World Trade Law
Abstract and Keywords
After World War II, a body of rules and institutions have emerged for the purpose of regulating global flows of goods and services. These are known as world trade law, classified under international economic law, an expanding body of transnational regulatory treaties and institutions. World trade law has evolved within the global trading system following the Second World War, beginning with the General Agreement on Tariffs and Trade (GATT), which came into force in 1948. The Most Favored Nation and National Treatment principles are the most prominent principles that give world trade law its distinctive form. The World Trade Organization (WTO) provides a vast store of literature which covers the waterfront of legal and political issues that animate the global political economy of trade. The WTO’s predecessor, the GATT, has also contributed extensively to the growing body of literature on world trade law. The WTO’s inclusion of agreements on the liberalization of services, investment, and intellectual property have begun lively debates about the possible trajectories of governance in new issue areas, such as anti-dumping and intellectual property rights. In addition to the issues raised by the inclusion of many small economies in the institutions of global trade governance, the rise of world trade law has simultaneously highlighted the many areas of importance to national publics in developed economies where trade overlaps with social priorities.
World trade law refers to the body of institutions and rules that have been created and nurtured following World War II for the purpose of maintaining an orderly legal environment with which to regulate global flows of goods and services (Charnovitz 2011). While regional trade arrangements predate the twentieth century, the current multilateral system is a relatively new phenomenon, made possible by the postwar geopolitical context (Mazower 2012). This entry will provide an overview of the most relevant interdisciplinary and international literature engaging with the study of world trade law. The first section offers a brief review of the literature, locating international economic law in an increasingly globalized world and answering the question of where trade law belongs in this larger sphere (McRae 2009). The second section examines literature pertaining to the sources and functions of world trade law (Trebilcock and Howse 2005). This includes work on the history of the postwar international legal system, the principles that underpin its organization, its major functional parameters, and a number of important institutional functions of the world trade institutions.
The third section continues this discussion of institutional development, reviewing key literature on governance issues at the WTO, examining the legal issues of antidumping and the enforcement of intellectual property rights alongside the political issue of integrating developing countries into the multilateral trade governance system (Nottage 2009). Finally, the entry will review some of the most important literature that examines social priorities in the context of trade law. It is increasingly apparent to national governments and their voting constituencies that trading rules cannot be considered in isolation from social priorities, the most prominent of which are health, environmental standards, and cultural rights (Howse 2002; Bartels 2009). The entry concludes with a brief discussion of the future of world trade law with respect to trade liberalization, dispute settlement, and the place of trade regulation in the larger context of international law. As the world trading system continues to evolve, so does the need for effective governance. The World Trade Organization has not become the engine of liberalization that it was designed to be but it is becoming an essential legal arbiter in the regulation of international trade.
Relevant Literature Locating Trade Law in the International System
We may better understand the place of trade law in the more comprehensive system of international law by thinking of bodies of law as Russian nesting dolls. We ought to note at the outset that these bodies of law are not actually subsumed within one another, but rather exist alongside each other. Sometimes they overlap, and in other places their relationship is only now beginning to be defined (Charnovitz 2002). However, the nesting doll metaphor is apropos for our discussion because it allows us to think about law deductively, moving from the largest sphere of international law, to the most specific forms which that law may take. The largest doll may be considered the system of public international law. Public international law is the entire system of legal rules and customary practices that govern interactions between states (Kennedy 2006). Currie suggests that “it may be useful to think of it as a legal system that applies where national legal systems leave off” (2001:1).
Within this broad and incomplete, and sometimes fragmented, international system lies a body of law frequently referred to as international economic law (Koskenniemmi 2006). This expanding body of transnational regulatory treaties and institutions includes trade law, global and regional investment law, commercial law, and law pertaining to taxation, financial regulation, competition, and intellectual property (Guzman and Sykes 2008). Much of this body of law exists beside (or perhaps overlaps with) domestic regulatory authority of states and offers a matrix of subnational, national, and international regulation that has grown more complex with the continuing pace of international economic integration. There is no consensus on the exact location of international economic law. In one of the most instructive discussions to date, Charnovitz (2011) concludes that the place of IEL in relation to other bodies of law, “namely, whether it is distinct from or overlapping with related bodies of law,” remains one of the “core doctrinal puzzles” that animates the study of international economic law (22).
To complete the metaphor, the smallest doll is world trade law. Johnson (1998:1) defines it as a body of law that has evolved within the global trading system following World War II, beginning with the General Agreement on Tariffs and Trade, which came into force on January 1, 1948. Lester, Mercurio, and Davies (2012:3) agree, noting that the term itself is somewhat difficult to define because it is often used to refer to the larger body of international economic law as well as the agreements pertaining directly to the flow of goods and services across national borders. Most introductory legal textbooks therefore focus on the law as it relates to the “legal instruments that regulate trade flows.” Lester et al. go on to suggest that trade law has historically been considered to be distinct from international law because it has been practiced by lawyers concerned with domestic regulation or by specialists in the GATT based in Geneva (2012:91). These practitioners formed what Howse (2002) calls a technocracy, operating below the radar, in a complex legal terrain seldom understood by outsiders.
