WTO Jurisprudence

Governments, Private Rights, and International Trade

Wenwei Guan

• Publisher: Routledge
• Year: 2020
• ISBN:
  9781000071504
• Edition: 1
• Topic: Droit
• Subtopic: Droit du commerce international

This book offers a critical examination of the jurisprudence of the World Trade Organization (WTO) as an emancipatory international social contract on trade.

The book suggests that the WTO is an international organization built and operating on member states' attribution of authority through consent with legislative, administrative, and adjudicative functions – three functions in one triune personality. With a solid constitutional continuity building on GATT experiences, the WTO has successfully made governments accountable to foreign individuals in various capacities either as traders of goods, providers of services, or holders of intellectual property rights within the global marketplace. With a triune personality, the WTO operates within the reign of state primacy – the force – ultimately for the benefits of individuals – the ends – in the global marketplace, and gains a soul of its own in the institutional evolution – the means – of the global trading regime. Although the tripartite dynamics between states, international institutions, and individuals in the global marketplace are unprecedentedly complex, the WTO's ends of benefiting individuals in the global marketplace has no end. Beyond the critical analysis of WTO's decision-making by consensus, the book critically examines GATT's "common intention" treaty interpretation, Antidumping's NME methodology, TRIPS' public health concerns, and IP-competition trade policy dynamics. A unified WTO jurisprudence looking at the WTO as an international social contract on trade is therefore proposed to allow a fresh look at the force, the means, and the ends of the constitutional evolution of the global trading regime.

1 International social contract on trade

Its force, means, and ends

During its evolution from the GATT to the WTO, the global trading regime has gradually extended its reign from goods to services, intellectual property rights, and dispute settlement. The coverage of the trade without discrimination principle under the trading regime has also been gradually extended beyond products to individuals in various capacities as traders, suppliers, and nationals with private rights. As an integral part of the international law legal order, the WTO is an international organization with an independent personality that has administrative, legislative, and judicial functions. With its three-in-one triune personality, the WTO operates upon member states’ consent – the force – through rule-oriented institutionalization – the means – ultimately for the benefit of individuals – the ends – in the process of constitutionalization of the global trading regime. A unified jurisprudence looking at the WTO as an international social contract on trade would allow a fresh look at the force, the means, and the ends of the evolution of the global trading regime.

1.1 History and evolution from the GATT to the WTO

The development of the global trading regime of the World Trade Organization (WTO) can be traced back to the early multilateral efforts and practice of restoring international economic relations after World War II. In the second half of the 19th century, free trade among European countries had been essentially unfettered for a couple of decades, until World War I brought in a decline in free trade due to the shift of the political and economic environment.¹ Efforts to establish a global trade regime in the inter-war period through tariff truces and MFN-based treaty networks started to fail with the rise of agricultural protectionism and the eventual outbreak of World War II.²

To complement the Bretton Woods institutions – the World Bank and the International Monetary Fund (IMF) – after World War II, the US proposed negotiations on the establishment of an international organization regulating trade. It was within this context that the United Nations (UN) called for the establishment of an international trade organization as a UN specialized agency.³ Alongside the efforts attempting to establish the International Trade Organization (ITO), consultations to reduce tariffs and regulatory frameworks resulted in the General Agreement on Tariffs and Trade in 1947 (GATT 1947), which was originally expected to be part of the envisaged ITO regime. Although ITO agreement could not reach an end, the GATT 1947 was agreed to be applied provisionally.⁴ While the negotiations of the ITO Charter eventually completed in 1948 in Havana, the Havana Charter, however, failed to come into force due to the US’s opposition for the fear of sovereignty intrusion. Although the GATT 1947 lacked an organizational framework, contracting parties turned it into a de facto organization and successive trade talks continued until eventually the Uruguay Round established the WTO in 1995. As the final result of the Uruguay Round, the WTO replaced the provisional GATT with a permanent international institution regulating global trade.

1 WTO, World Trade Report 2017: Six Decades of Multilateral Trade Cooperation: What Have We Learnt? (Geneva: WTO, 2007), 35–39.

2 Ibid., 39–43.

3 UN Economic and Social Council (UN ECOSOC), Calling of an International Conference on Trade and Employment, UN Doc. E/13 (18 February 1946).

4 Protocol of Provisional Application of the General Agreement on Tariffs and Trade, signed at Geneva on 30 October 1947, UN Treaty Series 55, 308 (1950).

