WTO

Question 1

general development/description trade regime

Answer 1

• very legalised
• many different agreements
• separate negotiations (-> members always involved)

Question 2

objectives of the WTO

Answer 2

regulating international trade with the intention to decrease trade limiting practices as much as possible
+
avoiding protectionism (and with that economic crises)

underlying macro-economic logic: trade benefits all trading partners (specialization -> cheaper production = more money)

Question 3

Importance of the WTO

Answer 3

rule setting authority

means of transparency

court-like dispute settlement procedures for complaints

97% of all trade takes place between WTO members
99% of import tarrifs of developed countries are under WTO rule

Question 4

history

Answer 4

Bretton Woods Conference 1944
- goal = prevent system crashes by installing the International Trade Organization (failed)
- in the negotiations US pushed for trade liberations, EU was more careful (empire system influenced their behavior), developing countries wanted to protect exporting countries

1947 GATT: implied a number of new negotiating rounds about tariffs and international rules (first focused solely on tariffs, later on on more)

1995 establishment of WTO to implement agreements predating the WTO

series of WTO negotiating round, most recent = Doha Round 2001

Question 5

main agreements the WTO implements
5

Answer 5

• GATT: General Agreement on Tariffs and Trade (1947)
• GATS: General Agreement on Trade in Services
• TRIPS: Agreement on Trade Related Aspects of Intellectual Property Rights (patents)
• Rules on agricultural trade and subsidies (agriculture is not part of the GATT)
• Trade dispute resolution processes (important for avoiding/solving trade wars)

Question 6

Doha Round + Geneva package

Answer 6

2001

failure to reach an agreement to continue negotiations -> 2008 breakdown
- increasing bilateral trade agreements
- developing countries found they were disadvantaged in past rounds (Uruguay Round), wanted more influence (formed organized coalitions to resist proposals of the US and EU)

most recent agreement = 2022 Geneva package
- environmental sustainability (fishing)
- waiver for covid vaccines (manufacturing should be spread)
- WTO reform (not specific)
- making the dispute settlement system functional

Question 7

organs WTO

Answer 7

Ministerial Conference
- highest decisionmaking organ with annual meetings of trade-ministers

General Council: trade officials, meet in various setting to discuss trade in goods, services, agriculture, intellectual property etc.
- meet more often than the Ministerial Conference

Small secretariat (~600 members): supports negotiations among member states

Question 8

members WTO

Answer 8

164

not all members are states:
‘‘contracting parties’’: states but also political entities that control the economic policy of a territory
- e.g. EU, ‘Hong Kong China’, and ‘Chinese Taipei’

Question 9

headquarters WTO (and ILO)

Answer 9

Geneva

Question 10

decision-making WTO

Answer 10

based on consensus
making the WTO intergovernmental: member states have a big influence, have to agree on/with everything

Question 11

obligations

Answer 11

spelled out by the original GATT agreement
spelled out specifically for different products and ‘‘like products’’

three main obligations/principles
- bound tarrifs: documented in the ‘‘schedule’’ (decided upon in big review conferences of the WTO: in periodic rounds of WTO conferences)

• most-favored nation (GATT article 1): best agreement made with another country serves as the standard for agreements with other countries
• national treatment: requires that WTO members don’t discriminate between domestic goods and imported goods once they are imported

Question 12

tarrif

Answer 12

the tax that an importer must pay to the government for importing that specific product

highly political matter

Question 13

'’like products’’

Answer 13

determined by the World Customs Organization in Brussel

Rajesh Pillai found that ‘‘likeness’’ is determined mostly by the Working Party of the Border Tax Adjustments in 1970

Question 14

exceptions to WTO obligations
6

Answer 14

• general exceptions (to protect human, animal or plant life/health)
• security exceptions
• balance-of payments (safeguard external financial situation)
• temporary waivers
• cultural exceptions
• regional trade agreements

Question 15

regional trade agreements

Answer 15

allowed to make tariff agreements without having to apply them to other WTO members

requires: limited within a region + agreement must cover substantially all of the trade among those regional partners

US regional trade agreements with Israel and Jordan aren’t really regional, but it is tolerated: no one complains as no one is harmed

Question 16

why should WTO compliance be automatic or not?