Even so, with the rise in prominence of trade law following the creation of the WTO, an emerging epistemic community of scholars are increasingly interested in the possible ways in which international law may be interpreted in WTO law and vice versa (Bartels 2001; Pauwelyn 2001; Trachtman 2004). Lester et al. examine a number of approaches to theorizing the place of trade law in the broader system of international law, concluding that there continues to be a general lack of clarity about the scope of international law in the trading system, which does not keep members from referring to international law “whenever they believe it helps their arguments” (Lester et al. 2012:109). Ultimately, the relative novelty of the legal system for trade, with its single undertaking for membership, reverse consensus mechanism for the acceptance of dispute settlement panels, and its expanded scope which now includes governance mandates in services, investment, and intellectual property, make for a thicket of complexity that legal scholars are analyzing even as the system continues to evolve in the real world of trade governance (Lamy 2006).
In the broad context of the social sciences, world trade is a multidisciplinary and highly pluralistic field of study with deep roots in the philosophical commonalities shared by politics and economics (Cropsey 1960). While it is difficult to distil simplicity from the many theories and methods used to analyze the domestic and international goals, processes, and outcomes of trade law, three significant and timely issues ought to be mentioned here. The first is the importance of trade law to the cause of global development. Over the past several decades, scholars have begun to develop a more nuanced understanding of the domestic forces that drive international trade. Traditionally, economists identify comparative advantage as the key driver behind the expansion of trade flows. However, as Helpman and Krugman have shown, “economies of scale provide an additional incentive and will give rise to trade even if countries are identical in tastes, technologies and factor endowments” (1999:261).
Much has been made of these “spillover” effects of domestic markets, but the basic takeaway from the new trade theory of the 1980s is that market forces present within industrialized societies may intensify the incentive to trade although significant incentives both in terms of growth and development are also present in less industrialized societies. Political scientists and legal scholars have taken the economic consensus on the benefits of trade seriously in the postwar system. Particularly in the study of trade law, the compatibility of open markets with economic development remains a major piece of the intellectual infrastructure that undergirds the multilateral project (Bhagwati 2008; Dollar and Wade 2009).
The second closely related issue concerns the impact of trade law upon global political interdependence. Much of the literature minimizes the possibility of an incommensurable fit between popular democracy and international trade regulation, while emphasizing the economic benefits of technological and economic integration (Abbott and Snidal 1998). In much of the literature, national governments stand as an intervening variable between civil society and intergovernmental organizations and this raises questions about the changing nature of the relations between national governance and trade regulation (Jackson 2009). It used to be that critics emphasized issues such as investor-state dispute settlement (Choi 2007), but scholarship has evolved to include discussions of the impact of juridical mechanisms on participation in multilateral trade governance (Shaffer 2009), the causes and consequences of regional trading arrangements (Krugman 2013), and the impact of a hyperglobalized trading system on a number of issues ranging from climate change to currency wars and food security (Subramanian and Kessler 2013).
The third point of discussion is about the place of trade law in global economic regulation (Hudec 1999). Some scholars wonder if the WTO is a constitution for world trade. Petersmann (2011:53) defines a constitution as “a coherent set of long-term principles and rules of a higher legal rank constituting the basic order of a political community […] or a functionally limited community.” In particular, do the current matrix of agreements and institutional processes embodied in the WTO comprise a constitutional order for global trade (Cass 2005)? This question is fraught with definitional and conceptual pitfalls, as the literature aptly demonstrates (Dunoff 2006). Is the WTO part of a political project by which trade rules are rendered legitimate (Pauwelyn 2009)? This may indeed be the case, yet scholars are uncertain about whether it serves as an organizational frame for future liberalization and legalization processes (Howse and Nicolaidis 2003). Certainly, as Trachtman (2006) points out, the WTO has a constitution in the legal sense of the term, but it remains unclear whether it operates as a constitution for legal activity in the global economic system, broadly defined.
The American legal scholars McGinnis and Movsesian (2000) offer another way to think about constitutionalism, arguing that the World Trade Organization does for its membership much of what the American constitution was designed to do for its states - repress factionalism, allow the free flow of goods, and set up the legal parameters for effective economic relations. The comparison between Madisonian constitutionalism and twenty-first-century trade governance is controversial, yet somewhat apt, at least if we do not stretch the comparison too far. Another way to consider the constitutionalism debate is in the critical context of Gramscian/Marxist discourse that views the World Trade Organization as an organizing rubric for the continued globalization of neoliberal economic policy (Gill 1995). Critical social scientists argue that capitalist power relations are reified through legal systems and the institutionalization processes underway represent the globalization of a neoliberal economic order with outsize benefits for wealthy nations and their transnational firms (Cutler 2003).
