22-008.

Bhala (2013a), para. 22-009. On a final note, one may argue—at least in the Chinese case—that when China joined the WTO in 2001, it already entertained its (undervalued) peg to the USD so that it did not levy other duties or charges in excess of those imposed on the date of its accession to the GATT (cf. Art. II (1) (b) GATT; for the interpretation of the provision regarding subsequent member states see Jackson 1997, p. 209).

This paragraph draws on Herrmann (2010b), pp. 48–49; Zimmermann (2011a), pp. 443–455 with comprehensive references in fn. 103 and 104; Staiger and Sykes (2010), pp. 609–611; Mercurio and Leung (2009), pp. 1293–1298; Bhala (2013a), paras 7-039–7-045.

Fn. omitted.

Bhala (2013b), para. 75-033 (Table 75-1) gives an overview of the traffic light system of the ASCM.

Although not a constituent element of subsidy, see Wouters and Coppens (2009), p. 28.

Cf. Wouters and Coppens (2009), pp. 33–34. Whether this is the case depends on whether the subsidy is contingent upon export (performance); it could be argued that undervalued currency de facto benefits mainly the export sector; however, a different line of argument negates contingency upon export performance due to the fact that all holders of foreign currency (and not only exporters) benefit from the undervalued local currency, see Hufbauer et al. (2006), pp. 22–23; Mercurio and Leung (2009), pp. 1297–1298; for a different view see Viterbo (2012), p. 313. If one were to follow this latter line of argument, specificity would have to be determined (cf. fn. 76 below).

An income or price support in the sense of Art. XVI GATT will be neglected here for it is obviously not given (Mercurio and Leung 2009, p. 1294; for a full discussion see Zimmermann 2011a, pp. 448–449).

If one were to categorize undervalued currency as yellow light subsidy under Art. 5 to 6 ASCM, specificity would also stand to question (in this direction Mercurio and Leung 2009, pp. 1296–1297; against specificity Viterbo 2012, p. 313; also for red light subsidies Zimmermann 2011a, p. 447, which is probably misleading, cf. Bhala 2013a, para. 7-040 (fn. 82)).

Cf. Zimmermann (2011a), pp. 447–448; Viterbo (2012), p. 312. It is not immediately apparent to be either “a [potential] direct transfer of funds”; or “government revenue […] foregone or not collected”; or the provision of goods or services or purchase of goods by the government (Art. 1.1 (a) (1) (i) to (iii) ASCM). An argument could potentially be made that the government foregoes tariff revenue by making imports more expensive (if demand for such imports is elastic and thus declines) or that the entity engaging in currency market intervention (to devalue the currency) directly transfers funds (cf. Staiger and Sykes 2010, p. 610). Although neither of these potential benefits are directed at the exporters, this does not seem to be of import for finding a “financial contribution”, which—in contrast to the benefit, which looks at the recipient side—takes into its view only the government side (Wouters and Coppens 2009, p. 26). Arguing against a financial contribution in this sense are Zimmermann (2011a), pp. 448–449 and Mercurio and Leung (2009), pp. 1294–1295; arguing against Zimmermann is Bhala (2013a), paras 7-040–7-041.

Wouters and Coppens (2009), p. 15; Adamantopoulos (2008), para. 11; Panel (29 June 2001 (adopted 23 August 2001)) United States — Measures Treating Export Restraints as Subsidies, Report of the Panel, WT/DS194/R, para. 8.69 (unappealed); cf. Zimmermann (2011a), p. 447 (fn. 112) with further references.

Wouters and Coppens (2009), pp. 25–26; cf. Appellate Body (2 August 1999 (adopted 20 August 1999)) Canada — Measures Affecting the Export of Civilian Aircraft, Report of the Appellate Body, WT/DS70/AB/R, para. 158.

Staiger and Sykes (2010), p. 611; in opposition to a benefit also: Viterbo (2012), p. 312.

Zimmermann (2011a), p. 450; Mercurio and Leung (2009), p. 1296; Bhala (2013a), para. 7-41.

Hufbauer et al. (2006), p. 21; Bhala (2013a), para. 7-42; Mercurio and Leung (2009), p. 1296.

Zimmermann (2011a), pp. 450–451.

Herrmann (2010b), p. 49; see also Bown and Hillman (2019), pp. 569–570.