Answer 16

it should be automatic:
- trade produces gains for both partners
- trade increases efficiency by allowing countries to specialize and by encouraging production on larger scale
- prices and diversity should increase in a market that is opened to imports and exports

in practice: trade advantages some and disadvantages others

Question 17

two sources of noncompliance to the WTO

Answer 17

• political opportunism: to cater/protect domestic interests (costs and benefits are unevenly distributed across domestic industries and between trading partners)
• # free-riding through unilateral non-tariff barriersWTO obligations are reciprocal (each member is supposed to see increased access to others’ markets in exchange for allowing them in their market)
  incentive to cheat this bargain by creating nontariff barriers to trade

Question 18

WTO enforcement / dispute settlement

Answer 18

limited to identifying violations and authorizing members to punish the violator (emphasis that the WTO is mainly about the commitments states make to each other, not to the WTO)

1. member complains to the WTO that it believes another member has failed to meet its obligations AND that they have suffered from it
   - can only be brought to the WTO if a bilateral solution has failed
2. creation of a panel of 3 trade experts
3. report distributed to the parties who may appeal to a separate Appellate Body
4. Report goes to the Dispute Settlement Body: approves or rejects the report (rejection never happened)
5. Reports recommendations become legally binding
6. If the WTO member doesn’t comply, economic sanctions are allowed: violated members can execute sanctions as harmful as the ones they suffered, should be in the same line of products (is often not the case: e.g. EU once targeted sanctions that would impact Florida and Carolina, which had an important role in the US elections in 2004

! step 6 works for powerful states, but not for smaller states: it may cost them more than that it gains them

Question 19

problems with enforcement

Answer 19

debate if the Dispute Settlement Management is dead:
- US blocks election of judges in the Appellate Body (once 3 were left it didn’t function anymore)

Appellate Body suspended since December 2019

Question 20

temporary alternative mechanism for the dispute settlement

Answer 20

2020

Multi Party Interim Appeal Arbitration Arrangement (MPIA)

can only decide between disputes among countries that are part of this alternative mechanism

Question 21

criticism WTO

Answer 21

Seattle Protests 1999: anti-globalization movement: WTO contributes to the growing inequality

WTO fails to address agricultural subsidies (richer countries subsidize, less developed countries can’t compete)

WTO rules mostly ignore environment and labor-related issues

lack of transparency in ‘‘green room negotiations’’

consensus structure (O’Hara)

Question 22

two substantively important problems for future of international trade and law

Answer 22

• tangled relationship between trade policy and environmental consequences
• puzzle over the relationship between how things are made and how they are traded (does the production play a role in the likeness of products)?

Question 23

how does the WTO mainly favor rich countries?

Answer 23

• dispute settlement: imposing sanctions is often costs poor countries more than that they gain
• WTO’s rules standardize trade and reduce tariffs mainly for those goods in which the industrialized countries are already highly productive + exclude those goods of greatest export interests to poorest countries (e.g. agriculture)

*WTO argues that the fault of subsidizing countries and that it isn’t the responsibility of the WTO

Question 24

case: shrimp-turtle

Answer 24

US ratified a law in 1989 that banned imports on shrimps caught with nets that aren’t turtle-friendly

India, Malaysia, Pakistan and Thailand filed a complaint:
- US wasn’t treating all sources of shrimp equally: some trade partners got longer transition periods and more financial and technical assistance)
- US was attempting to force other countries to adopt domestic policies modeled on American law = extraterritorial application of US law is unacceptable foreign domination
- raised the question if the protection of ‘‘exhaustible natural resources’’ should be interpreted broadly (including species e.g. turtles) ore should it conclude only minerals and similarly inanimate materials?

WTO dispute settlement found the US guilty of violating the most favored nation principle (the first part of the complaint), it didn’t mention the other points

Question 25

Claerwen O’Hara

Answer 25

consensus and diversity in the WTO: a queerer perspective

focus on the discursive effects of consensus decision making

Question 26

Uruguay Rounds 1986-1993

Answer 26

O’Hara

It is claimed that 120 states reaching consensus during the Uruguay Round of trade negotiations is the origin story of the WTO.