In certain functional ways the WTO does offer centralizing, aggregating, and legitimizing functions (Evans 2000). Slaughter (2003) has proposed an alternative to the constitutionalism metaphor by imagining a world of interconnected legal systems, in which the network of legal communities ought not to be considered an exemplary template, but rather a guide for future change. However, like the constitutionalism debate, the community of courts thesis suffers from a paucity of positive evidence, which does not invalidate the observation, but certainly calls for more research.
Literature on the Principles of World Trade Law and the Creation of the WTO
Scholars of world trade law begin their studies of the trading system with the principles that give the law its distinctive form, namely the Most Favoured Nation and National Treatment principles. These conceptual touchstones form the basis of much of the scholarship about trade governance and animate much discussion about the developmental trajectory of the multilateral trading system (Heiskanen 2004). The Most Favored Nation principle dates back to the medieval period in the twelfth century, and in the eighteenth and nineteenth centuries its inclusion in treaty arrangements occurred as a conditional clause, in which “benefits granted by one State were dependent on the granting of the same concessions by the beneficiary State” (UNCTAD 2010:10). Traditionally, MFN treatment required certain conditions to be met in order to trigger its benefits, and its inclusion in treaty arrangements required a substantial level of good will on the part of treaty signatories. As VanGrasstek notes, the granting of MFN was more often an exception rather than the rule of trade governance (2013:18–21).
Following World War II, MFN was defined so as to make the unconditional granting of most-favored nation status the basis for membership in the GATT (Cottier, Mavroidis, and Blatter 2000). Article I of the GATT 1947 declares that “any advantage, favour, privilege or immunity granted by any contracting party to any product originating in or destined for any other country shall be accorded immediately and unconditionally to the like product originating in or destined for the territories of all other contracting parties” (full text of the GATT 1947 may be accessed at http://www.wto.org/english/docs_e/legal_e/legal_e.htm). The benefits of a multilateral application of MFN are particularly important for developing countries and include transparency in the application of tariffs across all member jurisdictions that gives smaller economies a trading advantage they would have otherwise been unlikely to negotiate with large trading partners (Aggarwal 2006).
The second principle is national treatment. The principle of national treatment states that nations must treat imported goods the same way that they treat domestic goods for regulatory and taxation purposes. GATT 1947 Article III paragraph 1 states “The contracting parties recognize that internal taxes and other internal charges, and laws, regulations and requirements […] should not be applied to imported or domestic products so as to afford protection to domestic production.” Like the MFN principle, the principle of national treatment is difficult to apply in the real world because while some protectionist regulations are obvious, much of what the state does to protect and enhance economic output occurs in the domain of business regulation. Even so, members have an obligation and must maintain law and policy in such a way as to minimize (and hopefully eliminate) substantive differences in the way domestic and imported goods are regulated (Ortino 2005). These two principles give some sense of the complexity of bringing together the priorities of national governments and the demands of citizens with the multilateral standards for fair treatment of goods for trade.
Literature on the Creation of the WTO
In the closing days of World War II, questions of global economic coordination were largely considered within the context of international security and the orderly development of a system for global monetary relations (Eichengreen 2008:91–100). This is not to say that the rehabilitation of global trade was not a distinct priority, but rather to emphasize the embedded nature of trade within a geopolitical context that emphasized security as the lynchpin of postwar growth, and thereby foreshadowed the slow development of world trade law as it emerged as a body of law distinct from other forms of international economic law (Steil 2013).
As the world's leading economic power, the United States signed the General Agreement on Tariffs and Trade, yet failed to ratify the International Trade Organization, which would have served as the governing institution for the world trading system, much as the World Bank and International Monetary Fund were designed to preside over postwar reconstruction and economic development (Irwin, Mavroidis, and Sykes 2009). Without an institutional home, the GATT remained, in Jackson's words, something of a “country cousin” to the international financial organizations in that it did not have the same profile upon the global political stage (Jackson 1992:11). Even so, the GATT was not without boosters, and its small secretariat hosted a number of liberalization rounds in the late 1940s and 1950s.
Winham has noted that the first four rounds did not reduce tariffs as much as expected due to the slow European recovery, but the United States did make a number of significant tariff concessions (2009:16). The Kennedy (1963–7), Tokyo (1973–9), and Uruguay (1986–94) rounds made significant gains in the liberalization of trade and culminated in the creation of a multilateral institution for the governance of trade, inaugurated on January 1, 1995 (Croome 1995; Ostry 1997). The development of world trade law was driven by geopolitics and a high-minded belief that the principle of comparative advantage was the lynch pin for connecting wealth creation with peaceful global development, a dual economic and political rationale that has been discussed in Winham (1992) and Steger (2004).
The WTO was created in order to develop an institutional frame in the form of the secretariat with which to deal with the complexity of an international trading system in which more than a hundred countries had signed on to the GATT (McRae 2009). A legal and institutional frame was necessary for the administration of new agreements brought into the trading system in the Uruguay Round, in particular the General Agreement on Trade in Services (GATS), the Agreement on Trade Related Investment Measures (TRIMS), and the Agreement on Trade Related Intellectual Property Rights (TRIPS). It was also increasingly apparent that the GATT's dispute settlement measures were inadequate to the growing task of managing trade-related legal conflict, so a more robust legal system for the resolution of disputes was also needed (Weiler 2000; Horn and Mavroidis 2006; WTO 2013).
