Jean Monnet Center at NYU School of Law

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Throughout the half-century history of the former GATT and the newly launched WTO system, the GATT/WTO has been pursuing what seems to be a mostly rule-oriented international trade regime. This is evidenced by a number of panel reports, both adopted and unadopted, which are frequently cited in later cases. Regardless of the debate over their legal nature, it seems clear that many panel reports are contributing to the creation of a certain legal framework under which the GATT/WTO can be properly interpreted.[209] A good number of side agreements, understandings, and other legal materials have also been promulgated with the intent to clarify obligations and rights of the contracting parties (Members).

Non-violation cases, however, seem out of sync with this trend since the notion of non-violation cases itself presupposes that no breach of obligation exists. The key principle of non-violation cases which the panel has tried to establish in three adopted panel reports merely "re-balances" the unbalanced reciprocity on a rather ad-hoc basis. Thus, no sense of an established and consistent international trade norm exists and any Member could insist on maintaining a problematic measure even if it repeatedly nullifies or impairs the benefits of other Members.[210] Undoubtedly, the primary appeal of a rule-oriented dispute settlement system is its predictability and transparency. This would allow Members of the WTO to better manage their trade policies and enable private companies to design more secure long-term plans.[211] Such an approach is especially reasonable considering that both the world economy and international trade are becoming more internationalized, interdependent and standardized.[212]

One might counter-argue that the current WTO system has many legal loopholes which allow for sophisticated non-tariff barriers and even competition policies or labor standards, preventing the WTO from providing proper legal answers. Some might also wish to utilize non-violation complaints as "flexible" instruments to cover these loopholes.[213] However, legal loopholes should be closed by legal instruments rather than by the ambiguous flexibility embedded in the notion of non-violation cases. Therefore, efforts should be exercised to fine-tune the current "violation" regime, by "violationizing" cases, reducing the use of non-violation complaints, and establishing more sophisticated substantive rules.

In the past, the possibility of blockage of panel reports served to some extent as a means to filter undesirable non-violation cases.[214] Paradoxically, the current automatic adoption system could be more vulnerable to wrong cases made by panels or the Appellate Body.[215] This vulnerability is the very reason why panel composition should be more carefully crafted and a panel itself should be more circumspect in invoking the non-violation provisions in its ruling.

Finally, in the post-hegemonic era after the Cold War, no major country seems willing to play the role of "standard-bearer" of free trade.[216] Some countries may actually be more interested in representing the parochial voices of domestic constituencies or interest groups, and they might regard non-violation complaints as a new way of securing their goals. Unless changes are made, the non-violation provision could be the Achilles heel of the WTO system.

[209] See JACKSON, THE WORLD TRADING SYSTEM, supra note 51; Jackson, supra note 123.

[210] See DSU, supra note 31, art. 26.

[211] See JACKSON, THE WORLD TRADING SYSTEM, supra note 51, at 87 - 88.

[212] Id. at 111; Abels, supra note 42, at 469.

[213] See supra note 42.

[214] Petersmann, supra note 10, at 1192.

[215] See supra Part II.C.2.

[216] See, e.g., Reinhard Rode, GATT: Revival or Decay?, in GATT AND CONFLICT MANAGEMENT 117, 119 (Reinhard Rode ed., 1992).

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