Among the various significances of the transformation of the trading regime from the GATT to the WTO, there are a couple of new developments that are important to our critical examination. First of all, the coverage and reach of the trading regime have been gradually broadened throughout the years of the evolution of global trade governance which built firmly upon GATT experience with a clear jurisprudential continuity. It is particularly worth emphasizing here that the post-war negotiation aiming at ITO as a specialized UN agency had an ambitious plan to cover not only world trade disciplines but also “rules on employment, commodity agreements, restrictive business practices, international investment, and services.”⁵ Although the provisional GATT focused only on tariff reduction on trade of goods at the very beginning, the trading regime’s interest in other areas of trade grew broader eventually. From 1948 to 1994, the GATT was a provisional agreement and organization for 47 years, during which the GATT held eight rounds of trade talk. The first five rounds from the first round at Geneva in 1947 to the Dillon Round at Geneva between 1960–1961 focused all on tariffs. In addition to focusing on tariffs, while the Kennedy Round (the sixth, between 1964 and 1967) covered also antidumping measures, the Tokyo Round (the seventh, between 1973 and 1979) covered also subjects of non-tariff measures and “framework” agreements.⁶

The eighth and last round of the GATT, the Uruguay Round between 1986–1994, eventually created the WTO. The Uruguay Round, as a round to end all rounds, covered a much broader range of subjects than all the previous rounds, including new subjects like services, intellectual property, dispute settlement, textiles, and agriculture, etc., making it “the largest negotiation of any kind in history.”⁷ In terms of tariff lines, the Uruguay Round increased the tariff bound percentage of developed countries from 78 to 99 percent, of developing countries from 21 to 73 percent, and of transition economies from 73 to 98 percent.⁸ As the final result of the Uruguay Round, the WTO replaced the provisional GATT with a permanent international regime, coverage of which has been extended from goods to services and intellectual property backed with a much stronger dispute settlement system, the Dispute Settlement Understanding (DSU) system.

5 WTO, Trading into the Future (Geneva: WTO, 2001, 2nd ed.), 9.

6 Ibid., 9.

7 Ibid., 12–13.

8 Ibid., 6.

It should nevertheless be noticed that the newborn WTO is a result of the continuity of the evolution of the global trading regime, built firmly on the provisional GATT. According to the WTO Agreement, the Secretariat and the Director-General of the WTO were designed to come from the Secretariat and Director-General of the GATT.⁹ Most importantly, except as otherwise provided, “the WTO shall be guided by the decisions, procedures and customary practices followed by the CONTRACTING PARTIES to GATT 1947 and the bodies established in the framework of GATT 1947.”¹⁰ In its discussion of the legal effect of GATT panel reports, the WTO Appellate Body stated:

Article XVI:1 of the WTO Agreement and paragraph 1(b)(iv) of the language of Annex 1A incorporating the GATT 1994 into the WTO Agreement bring the legal history and experience under the GATT 1947 into the new realm of the WTO in a way that ensures continuity and consistency in a smooth transition from the GATT 1947 system. This affirms the importance to the Members of the WTO of the experience acquired by the CONTRACTING PARTIES to the GATT 1947 – and acknowledges the continuing relevance of that experience to the new trading system served by the WTO.¹¹

Therefore, the global trading regime from the GATT to the WTO has been a process of evolutionary growth penetrating deeper into and covering a broader range of global trade, with no interruption but rather continuity firmly built on those 47 years of GATT experience.

Secondly, although the WTO system is a comprehensive framework with lengthy agreements and annexed schedules, there are several fundamental principles run through the whole system. According to WTO Secretariat, these principles include trade without discrimination, free trade gradually through negotiation, predictability through binding, promoting fair competition, and encouraging development and economic reform.¹² The most fundamental one among these five is the principle of trade without discrimination, which includes the most-favored-nation (MFN) treatment obligation and the national treatment obligation. While the MFN treatment ensures the same “best” treatment be equally available to products from all the other members beyond border,¹³ the national treatment guarantees foreign imported products be treated not less favorably than local products within border.¹⁴ Therefore, the trade without discrimination principle secures equal treatment for products in trade, within or beyond national borders, i.e. goods in the entire global market among all WTO Members.

9 Art. XVI.2, WTO Agreement.

10 Art. XVI.1, WTO Agreement.

11 Japan – Alcoholic Beverages II, WTO Appellate Body Report, WT/DS8/AB/R (4 October 1996), 14. See also, India – Patents (US), WTO Appellate Body Report, WT/DS50/AB/R (19 December 1997), 14; EU – Poultry Meat (China), WTO Panel Report, WT/DS492/R (28 March 2017), paras. 7.24–7...