VanGrasstek (2013:54–73) describes in great detail the negotiations that took place in the run up to the WTO's birth. Professor John Jackson put forward a series of proposals part way through the Uruguay Round negotiations calling for a “World Trade Organization,” and describing its potential uses. His proposals were met with tepid support, but later championed by Debra Steger, a Canadian diplomat who had studied under Jackson and believed in the necessity of a new institutional mechanism for the administration of trade governance (Steger 2004). The Canadian trade minister raised the issue with the European Union, which then championed the concept of a “multilateral trade organization,” which contrasted with the less formal mechanisms proposed by the United States for the administration of the new agreements currently under negotiation. In the final months of the Uruguay Round, horse-trading between the United States and the European Union saw the creation of a new institution with robust dispute settlement mechanisms in exchange for a wider mandate for trade governance and the understanding that the United States would stop using domestic courts to determine damages in international trade disputes, a practice which began as a stopgap measure, but which was increasingly considered to be a conflict of interest by the international community. (For a description of the powers contained in Section 301 of the Trade Act of 1974 see http://www.trade.gov/mas/ian/t...tes-enforcement/tg_ian_002100.asp).
Literature on Dispute Settlement at the WTO
With the creation of the World Trade Organization a series of literatures quickly developed that studies its institutional structure, the effectiveness of its processes and mechanisms, and the implications of its governance decisions (Shell 1995; Koh 1997). The largest of these literatures by far is the one dealing with the juridical mechanisms for the settlement of disputes. The Dispute Settlement Understanding (DSU) is by far the most distinctive legal mechanism to come out of trade multilateralism in the post-Cold War period (Bello 1996). Dispute settlement at the GATT was non-binding and, by the late 1980s, large trading powers such as the United States were turning to domestic courts to settle trade disputes. Such a move highlighted the need for a more robust set of rules for the settling of disputes at a forum that would remain free of the perception of political interference.
The DSU outlines a binding dispute settlement process, in which trade policies and practices are challenged before panels, which render a binding decision (Horn and Mavroidis 2006; WTO 2013). The panel's final report may be appealed to an Appellate Body, which rules upon the substance and process of the original panel's decision. More than four hundred disputes have been notified to the Dispute Settlement Body. As Leitner and Lester show, in the first 15 years of dispute settlement, 132 panels were circulated to the membership and 90 of those, or 68 percent were appealed (2011:197). A number of issues face the dispute settlement mechanism (DSM). One problem highlighted early on is the fact that dispute settlement is expensive and its uptake happened much more quickly among industrialized nations with large trading volumes and significant experience with an adversarial court system modeled at least in part on the common law experience of Anglo-American members (Gao 2007).
Dispute settlement raises the issue of conflicts between domestic authority and the authority of intergovernmental judicial panels. By adopting an appropriate standard of review, panels attempt to walk a fine line between the obligation of states to maintain their treaty obligations and the autonomy of governments to reflect in policy and law the interests of constituent voters. Pauwelyn (2003) has been one of the leading figures in this emerging field of scholarship with an important book examining this “conflict of laws.” Particularly in the first decade of governance, members worried that the broad scope of WTO governance would create a dynamic in which dispute settlement panels, whose decisions are binding for members, would delve too deeply into domestic regulation while rooting out protectionist policies.
To date, a minority of the membership has used the DSM, which may simply reflect the reality of global trade flows, or it may represent a significant gap in the skill sets or priorities of small economies (Bohanes and Garza 2012). Much research has been conducted examining usage patterns (Hoekman, Horn, and Mavroidis 2009; Froese 2011), the potential benefits and drawbacks of usage (Keck and Schropp 2007; Shaffer 2009), and the possible implications for non-usage (Mosoti 2006; Bown and Hoekman 2007; Bown and McCulloch 2010). Perhaps the most important finding highlighted by this research is the fact that legal capacity, measured in terms of access to knowledge, legal talent, and money, may account for some of the lack of uptake among poor countries (Busch, Reinhardt, and Shaffer 2009). Other important questions remain about the ability of the DSM to effectively resolve disputes (Alter 2003; McRae 2008), both in terms to brokering an effective compromise as well as enforcing compliance with the binding decisions rendered by panels and the Appellate Body (Sullivan 2003; van den Broek 2003; Wilson 2007).
Literature on Legal and Governance Issues at the WTO
The literature on the WTO's governance is vast, covering the waterfront of legal and political issues that animate the global political economy of trade. At its most basic, the GATT is an agreement to lower tariffs, and the literature on tariffs, border measures, and the use of quota systems for the regulation of imports has grown exponentially over the twentieth century (Schattschneider 1935; Viner 1952; Shonfield 1976; Irwin 2009). With the intensification of trade and the increasing recognition of global economic interdependence, the literature began to address a number of high profile non-tariff issues, such as dumping, subsidies, and safeguards (Vermulst and Graafsma 2005). Trade in agricultural goods, which had been placed to one side in the GATT system because of its political sensitivity, has gained prominence at the WTO, if only because a development round that avoids agriculture is sidestepping one of the biggest trade issues facing exporters in developing economies (Clapp 2006).
