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As discussed earlier, under the current WTO regime, when a measure by another government does not explicitly breach any obligation, a complaining party which feels deprived of its legitimate benefits can easily bring a non-violation nullification or impairment case. However, even if a regulatory measure is on its face neutral and non-discriminatory, it could in fact have an import-restrictive impact, thus violating national treatment obligations in the form of disguised discrimination.[122] In other words, many future complaints which may be raised under the non-violation provision should be interpreted as violation cases if a panel fully exercises its interpretative capacity in the context of the general obligations embodied in the GATT. [123] By doing so, a Panel or Appellate Body would shift focus from the rather rigid language of the general obligations (e.g., national treatment) to the objectives and purposes of the GATT provisions.
At this point, much attention should be paid to the exceptions to the general obligations (i.e., Article XX of the GATT 1994). Defending parties which are alleged to have violated general obligations can choose to rely on Article XX. This Article insulates from inquiry measures designed to protect human health, public morals or cultural values (among other things) because of domestic sovereignty.[124] However, Article XX incorporates a safety net against potential overuse or misuse of these general exceptions, namely the "Chapeau" or preamble to Article XX.[125] In other words, even if the defending parties succeed in arguing that their measures fall within the scope of general exceptions, they would still have to prove that their measures would not constitute "arbitrary or unjustifiable discrimination" or "disguised restriction". [126] The Chapeau as final gatekeeper would help broaden the operational scope of general obligations, and thus "violationize" potential non-violation cases. Furthermore, these general obligations would be particularly effective in coping with the so-called "independent-mode" non-violation cases[127] since the obligations (e.g., national treatment) would also extend to products not bound under Article II.[128]
Such a positive approach would also be applicable, to some extent, to cases concerning competition policies, which are likely to produce many future non-violation cases. For example, suppose that according to country A's business practices, domestic firms in a specific industry exchange important business information among themselves and sometimes provide each other with raw materials at a relatively cheap price.[129] Then suppose that country B, which exports competitive goods to country A, argues that its benefits are nullified or impaired by the restrictive business practices and subsequently files a non-violation complaint under the WTO dispute settlement system. In this hypothetical case, the crucial issue which the panel should focus on is the existence of government intervention or interference. If the outwardly restrictive business practice stems from the "purely commercial" nature of the issue, then it would be beyond the scope of dispute settlement procedure of the WTO. If, however, private practices are encouraged or promoted by some kind of government bias against foreign competitors which can be evidenced by "administrative guidelines," "administrative action,"[130] or at least persistent "practices" by the government, it should be interpreted as disguised discrimination designed to protect domestic firms from competition. If protection is the underlying motivation behind the government intervention, then the panel could legitimately rely upon the national treatment provision.[131] Another question regarding competition policies would arise in cases of mere inaction or acquiescence by the government facing these private restrictive business practices. In this situation, however, it seems very controversial to argue that violation of the national treatment obligation has occurred because there exists no clear nexus with the governmental action. [132] Thus, it would be wiser to deal with such issues outside the domain of the WTO system. Therefore, there is a limit to the extent that a panel should "violationize" a case.
Considering the likely complexity of future cases, in order to guarantee rationality and legitimacy when transforming non-violation cases into violation cases, a panel would need to rely on even more sophisticated "substantive rules" beyond the general obligations of the GATT and GATS as a basis for its interpretation. As a result, the scope of legal obligations under the WTO system would be substantially expanded.