'’single undertaking’’: US and EU insistence on all-or-nothing basis

queer thinking: result of the round conceals underlying dynamics

states in the Global South felt they weren’t heard

Question 27

difference unanimity and consensus

Answer 27

unanimity requires affirmative votes from all parties

consensus in the framework of the WTO requires that no party formally objects (such an objection can come with political and economic costs)

Question 28

consequences of WTO’s consensus decision making

Answer 28

• powerful states more opportunity to use their market size or geopolitical power to influence the WTO
• difficult for low-income states to maintain an objection to a proposed decision
• marginalizes/closets smaller groups (the institution seems to speak as a whole, losing the individual voices of members)

Question 29

queer thinking

Answer 29

favor establishing consent through open and direct communications due to awareness that social hierarchy may result in different degrees of negotiating power

use of consensus decision making -> marginalizing

Question 30

Christmas effect + Uruguay round

Answer 30

Eve Kosofsky Sedgwick

all institutions lined up during Christmas to speak with ‘‘one voice’’ -> alienating those who did not fit the dominant narrative

Uruguay Round: idea that the WTO united the world around free-market principles
- discourse of sameness worked to naturalize the WTO’s system, making it appear common sense + excluding other economic visions

Question 31

in what way did the consensus decision making lead to naturalization of the WTO and its practices?

Answer 31

consensus decision making -> vision of sameness -> discourse making the WTO’s system seem natural + excluding other ways of thinking

Question 32

WTO intolerance of economic difference

Answer 32

e.g. China: joined in 2001, did not adopt a free-market economy (while it was expected to)
led to claims/worries that China had broken an implicit promise to the WTO by doing this (may have played a role in the US decision to block the appellate body)

Question 33

queerer approach WTO

Answer 33

may not be possible: to resolved around consensus
maybe what is needed is a move away from the WTO

breaking of trade law into multiple institutional sites, embedding it within different contexts such as food, security, public health, and transnational labor (Michael Fakhri)

to address trade-related issues requires international cooperation without being subsumed within a single unequal vision of the global economy.

Question 34

Davey, W.

Answer 34

WTO dispute settlement: crown jewel or costume jewelry?

Question 35

status quo dispute settlement system WTO

Answer 35

largely ineffective dispute settlement system with two classes of obligations: those that are enforceable by the MPIA and those who aren’t

Question 36

US objections to the appellate body

Answer 36

• appellate body has interpreted WTO agreements to impose on members obligations to which they never agreed
• fails to meet 90 day mandatory deadline of issuance of its reports in recent years
• has permitted its members to sit on appeals after the expiration of their terms of office
• issues advisory opinions not necessary for resolutions of disputes
• reviews panel factual findings despite being limited to consider legal issues
• treats its reports as precedent even though only WTO members are authorized to interpret the WTO agreements

claims that the appellate body has gotten bigger and more crucial than intended:
- more disputes than envisioned
- appeals became the norm
- Appellate Body engaged in searching re-examination of panel reports

Question 37

Walker decisions

7

Answer 37

2019 DSB chair David Walker proposed a decision to solve the US’ objections

(a) Limits were placed on the ability of the Appellate Body members to hear cases after expiration of their terms

(b) 90-day limit restated (subject to an agreement by the parties to extend it)

(c) Restated that only issues of law and legal interpretations may be appealed + that municipal law is to be considered as fact

(d) Only issues raised by parties may be decided upon by the Appellate Body

(e) Precedent is not created in WTO dispute settlement (previous relevant reports should be taken into account)

(f) Restated that dispute settlement cannot add to or diminish the rights and obligations provided in the WTO agreements

(g) A formal dialog between WTO members and the Appellate Body would be established

Question 38

criticism/failure Walker decisions

Answer 38

they mainly restate already existing obligations of the Appellate Body

US didn’t agree: walker decisions didn’t adequately explain/consider why the Appellate Body didn’t follow these provisions in the past