The WTO's inclusion of agreements on the liberalization of services, investment, and intellectual property have begun lively debates about the possible trajectories of governance in these new issue areas (Mercurio 2004; Blouin, Drager, and Smith 2005; Banerji and Jain 2007). For the sake of simplicity two issue areas that exemplify the ongoing debates about the possibilities and limits of multilateral trade agreements will be discussed briefly - the literatures on anti-dumping and intellectual property rights.
Dumping occurs when a producer in Country A sells their product in Country B for less than the cost of production. This practice is usually used to clear a surplus without driving down the price in the home jurisdiction (Sykes 1998). The primary defense against dumping is countervail - a set of escalating tariffs that may be implemented if a determination of dumping has been made. The main controversy surrounding the practice has to do with the way in which determinations of dumping are made, and the subsequent employment of countervailing measures (Bourgeois 1998). Critics of American anti-dumping laws argue that the Department of Commerce uses narrow windows of empirical evidence, or controversial statistical methods, to determine if a product has been dumped on the American market (Froese 2010). Of course it is also the case that domestic producers and their powerful lobby groups use dumping determinations to protect embattled domestic industries, such as American softwood producers (Devadoss and Roman 2004). On the other side, producers and politicians frequently argue that the United States is one of the world's largest and wealthiest markets, and foreign producers frequently use underhanded tactics to gain a share of this lucrative market (Mankiw and Swagel 2005).
Globally, charges of dumping and the leveling of countervailing duties have become a basic strategy by which members of the WTO deal with the increasing intrasectoral competition faced by domestic producers (Drope and Hansen 2006). As tariffs fall, non-tariff barriers become an important tool for sheltering domestic industry. Dumping disputes are frequently brought to the WTO, where they are litigated under the Agreement on Anti-Dumping and the GATT. According to WTO statistics, 97 cases have cited the Article VI (Anti-dumping) of GATT 1994 in their requests for consultations, making dumping one of the most significant issues dealt with in dispute settlement (statistics related to the dumping issue may be accessed at http://www.wto.org/english/tratop_e/adp_e/adp_e.htm). There is a basic consensus among scholars and policy practitioners that excessive use of countervail protections is an unfortunate side effect of lower tariffs (Hudec 1999; Bown 2013). But there is little consensus on how to reduce the use of these and other non-tariff barriers, and the extensive use of anti-dumping legislation continues to be one of the most significant features of the global trading system, one that has been exacerbated by the 2008 financial crisis (Fritz and Wermelinger 2009).
The Trade Related Intellectual Property Rights Agreement (TRIPS)
One of the main political trade-offs that typified the creation of the WTO was the tacit understanding between the United States on the one hand and the European Union and Canada on the other that if the United States wished to enlarge the scope of the GATT system's governance of trade it would have to accept an enlargement of the institutional governance arrangements as well (VanGrasstek 2013). Intellectual property rights were one of the highest profile issue areas within this expanded governance domain (Drahos and Braithwaite 2002). The rationale for the global protection of intellectual property is theoretically sound. If producers of intellectual property are to have an incentive to produce the processes, formulas, and ideas that drive innovation, they must have a way to realize the profits of their efforts and this has traditionally been through a time-limited monopoly. National governments have traditionally governed the terms of this monopoly, and have largely policed their own efforts through organizations such as the World Intellectual Property Organization (WIPO).
As Sell (2003) and others have noted, the placement of intellectual property inside the legal system for trade governance has resulted in a basic shift from national policing of intellectual property rights to multilateral policing, and from a negative (thou shalt not) form of rulemaking, to a positive (thou shall) form of rulemaking for the global governance of IP rights. As many scholars have noted, these changes have significant implications for the governance of trade in intellectual property (Mercurio 2004). Most notably, the TRIPS Agreement is one of a select few treaties under the WTO's umbrella (the others being the Agreement on Trade Related Investment Measures and certain aspects of the Technical Barriers to Trade Agreement) that supplement the principles of non-discrimination with a set of positive regulatory requirements. For example TRIPS mandates the minimum length of time that a patent must be protected at 20 years.
A number of scholars have pointed out the complications that arise from this form of multilateral policing (Drahos 2003). They note that, historically, the appropriation of intellectual property has been a major factor in economic development, pointing to ways in which American creators pirated patented material in the nineteenth and early twentieth centuries, just as Chinese entrepreneurs do today (Lessig 2004). Leaving aside the moral and economic implications of IP theft, other scholars examine the institutional complications that arise from trade agreements designed to protect industrial property, which now have significant implications for access to medicines in the world's poorest countries (Park 2002; Curtis 2012). Issues such as compulsory licensing of patented drugs and parallel importation for drugs produced out of country have complicated the intellectual property rights issue and made a relatively obscure aspect of regulation into a flashpoint for public anger over the perceived unfairness of the TRIPS Agreement for developing countries (George 2011).