In the above context, a useful example of the sequential development of substantive rules could be found in the subsidy area where there is a sequence of cases and report, culminating in one side agreement. This sequence is as follows: Australian Subsidy (1949), Working Party Report of the 1954-55 Review Session (1955) [133], Oilseeds (1988), and Agreement on Subsidies and Countervailing Duties (1994). [134] Originally, Article III, para. 8 of the GATT 1947 legitimized the introduction of domestic subsidies without any restriction. Likewise, in Australian Subsidy (1949),[135] although the working party concluded that the unexpected removal of a pre-existing subsidy on one of two competing products constituted impairment of the value of a tariff concession granted to Chile, the then-working party strongly reaffirmed the general acceptability of introducing a new subsidy without any possible nullification or impairment, noting that:
The situation in this case is different from that which would have arisen from the granting of a new subsidy on one of the two competing products. In such a case, given the freedom under the General Agreement of the Australian Government to impose subsidies and to select the products on which a subsidy would be granted, it would be more difficult to say that the Chilean Government had reasonably relied on the continuation of the same treatment for the two products.[136] (emphasis added)
However, during the 1954-55 Review Session, a GATT Working Party reversed the previous position in Australian Subsidy (1949), concluding that:
So far as domestic subsidies are concerned, it was agreed that a contracting party which has negotiated a concession under Article II may be assured, for the purpose of Article XXIII, to have a reasonable expectation, failing evidence to the contrary, that the value of concession will not be nullified or impaired by the contracting party which granted the concession by the subsequent introduction or increase of a domestic subsidy on the product concerned.[137] (emphasis added)
In line with this report, in Oilseeds (1988)[138] the panel solidified the previous position in the 1954-55 Report (1955), concluding that the introduction of "product-specific" domestic subsidies did impair the benefits from tariff binding, finding that:
benefits accruing to the U.S. under Art. II of the GATT in respect of the zero tariff bindings for oilseeds in the Community Schedule of Concessions were impaired as a result of subsidy schemes which operate to protect Community producers of oilseeds completely from the movement of prices of imports[139] (emphasis added)
These two findings in the 1954-55 Report (1955) and Oilseeds (1988) seem especially significant because they clearly demonstrated a substantial shift away from the position in the earlier Australian Subsidy (1949) case on the introduction of domestic subsidies. Although the findings did not go so far as to recognize the legal obligation of prohibiting or restricting the introduction of certain subsidies, one could say that the findings represented an evolved position. They diluted the impact of the subsidy exception to national treatment obligation and established legal discipline in such a traditionally sensitive area.
Real codification in the subsidy area took place during the Uruguay Round.[140] According to the Subsidies Agreement, the introduction of "product-specific" domestic subsidies shall constitute a "breach of international law obligation" when they are invoked by a Member country under this agreement.[141] From this Agreement, the non-violation issues on subsidies found in Oilseeds (1988) have been fossilized to a considerable degree.[142]
Side agreements aiming at "elaborating rules for the application" [143] or "furthering the objectives of the GATT" [144] should be more actively employed and used to cover a broader range of legal obligations. Throughout the Tokyo and Uruguay Round some side agreements, such as the "Agreement on Technical Barriers to Trade" (TBT), the "Agreement on the Application of Sanitary and Phytosanitary Measures" (SPS), and the "Agreement on Import Licensing Procedures" (ILP) were established to rationalize and fine-tune legal rights and obligations under the GATT. No doubt, these agreements are quite delicate and technical. Yet, despite their usefulness, up to now they seem to have been infrequently cited and applied in the actual panel reports. One reason for this lack of use is that panels may have mainly focused on the interpretation of the GATT provisions themselves, while paying less attention to the possible use of technical provisions. However, responding to future cases, which would likely be more puzzling and exacting, may require a more stringent framework of substantive rules in order to "violationize" the potential non-violation cases and thus discourage such cases. In this context, it is noteworthy that a recent panel based its ruling on the specific obligations of the SPS; the Hormone (1997) [145] panel concluded that the EC violated Article 3.1, 5.1, and 5.5 of the SPS.[146]
In addition to taking full advantage of the possibility of the above-mentioned "hard law" (i.e., side agreements), quasi-rule-making through "soft laws" [147] without binding force should be pursued in technical areas, such as non-tariff barriers and competition policies. It would, of course, be ideal to think that the above emerging areas can be sufficiently and effectively covered by amending the WTO agreement or establishing new side agreements. However, considering the double difficulty of amending the current WTO Agreement[148] (legal difficulty) as well as coordinating the Member countries' various interests (political difficulty), there may be no other practical choice, at least in the short-run. As we have witnessed, no matter what their legal nature, various types of recommendations, declarations, or guidelines of various international organizations, such as the "Organization for Economic Cooperation and Development (OECD)"[149], the "International Labor Organization (ILO)"[150], and the "International Civil Aviation Organization (ICAO)"[151], are influential despite their non-binding nature. Indeed, formality is not a critical component of soft law. Instead, what is crucial is that there exists flexibility so that Member countries feel a lesser political burden to draft and implement such soft norms. Nevertheless, by drafting such norms, they set common standards that harmonize their conduct.[152]
Flexibility is especially important when these norms are related to technical and professional areas. Initially, these norms should converge on so-called "common denominators" without losing sight of the differences in perspective and culture that inevitably exist among Member countries.[153] Progressively, the scope of the common denominators will expand. Once the soft norms are established, in spite of their non-binding nature, Member countries would likely be strongly encouraged to comply with the norms, and the panel would begin to cite them to support its ruling just as adopted panel reports have been frequently cited by later panels. Hence, the normative effect of the soft laws does not necessarily depend on the degree to which the Member countries are formally bound. [154] By taking advantage of soft law the panel could effectively avoid fuzzy non-violation claims and steer the dispute settlement system toward a more predictable and transparent path.