In accordance with Art. 1 (1) DSU, cf. Ciobanasu and Denters (2008), p. 65; van den Bossche and Zdouc (2017), p. 170. For an overview of possible multilateral and unilateral consequences see Staiger and Sykes (2010), pp. 606–616.

Art. 23 (1) DSU; Steinmann (2006), para. 6; van den Bossche and Zdouc (2017), p. 169; Hahn (1996), p. 283; also on GATT 1947 see Mavroidis (2008), pp. 404, 398–402.

Cf. Ciobanasu and Denters (2008), p. 65. For a discussion of antidumping duties see Staiger and Sykes (2010), pp. 614–616.

Cf. Bhala (2013a), para. 7-30.

For a discussion of other legal issues and ambiguities relating to Art. XV GATT see Zimmermann (2011a), pp. 460–472; Gadbaw (2017b), pp. 555–556; Viterbo (2012), pp. 308–314.

Herrmann (2010b), pp. 46–47; for a different view see Mercurio and Leung (2009), pp. 1285–1286. In addition, the drafters assumed the original Bretton Woods exchange rate system and IMF jurisdiction over exchange rates, both of which are no longer in place, cf. Lastra (2015), para. 14.202 (fn. 262). Gadbaw (2017b), p. 555 and Viterbo (2012), p. 309 submit that Art. XV:9 GATT would also have to be considered.

Bhala (2013a), para. 7-32. It should be noted that some authors argue—based on the wording of its Ad Article—that Art. XV (4) GATT demands a specific GATT provision to be frustrated (and not the GATT’s general purpose), see Hufbauer et al. (2006), p. 19.

GATT Preamble para. 2; Mercurio and Leung (2009), pp. 1288–1290; similarly Hufbauer et al. (2006), p. 18.

Ciobanasu and Denters (2008), p. 67.

Mercurio and Leung (2009), p. 1287.

Bhala (2013a), para. 7-31; Staiger and Sykes (2010), pp. 607–608 find the reading most probable under which “frustration” requires a violation of the IMF Statute.

Viterbo (2012), p. 310.

Mercurio and Leung (2009), p. 1290; Staiger and Sykes (2010), p. 608; Lastra (2015), para. 14.202 (fn. 262); Gadbaw (2017b), p. 556; Herrmann (2010b), p. 48; inconclusive Ciobanasu and Denters (2008), pp. 68, 70.

Lastra (2015), para. 13.05.

Funk (2018), pp. 265–266; Herrmann (2010b), p. 41.

Cf. Zimmermann (2011a), p. 428; Posner and Sykes (2013), p. 314.

Art. IV, Sec. 1 (iii) IMF Statute (emphasis added).

Staiger and Sykes (2010), p. 589; Herrmann (2010b), p. 41.

International Monetary Fund Executive Board (2007), Annex, Art. IV, Sec. 1 (iii) and Principle A, para. 1. On the history of this decision Herrmann (2010b), pp. 42–43; Zimmermann (2011a), pp. 430–437.

Zimmermann (2011a), p. 430.

International Monetary Fund Executive Board (2007), Annex, Art. IV, Sec. 1 (iii) and Principle A, para. 2 (emphasis added).

International Monetary Fund (2007b); in detail Zimmermann (2011a), pp. 435–436.

Goldstein and Lardy (2008), pp. 17–18; Staiger and Sykes (2010), p. 614 and Zimmermann (2011a), p. 440 (in the context of export subsidies). On the differing opinions Hufbauer et al. (2006), p. 25 and Viterbo (2012), p. 296 (fn. 22).

International Monetary Fund Executive Board (2007), Annex, Art. IV, Sec. 1 (iii) and Principle A, para. 3.

International Monetary Fund Executive Board (2007), Annex, Art. IV, Sec. 1 (iii) and Principle A, para. 3: “Any representation made by the member regarding the purpose of its policies will be given the benefit of any reasonable doubt.” See also Viterbo (2012), pp. 296–297.

Cf. Mussa (2008), pp. 292–295; for comprehensive references cf. Goldstein and Lardy (2008), p. 39; for a different view Bergsten and Gagnon (2017), p. 138.

In detail Blustein (2019), pp. 89–110; see also Bhala (2013a), para. 7-19; Hufbauer et al. (2006), p. 26.

This paragraph draws on Herrmann (2010b), pp. 44–45; Viterbo (2012), pp. 299–301; and Staiger and Sykes (2010), pp. 592–593.