Literature on Trade Governance and Developing Countries
Perhaps the biggest single issue facing the trading system has been the inclusion of scores of developing countries, which bring very different concerns about the place of trade in development strategies than do the industrialized members who first created the GATT (Trommer 2014). The discussions above on the principles underpinning the trade system, new institutional mechanisms such as dispute settlement, and the complications arising from new areas of governance such as intellectual property have significant implications for developing economies, as the literature adequately demonstrates. Nevertheless, we have not yet touched upon the issues directly related the inclusion of developing country members into the WTO. This literature is specifically concerned with the development of “special and differential treatment” for developing countries, the use of dispute settlement by small economies, and the Doha Round of negotiations (Hoekman 2004). The rise of regional forms of trade governance are also of significant importance for developing economies and have been covered in the entry “Formal International Institutions and the Regulation of Flows of Goods and Services.”
Special and differential treatment is the term used to identify the bundle of exceptions and differential timelines for liberalizations created for less developed and least-developed nations at the WTO. Recognizing that the majority of the membership is not fully industrialized, certain aspects of WTO negotiations divide the membership according to wealth and then apply trade discipline accordingly. In negotiation, the issues facing developing countries are ones of both order and magnitude (Clapp 2006). In dispute settlement the issues facing developing countries are ones of institutional access both in terms of financial and professional factors, as well as in terms of legal capacity (Bohanes and Garza 2012). A minority of members use the DSM, and political scientists and trade lawyers examine the implications of non-use of legal mechanisms (Smith 2004). Successfully defending public policy and successfully challenging the protectionist policies of trading partners depends to a great extent upon the skilled use of the DSM (Shaffer 2009). Trade lawyers note that effective use of dispute settlement mechanisms begins with continued use, which may aid in the development of professional standing and legal capacity on the part of civil servants (Hoekman, Horn, and Mavroidis 2009).
Finally, the Doha Round of liberalization negotiations was supposed to place the issues of developing economies front and center at the WTO. However, after 12 years of negotiation, the agreement remains far from complete. There is a significant political legitimacy to be lost in the failure of the first trade round to prioritize developing country issues in the trading system (Akyuz, Milberg, and Wade 2006). However, the failure of the Doha negotiations has resulted in the migration of many trade issues to the regional level where agreements have proliferated (Stephenson 2008). Even so, a multilateral approach to trade issues, from the liberalization of agriculture markets to the easing of barriers for trade in services, would pay significant dividends because most developing country members do not have any other direct access to trade negotiations with the United States and European Union outside the multilateral forum.
Literature Linking World Trade Law and Social Priorities
In addition to the issues raised by the inclusion of many small economies in the institutions of global trade governance, the rise of world trade law has simultaneously highlighted the many areas of importance to national publics in developed economies where trade overlaps with social priorities. In particular, the literature most often highlights issues relating to the environment, culture, labor standards, human rights, and health. In the interests of space, we will examine three of these issue areas below - health, the environment, and cultural goods.
Trade Law and Public Health
There are three basic areas where national responsibilities for population health intersect with trade law. The first has to do with state regulatory autonomy. States may according to the law of the GATT limit trade in certain goods if the action is taken to protect human health. Even so, the protection of health through the limiting of trade is difficult because if the state is challenged in dispute settlement, they must show (among other factors) a clear chain of causation between their trade-limiting action and the health of a national population (McGrady 2011:164). France was able to show this chain of causation when it banned the importation of Canadian asbestos (Castleman 2002), but the United States was not able to do so when it banned the importation of clove cigarettes from Indonesia for public health reasons, partly because the panel found that clove cigarettes are a similar product to menthol cigarettes produced in the United States. (For a one-page summary of the clove cigarettes case, see https://www.wto.org/english/tratop_e/dispu_e/cases_e/1pagesum_e/ds406sum_e.pdf.)
The second has to do with new areas of multilateral regulation that broadened the WTO's governance mandate after the Uruguay Round. In particular, scholars and policy makers have closely examined the implications of the General Agreement on Trade in Services (GATS) for public health (Blouin, Drager, and Smith 2005). Health provision has been historically largely unaffected by trade, but with the birth of the GATS, it appeared as if the globalization of health service provision was upon us. This has not been the case, partly because member states have been unwilling to liberalize in these areas and partly because of low demand for cross-border medical service provision, although information and communication technologies have driven demand for some off-shoring (Blouin et al. 2006).
Finally, there is the issue of intellectual property rights as they relate to public health. The TRIPS Agreement attempts to strike a balance between the needs of consumers and the rights of inventors to collect a fair return on their intellectual property. This balance has proven to be difficult to maintain, and the TRIPS Agreement is often considered to be one of the many stumbling blocks to equitable provision of medicines in countries facing health pandemics, such as that posed by HIV/AIDS to countries in Africa (George 2011). At the time of drafting, TRIPS contained provisions to allow countries facing pandemics to temporarily suspend certain IP rights in order to manufacture at public expense life-saving medicines - a process known as compulsory licensing (Wilson, Cawthorne, Ford, and Aongsonwang 1999). But the basic problem was that most of the countries facing the HIV pandemic did not have any pharmaceutical manufacturing capacity.