In addition to examining the utility of both hard law and soft law, the desirability of "strategic co-optation" [155] of other international organizations, which are capable of providing technical and professional support to the panel in specific areas, should be investigated. There are and will be many areas requiring panels to depend on specialized organizations for fact-finding when it is trying to determine whether a Member country has breached a specific obligation (e.g., national treatment) or not. Former GATT panels have already recognized the necessity of this dependence. In Thai Cigarette (1990), the panel consulted the World Health Organization (WHO) on factual issues related to links between health and cigarettes. This was the first time a GATT panel had referred to outside experts in a dispute settlement proceeding.[156]
As a result of the Uruguay Round Negotiations the DSU explicitly entitles a panel to seek information and technical advice from any body which it deems appropriate.[157] Further, the SPS agreement requires a panel handling scientific and technical issues to seek advice from experts and at the same time authorizes a panel to consult relevant international organizations, at the request of either party to the dispute or on a panel's own initiative.[158] In line with these provisions of the SPS, the Hormone (1997) panel sought technical advice from outside experts with regard to the effect on human health of the use of natural and synthetic hormones for growth promotion purposes.[159]
Reliance on outside experts can also be fruitful in the area of competition policies. Since the OECD is known to be a repository of much experience and expertise[160] in this area, a panel could consult with the OECD about detailed factual features of anti-competitive measures or practices in question. In particular, if a dispute related to competition policies occurs between the OECD Member countries, it would be both more relevant and convenient for a panel to refer to the OECD for detailed information in this area. Moreover, it is conceivable that some guidelines or recommendations adopted by the OECD Member countries in the area of competition policies would even be cited by a panel in a future dispute between the OECD Member countries.
In conclusion, by actively taking advantage of strategic co-optation, a panel's ability to determine whether a country has breached a specific obligation will be improved, thereby constraining the use of non-violation complaints, while at the same time enhancing the reliability and legitimacy of its ruling.
Turning to the institutional framework of the WTO, there is still much work to be done to strengthen the normative structure in its operation and thus enable a future panel to transform non-violation complaints to violation cases, i.e., violationize.
First, it is essential that the composition of a panel be chosen more selectively in order to effectively cope with complex, often technical, disputes and to justly violationize them. According to the DSU, a panel is likely to be composed of two kinds of groups. The first group consists of "trade diplomats" who had the experience of representing their countries in the former GATT Council or other related Committees under the side agreements, while the second comprises "trade bureaucrats" who have served as senior trade policy officials of the Member countries.[161]
Although the diplomatic and bureaucratic experiences of a panelist should not be undervalued, the possibility of selecting as panelists "technicians" or "professionals" who may better determine a specific factual issue shaping the basis of a panel's ruling should also be investigated. In this manner, at least one panelist of the three would be chosen according to the professional nature of the case before a panel.[162] Similarly, a panel should establish an "expert review group" or an "advisory technical expert group" whose mission is to provide the panel with technical assistance needed to decide cases involving technical questions.[163] In accordance with this view, in the Hormone (1997) case, the panel properly utilized the scientific advice of experts in justifying its own opinion.[164] In addition, from a practical standpoint, it should also be noted that the amount of "financial compensation" to those experts would determine their quality.[165]
Another important impetus that could enhance the legal standing within the institution would be to invigorate the "WTO Committees" which have been established for specific purposes. The WTO Agreement explicitly anticipates the future existence of various functional Committees.[166] These Committees would be especially significant since they would be the locus at which the above-mentioned "soft laws" (guidelines and recommendations) could be established.[167] The epistemic[168] nature and flexible operation of the Committees could facilitate the institution of norms that would be formally non-binding but actually cited by a panel. It would also substantially guide the behavior of a Member country, with few political overtones.[169]
In addition, as Professor Jackson maintains, an indirect but effective way exists to improve the "legal integrity" of the WTO system and thereby expand the scope of legal obligations: "surveillance".[170] To this end, committees or working groups under the umbrella of the WTO may be used. However, considering the relatively weak institutional nature of committees or working groups, it would be more relevant to use the "Trade Policy Review Mechanism (TPRM),"[171] which is regarded as one of the most important achievements of the Uruguay Round. The purpose of the TPRM is to encourage "improved adherence" by all Members to "rules, disciplines, and commitments" made under the Multilateral Trade Agreements, thus achieving greater "transparency."[172] This enhanced transparency is expected to induce the Members to recognize a more precise legal meaning and status under the WTO regime of their own trade policies as well as those of other Members', thereby reducing ambiguities in their legal complaints and restricting potential non-violation disputes.