Zimmermann (2011a), p. 433; Bhala (2013a), paras 7-028–7-029.

Chwieroth (2010), pp. 241–242.

On the IMF’s practice Mussa (2008), pp. 287–292; on bilateral surveillance in general Mercurio and Leung (2009), pp. 1274–1275. Quite telling is Gadbaw’s remark (Gadbaw 2017a, p. 554 (emphasis added)): “In practice, the [IMF] has treated these guidelines less as rules than as topics of conversation […]”.

Zimmermann (2011a), p. 426.

Zimmermann (2011a), pp. 432–433; Bhala (2013a), para. 7-29.

Mattoo and Subramanian (2008), pp. 6–9; Gadbaw (2017a), p. 554; Bergsten and Gagnon (2017), pp. 138–139; Zimmermann (2011a), p. 437; Herrmann (2010b), pp. 44–45; Staiger and Sykes (2010), p. 593; Ciobanasu and Denters (2008), p. 58; Viterbo (2012), p. 315; Blustein (2019), pp. 101, 110; Bhala (2013a), paras 7-028–7-029; for the difficulties in determining even an undervaluation cf. Goldstein and Lardy (2008), pp. 18–19. Affirming manipulation by China are Mercurio and Leung (2009), p. 1278 (see, however, p. 1283 on intent).

Especially the legislative organs of the United States considered their options, see Viterbo (2012), pp. 304–307 (also with reference to the bills introduced, some of which drew on the security exception in Art. XXI GATT) and the references in fn. 52 above. In context of the 2019 weakening of the CNY vis-à-vis the USD (fn. 39 above), the United States administration called upon the (independent) Federal Reserve, the state’s central bank, to react (The Economist 2019b, p. 55).

See Schachter (1991), p. 184.

Shaw (2017), p. 589 with further references in fn. 1.

Peters (2016), pp. 373–374 (paras 33–37); Malanczuk (1997), pp. 270–271.

Schröder (2016), pp. 546–547 (para. 7) (the Draft Articles also contain provisions not reflecting customary international law); Hahn (1996), p. 47 (with further references in fn. 110).

Crawford (2013), pp. 598 et seqq.

Zoller (1984), pp. 75, 137 places them “within reparation and outside punishment” (critical of this placing is Noortmann 2005, p. 36); see also Peters (2016), p. 375 (para. 39); Crawford (2013), pp. 675 et seqq.; Cassese (2005), p. 302.

Crawford (2013), pp. 684–686.

Schachter (1991), p. 185; Crawford (2013), p. 675; Giegerich (2018c), para. 5.

Cf. Joyner (2016), pp. 200–201.

Peters (2016), p. 376 (para. 43); Schachter (1991), p. 185; Kißler (1984), pp. 90, 92.

Cf. Blustein (2019), p. 95.

Overview: International Law Commission (2001), Introduction to Chapter II of Part III, para. 6; Doehring (1994), p. 236.

Ronzitti (2016b), pp. 30–31.

Ronzitti (2016b), pp. 26–28; Paddeu (2018), pp. 10, 19–22. Dispute settlement provisions and obligations to safeguard diplomatic and consular inviolability may not be deviated from (Art. 50 (2) Draft Articles), see comprehensively Crawford (2013), pp. 688–697; Cassese (2005), pp. 303–306.

White and Abass (2014), p. 545; Paddeu (2018), paras 23–25 (who rightly points out that measures also have to be necessary; a criterion not further elaborated here).

O’Connell (2002), p. 76; taking a different view is Schachter (1991), p. 193: “[R]easonable judgements are not difficult to make in most cases.”

Franck (2008), p. 763.

Crawford (2013), pp. 697–698; slightly unclear Culot (2017), p. 345.

Art. 51 Draft Articles: “Countermeasures must be commensurate with the injury suffered, taking into account the gravity of the internationally wrongful act and the rights in question”.

Cassese (2005), pp. 305–306; White and Abass (2014), p. 546.

Crawford (2013), p. 687; Cassese (2005), p. 305; Kißler (1984), p. 92; Paddeu (2018), paras 41–42.

Kißler (1984), pp. 93–99; Schachter (1991), pp. 196–198.

Elagab (1988), pp. 215, 218–219; Hahn (1996), p. 158; see generally Noortmann (2005), pp. 131 et seqq. On the controversial notion of self-contained regimes see International Law Commission (2006), paras 123 et seqq.