With great difficulty TRIPS was eventually amended on December 6, 2005, to allow members with manufacturing capacity to fulfill the terms of the license. The amendment will become a permanent piece of the agreement when two-thirds of the membership has accepted it, which the secretariat hopes will happen by the end of 2015. (For information on the ongoing amendment process see https://www.wto.org/english/tratop_e/trips_e/amendment_e.htm.) The first and only test of the new rules came in 2007, when Rwanda notified the WTO that it would seek the production of generic anti-retroviral medications from Canada. In institutional terms the collaboration was a successful test of the new flexibilities. However in practical terms, the legal, bureaucratic, and economic hurdles that must be surmounted in order to improve access to medicines are significant (Amollo 2009). Although in fairness many of these hurdles are not the purview of world trade alone.
Trade Law and the Environment
Even before the WTO came into being, national publics had begun to question the impact of multilateral trade regulation on environmental protection. In particular, the Dolphin-Tuna dispute in which the GATT struck down as discriminatory an American dolphin-safe labeling initiative for canned tuna, seemed to signal a new impatience within the multilateral trading order for domestic regulation protecting environmental priorities (Schoenbaum 1997). The concern was then, and remains today, that environmental measures will be considered solely in terms of their potential trade distorting effects, rather than in terms of their possible impact upon environmental sustainability. A number of disputes have arisen in which WTO panels have attempted to apply an appropriate standard of review that maintains the principles of most-favored nation and national treatment while simultaneously leaving room for national approaches to social priorities (Vranes 2009).
Trade Law and Cultural Goods
Much as been made of the incommensurate differences between cultural products and industrial goods (Mas-Colell 1999). Advocates of a cultural distinctiveness model for the treatment of cultural goods and services argue that a film cannot be treated in the same way as softwood lumber for example, both in the flow of the product in question across national borders as well as the basic form of regulation of the product behind the border (Throsby 2001). There are three reasons for this. First, most cultural goods are increasingly digital, making their movement more similar to financial flows than to the import/export movement of commodities (Wunsch-Vincent 2008). The preservation of intellectual property is an issue in this regard (Helfer 2004). Second, the endless replication of these cultural goods raises concerns for the cultural producers in smaller economies, that their industries will be swamped by high-quality, low-cost iterations from large economies, where cultural producers recoup the cost of production in their home jurisdiction, and reap large profits in foreign markets (Grant and Wood 2004). Examples include the sale and distribution of American cultural content such as films and magazines abroad. A number of disputes between Canada the United States targeted this issue (Acheson and Maule 1999).
Finally, cultural goods embody identities and social values in a way that industrial goods do not, contributing a number of complex sociocultural and political implications to their consumption (Drache and Froese 2008). Needless to say the WTO's membership is deeply divided upon these issues, with producers in the United States arguing that consumers treat cultural goods much like any other product, consuming according to their tastes with little regard for national origins. A film may portray American social values, but many other products may be identified by the distinctive features and symbolic properties as well (Aageson 2008). Even so, the cultural distinctiveness thesis has gained significant traction, and provides a useful counterpoint to intellectual property when considering the relationship between trade governance and the global cultural economy (Sundara Rajan 2008).
Conclusion: The Future of World Trade Law
The terrain of trade law is complex and prognostication is inherently risky, but it is possible to identify a number of potential trajectories for the development of international economic law. In particular, we will identify possible futures discussed in the literature for regional trade agreements, multilateral trade negotiation, dispute settlement, and the future role of the WTO in the larger system of international law.
Regional trade agreements have proliferated exponentially in the years following the birth of the WTO, and while it is perhaps safe to say that the trend has peaked in numerical terms, the future of integration likely lies at the regional level (Crawford and Fiorentino 2005). This is not to deny the significance and rising juridical importance of the WTO, but rather point towards the number of increasingly large and complex arrangements currently under negotiation at the Transpacific Partnership (TPP), the EU-US negotiations known as the Trans-Atlantic Trade and Investment Partnership (TTIP), and many others (Steger 2012). The literature is split on the implications of the new regionalism, with some commentators seeing the rise of a particularism that undercuts the multilateral liberalization project (Bhagwati 2007), while others see a complement to the current trading system (Summers 1991). They further argue that regionalism may offer a way to bypass the deadlock in the Doha Round while simultaneously offering multiple platforms upon which to test new institutional and legal mechanisms for governance (Stephenson 2008). Critically minded scholars see the growing spaghetti bowl of regional agreements as part of a neoliberal agenda that places the gains from trade ahead of workers’ rights and health, welfare, and environmental standards (De Ville and Siles-Brugge 2015).