Finally, it should be stressed that "international bureaucrats" at the Secretariat should play an active role in providing the necessary infrastructure for the efficient operation of the WTO. It is the Secretariat that assists and supports a panel or Appellate Body to produce its rulings. Therefore, in order for a panel or Appellate Body to violationize future non-violation cases, much practical assistance--both advisory and administrative--from the Secretariat would be necessary. One impediment to this support, as many scholars note, is that the current WTO Secretariat is seriously understaffed. Its size is reportedly only eight percent of that of the World Bank and twenty-three percent of that of the International Monetary Fund (IMF). [173] Although the Secretariat of the former GATT was also understaffed, the Secretariat of the WTO is now even more problematically understaffed in light of its greater responsibilities.[174] Therefore, in order for the Secretariat to carry out its role, it should be substantially strengthened through practical means, such as expanding contributions from the Member countries and increasing the WTO budget.[175]
Although the recent trend in international trade is "standardization," some issues can still be assessed and determined only by domestic authorities or courts. An example is measures concerning "regulatory policies." In some cases, it may be difficult for other countries or institutions to refute the logic behind a specific regulatory policy (e.g., banking regulation) since most countries have their own peculiar policy goals and priority structure among different policies.[176]
In that context, questions may arise when a panel faces a case in which the decision of whether or not to second-guess or reassess what domestic authorities have already legitimately determined constitutes an essential part of the case.[177] If issues in question fall into a rather technical or scientific area, the panel could turn to other impartial professional bodies in handling a particular factual question. That was the approach taken in Thai Cigarette (1990).[178] However, when issues involve value judgments or are related to cultural characteristics or high-level policy considerations, the panel should be more cautious in ruling for nullification or impairment. Those are situations where a "reasonable and nuanced" approach by a panel is called for.[179] Of course, when a certain decision by a national authority explicitly appears to be so arbitrary and unjustifiable under the current WTO regime that it transgresses an unwritten but agreed-upon boundary, a panel should be able to strike down the initial decision of the national authority by applying violation clauses. However, if the national authority's initial decision does not appear to conflict with the current WTO regime and makes it difficult to resort to violation provisions, a rash panel decision of non-violation nullification or impairment enforced against the losing party would likely frustrate the parties and be a cause of concern for most Members. The dispute settlement mechanism would then be a target of harsh criticism, which in turn could threaten the stability of the still young WTO.[180] It should be noted that during the first decade of GATT's existence, the contracting parties were careful not to overtax the fragile GATT system, by avoiding overly aggressive use of the dispute settlement system.[181]
Even though a panel may on its own accord restrain itself from making judgments on sovereignty-related or culture-specific issues, the possibility still exists that a complaining party will be dissatisfied if it feels benefits afforded it have been nevertheless nullified or impaired. In such a case, a mere declaration by a panel that a particular pending case is beyond its capacity would not address the problem facing the Members concerned; in fact, this decision could sometimes make things worse. Moreover, deciding whether to defer fact finding to a national authority or interfere with that determination would be quite difficult for a panel, especially when confronted with the likely problem of policies having different roots. Historically different policies, such as competition policies, cannot be easily reconciled or harmonized between the Member countries.
Under such circumstances, the judicial approach should give way to "cooperation" or "coordination" between disputants.[182] In other words, closer cooperation between the parties concerned and rational compromise through mutually satisfactory adjustments in position would decrease the possibility of the panel process being tested by ambiguous non-violation cases. Already, the 1960 Report[183] noted that:
the Group agreed to recommend that the CONTRACTING PARTIES should encourage direct consultations between the contracting parties with a view to the elimination of the harmful effects of particular restrictive practices.[184] (emphasis added)
This report further noted that the majority of experts agreed on the necessity of preventing any action under the GATT Article XXIII, observing that:
the majority were convinced that, regardless of the question whether Article XXIII could legally be applied, they should recommend to the CONTRACTING PARTIES that they take no action under this Article. Such action would involve the grave risk of retaliatory measures under the provisions of paragraph 2 of that Article, which would be taken on the basis of judgments which would have to be made without adequate factual information about the restrictive business practice in question...[185](emphasis added)
Paradoxically, this type of judicial restraint would probably be one of the ways in which the rule-oriented nature of a panel process could survive future wrong cases. In the same context, in Canadian Import Quotas on Eggs (1975), the working party recommended cooperative settlement of the issue involving the use of a wrong base period for calculating the size of a quota, stating that they were unable to determine that the quota had nullified or impaired the benefits from tariff binding.[186] Likewise, a future panel should, with its own voice, actively recommend "cooperative settlement" of the non-violation complaint when it deems it necessary to do so.