Question 39

DSU

Answer 39

dispute settlement understanding

Question 40

MPIA basis
+ problems

Answer 40

article 25 of the DSU allows a stop-gap measure for WTO members who wish to have an Appellate Body like appeals process

no appeals so far, ongoing proceedings will be subject to the arrangement

• doesn’t offer long-term solution since the US will most certainly not join

Question 41

possible ways forward with the DSB

Answer 41

• revived appellate body (without a clear enforcement mechanism unsure if the US will accept this)
• limited appeal (broad support doubtful)
• panel only, with limited review (senior panelist proposal could be accepted by the US, permanent panel body probably not)
• back to GATT 1947 (would be a step back)

Question 42

possible ways forward with the DSB: revived appellate body

Answer 42

revived appellate body with strengthening of walker principles:
- prohibition of gap filling
- promoting greater use of non-liquet (situation where there is no proven innocence or guilt as there is no applicable law)
- requirement to reject aggressive interpretations
- exhortations on the proper limited role of dispute settlement
- rules limiting the influence of the Appellate Body secretariat
- exemption of trade remedy cases from standard appellate review (hard to justify)

compliance of these suggestions would be hard to monitor
perhaps: Appellate Body - WTO member dialog on issues on a regular basis + providing informal feedback

Hillman: compliance to the Appellate Body to the walker principles would require the creation of a new committee (not clear what would happen if the committee found noncompliance)

without a clear enforcement mechanism unsure if the US will accept this revived Appellate Body

Question 43

possible ways forward with the DSB: limited appeal

Answer 43

revising the system so that appeals would be limited and uncommon
- e.g. requirement that a party has to convince the Limited Appellate Body that the panel report conflicted with another panel report or has a wrong interpretation of an agreement

will lead to many requests and much time will be spent in determining whether the conditions for appeal have been met

seems doubtful that there would be broad support for this

could serve as a standard for ad hoc appellate review under DSU article 25 when a non-MPIA party is in dispute

Question 44

possible ways forward with the DSB: panel only, with limited review
- 2 proposals

Answer 44

proposal to create a Permanent Panel Body to serve as panelists in all cases (with better quality panel reports perhaps an appellate system is not needed)

doubts that the US will agree: new institution that might be seen as little different from the current system

proposal to keep the current panel process + possibility of a review by senior panelists to resolve conflicts over truly bad decisions
- informal review mechanism: ad hoc basis to submit an appeal with three arbitrators selected by the parties from a list compiled by the WTO secretariat of the seven most experienced panelists

advantage of avoiding creation of a new institutions + ensures expertise

could be accepted by the US

Question 45

possible ways forward with the DSB: back to GATT 1947

Answer 45

system without an Appellate Body

could function if blockage seldom occurred

would have defects of the GATT system and a step back from the progress made in the Uruguay round

GATT dispute settlement:
no options for appeals

establishment of a panel + adoption of reports + authority to retaliate = all subject to consensus based decision-making

Question 46

prospects for resolving the DSB crisis

Answer 46

US is the one who started it and the only one that can solve it

hopeful sign of change: US Dec. 2021 agreed to the adoption of a panel report even though it disagreed with the panel on several important points

to figure out how to solve it, it is important to think about what the underlying reasons for the US’ behavior are:

• is it really about substance?
  if so, it would be hard to change the Appellate Body in the US wishes: most WTO members agree with decisions the US objects to (-> members will agree to some changes, but not too big ones)
• is it really about dispute settlement?
  US shows problems with support for any form of binding dispute settlement (e.g. withdrawal general compulsory jurisdiction ICJ, refusal to join ICC)

Question 47

other problem Dispute Settlement Body WTO (apart from appellate body crisis)

Answer 47

is it possible for a strong dispute settlement system to co-exist with a weak political system?

• Davey thinks so: appellate body would probably still be operating today if it treated trade remedy cases as it did health and environmental cases + if it hadn’t reversed a handful of panel decisions
• combination is still problematic: the role of dispute settlement cannot be to settle what negotiators could not

WTO system must rein in its ambitions to decide all issues + be more willing to conclude a compliant has not proved its case