The future of multilateral trade negotiation is murky as scholars and practitioners debate whether the Doha Development Round is beyond revival, or whether portions of it may be saved in order to salvage a smaller deal (Bhagwati 2011). In December 2013 one of these smaller deals was reached at the Bali Ministerial Conference, where negotiators came to an agreement on trade facilitation (Koopman and Wittig 2014). Like the TRIPS amendment discussed earlier, the Trade Facilitation Agreement will formally enter into force once two-thirds of the membership have ratified it. Ultimately, negotiators may be able to salvage a much smaller final package, and perhaps some negotiations may be spun off and completed as plurilateral agreements. But the bigtent form of trade multilateralism practiced immediately following the end of the Cold War is perhaps best understood as the unique product of an historical moment. There are at least two reasons for this explored in the literature. First, the geopolitical dynamics of trade governance have shifted with the rise of many new developing country members and the increasing power of the so-called BRICS of Brazil, Russia, India, China, and South Africa (Narlikar 2010). Second, the gains predicted at the end of the Uruguay Round (both in terms of governance effectiveness and economic advantage) have yet to fully materialize. This is partly because of turbulence in the global economy, and also due to ongoing complications related to internalizing and capitalizing upon disciplinary agreements such as the TRIPS and new arenas of liberalization such as the GATS.
Scholars are perhaps more sanguine about the future of the dispute settlement processes instutionalized in world trade law over the past 20 years. In terms of volume, the number of cases brought to the WTO peaked by 2000 (VanGrasstek 2013:54). However, the dispute settlement mechanism continues to enjoy a broad-based multilateral support. Daemmrich (2011) suggests that a shift has taken place in which the trading system used to derive a great deal of its legitimacy from its expanding membership base, but now derives a similar legitimacy from its dispute resolution abilities. The novelty of binding rules and an appellate body have been replaced by debates about how to make dispute settlement more transparent, and discussions about how to integrate the interests of civil society into the process, suggesting a maturing organization. Concerns about the loss of sovereignty represented by a new international court have been mollified even as new concerns about the effective rates of compliance have been articulated (Plasai 2007). In the final balance, the WTO's developmental trajectory is trending away from liberalization negotiation and towards juridical and information-gathering functions, suggesting a future in which the institution functions as a highly legitimate court, a lens for trade policy transparency, and negotiating body with potential, but little kinetic energy (WTO 2013).
The future of trade law within the broader system of public international law is likely to be one in which the many small challenges, conflicts, and overlaps within and between these bodies will continue to be addressed as they arise in the processes of treaty negotiation and dispute settlement (Baldwin, Kawai, and Wignaraja 2013). Compromise will continue to be the rule, and now that a rationalization process is underway, it will continue to knit together the many disparate legal strands that compose the body of international economic law (Guzman and Sykes 2008; Lester 2013). The final outcome is likely to be a more coherent and focused body of trade law with a stronger understanding of its own strengths and limitations within the growing body of public international law that exists beyond the state.
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Links to Digital Materials
The World Trade Organization at http://www.WTO.org produces statistical databases on global trade trends, reports on the state of trade policy around the world, and documentation relating to trade dispute settlement.
The WTO and Stanford University maintain an important cache of documents pertaining to the history of postwar trade governance at the GATT Digital Library: 1947–94 at http://gatt.stanford.edu/page/home.
For UN reports and statistical databases relevant to developing country trade visit the United Nations Conference on Trade and Development at http://www.unctad.org. The United Nations Commission on International Trade Law is found at http://www.uncitral.org/uncitral/en/index.html.
The North American Free Trade Agreement Secretariat maintains databases of regional trade flows and documents pertaining to North American dispute settlement at https://www.naftasec-alena.org/Home/Welcome.
Governmental and Region Specific Resources
The Office of the United States Trade Representative may be accessed at http://www.ustr.gov.
The United States Department of Commerce maintains records at http://www.commerce.gov.
The Canadian Department of Foreign Affairs and International Trade maintains an online presence at http://www.international.gc.ca/commerce/index.aspx?view=d.
The European Union's online trade portal may be accessed at http://ec.europa.eu/trade/.
The Trade Law Center for Southern Africa offers a number of country briefs and working papers at http://www.tralac.org/.
University and Independent Research Sources
Institute of International Economic Law at Georgetown University at http://www.law.georgetown.edu/...centers-institutes/iiel/index.cfm.
The Trade Law Guide at http://www.tradelawguide.com.
For introductory and advanced resources relating to the development of international economic law go to http://www.lexmercatoria.org.
For commentary on dispute settlement go to http://www.worldtradelaw.net.
Harvard University maintains a portal for research on global trade negotiations at http://www.cid.harvard.edu/cidtrade/index.html.
The Fletcher School at Tufts University maintains the Multilaterals Project, a full text database of international commercial treaties at https://wayback.archive-it.org...letcher.tufts.edu/multilaterals/#.
The Peterson Institute for International Economics maintains a large archive of research relating to trade law, investment, and competition at http://www.iie.com/research/re...esearcharea.cfm?ResearchTopicID=5.
The Cato Institute maintains material on a wide range of research relating to the globalization of international economic law at http://www.cato.org/research/trade-immigration.