Simma and Pulkowski (2006), pp. 512–529; Hahn (1996), pp. 159, 279; Bothe (2016a), p. 36; White and Abass (2014), p. 547; Crawford (2013), pp. 104–105 (also on the question on how to deal with international agreements that are “silent” on the end of the exhaustiveness of its remedies. See also Bowett (1972), pp. 10–11.

Noortmann (2005), p. 130.

Cf. Schachter (1991), pp. 188–190. Paddeu (2018), para. 37 sets up the following three cumulative conditions for an exclusion of countermeasures by pending dispute settlement procedures: “(i) the wrongful act has ceased; (ii) the dispute is pending before a court or tribunal with power to issue binding decisions on the parties, including on provisional measures; and (iii) the responsible State’s subjection of the dispute to dispute settlement is in good faith”.

Dupont (2012), pp. 332–334 and Dupont (2016), pp. 61–63 with further references.

Dupont (2012), pp. 324–325; Dupont (2016), pp. 54–55.

Cassese (2005), pp. 302–303.

Paddeu (2018), paras 29–30 (also on the exceptions in urgent cases).

For the avoidance of doubt, these are no procedural but material requirements.

Cf. White and Abass (2014), p. 546.

Tomuschat (1973), p. 184; Malanczuk (1985), p. 301; Schachter (1991), p. 185; Crawford (2013), pp. 676–677.

International Law Commission (2001), Introduction to Chapter II of Part III, para. 3: “Acts of retorsion[,] [w]hatever their motivation, so long as such acts are not incompatible with the international obligations of the States taking them towards the target State, they do not involve countermeasures and they fall outside the scope of the present articles.” See also Crawford (2002), pp. 281–282; Dupont (2012), p. 312; Noortmann (2005), p. 42; White and Abass (2014), pp. 543–544.

White and Abass (2014), p. 544.

Peters (2016), p. 376 (para. 43); Cassese (2005), p. 310; Zoller (1984), p. 135 (assuming that her concept of countermeasures also includes retorsions); unclear Tomuschat (1973), p. 183, who observes that state practice is often proportionate in the use of retorsions.

International Law Commission (2001), Introduction to Chapter II of Part III, para. 3. Cf. Malanczuk (1997), p. 271; White and Abass (2014), pp. 540, 543.

Schachter (1991), pp. 198–199; Garçon (1997), p. 211; Giegerich (2018c), para. 14; Malanczuk (1985), p. 302.

Cf. Schachter (1991), p. 186.

Noortmann (2005), pp. 44–45.

The view taken here could integrate Schachter’s argument for declaring retorsions illegal when they are taken in pursuit of “improper” or “illegal” objectives (without the dismal prospects of finding a measure for impropriety or illegality), cf. Schachter (1991), p. 199 (originally as Schachter 1982, pp. 167–187), who is supported by Noortmann (2005), pp. 43–44. Kißler (1984), p. 100 entertains similar notions regarding reprisals. Finding such standards has already proven extremely difficult (if not vain) in context of the principle of non-intervention (above Sect. 3.​4.​2.​2).

Giegerich (2018c), paras 15–27, who adds that in exceptional circumstances, the obligation of states to settle disputes peacefully (Art. 2 (3) UN Charter) may restrict retorsions; but no general subsidiarity to dispute settlement mechanisms is in force; Cassese (2005), pp. 303–305.

Noortmann (2005), p. 43 (referring to measures of self-help in general).

Cf. Ronzitti (2016b), pp. 31–32.

Joyner (2016), pp. 193–194.

Schachter (1991), p. 186 notes: “The paucity of case-law and the obscurity of State practice have contributed to the uncertainty of the law on several key issues”.

A meaningful byproduct from the currency war example in terms of strictures on economic warfare in general is the observation that, once more, a very specific measure of economic warfare—in this case subsidies—is regulated (by Art. VI GATT in conjunction with the ASCM). This coincides with the findings regarding tariffs, quantitative restrictions, and antidumping measures (above Sect. 3.​4.​4.​1).

This paradox is captured in the following quote (Elagab 1988, p. 44): “States are permitted as a form of redress to take measures that are in themselves a threat to order”.

Malanczuk (1985), p. 293.

Cf. Paddeu (2018), para. 43.