The settlement of non-violation cases through consultation or cooperation, rather than adjudication, should not be limited to mere resolution of a specific case. If the Member countries focus on purely diplomatic case-oriented settlement, no cross-nationally harmonized regulatory structure will develop, especially in highly sophisticated regulatory areas like competition policies. In other words, although diplomatic problem solving on a case-by-case basis would help avoid overwhelming a panel with non-violation claims, it would not root out the possibility that similar non-violation cases would repeatedly emerge. This is because Member countries would have no obligation to withdraw the disputed measure in the absence of common rules or principles governing those areas.
The inability to control for the possibility of recurrence of some non-violation cases is the very reason why the Member countries need an "inter-governmental regulatory network," something beyond the current system of ephemeral diplomatic compromise in those regulatory areas. Pragmatically speaking, the importance of classical sovereignty is diminished if this approach is taken. More importantly, transnational communication between actual regulators would replace old-fashioned diplomatic sovereignty in a new interdependent world economy. [187]
In such an arena, the fact that regulators from various countries would meet, talk to, and exchange valuable information with each other would increase the density of their communication. [188] Moreover, the more the world economy becomes integrated, the greater the likelihood that common problems would be solved by the harmonization or convergence of domestic regulatory regimes.
Eventually, this dense transgovernmental regulatory cooperation would lead to a consensus on rule making, no matter how formal the agreement. Initially, regulators would likely draft and adopt a "guideline" or "recommendation" which would not be legally binding (soft law).[189] Of course, as occurred in the Codex Alimentarius, the "normative impact" of soft law is not necessarily undercut by its non-binding nature.[190] Even though a norm is not technically binding, the degree of compliance with it is not reduced.[191] Here, one can characterize the law not by its "subject or source," but by its "purpose and effect."[192] More surprisingly, soft law could also evolve into formal legislation through a "hardening" process, [193] and, as Professor J. Weiler maintains, this transformation could be facilitated by a "bi-directional" relationship between law and politics. [194]
Regulatory regimes which have undergone the process of inter-governmental cooperation would be more transparent, predictable, and reliable in a transnational society, thereby diminishing the possibility that Member countries would raise nebulous non-violation complaints in the future.
Many scholars have asserted that as the world becomes economically more interdependent, economic affairs tend to affect more citizens directly than do political affairs.[196] Thus, a change in the trade policy stance of country A, without any buffer, would directly impact the business communities of its trading partner, country B. This impact would be more acute with regard to "regulatory policies" in which a specific regulation directly burdens foreign suppliers of goods and services. This argument is supported by the fact that the framework of the GATS is based on the relationship not only between Members but also between a Member and foreign suppliers of services.[197] For example, a foreign bank branch would suffer enormously if the supervisory authority of a host country subjected it to increased regulatory burdens, like increased minimum capital requirements or submission of additional reports on operational status, for no legitimate purpose other than tighter supervision. Policy measures of this type are likely to constitute non-violation cases since the introduction of regulation does not easily constitute a technical violation of the GATS provisions. [198]
Under the current DSU in the WTO system, when a private company which has been directly affected by a foreign country's policy change seeks any kind of remedy, including a non-violation remedy, the company is subject to a tortuous political procedure called "championing." This requires the company to attempt to persuade its government to file a formal complaint with the WTO on its behalf. [199] In most cases, the company must lobby relevant government officials which is a costly and time-consuming process. Even if the complaint is successfully filed with the WTO, the burden on the company continues. Throughout the dispute settlement process, the company must continue to educate its government and provide it with specific information which can be of a sensitive nature, so that the government can appropriately represent the firm's interest.
Another undesirable impact of the indirect way a private party accesses the WTO panel is that this championing and governmental representation process may result in increased tension between the two countries involved in a dispute. This is especially true if the panel process addresses subjects beyond the trade arena. In that case, the political interests of the filing government may transform the nature of the original dispute into a politically motivated one--a move that the private party (company) may not have originally wished. The filing government may even reject a proposed settlement offered by the counterpart government with which the company would have been quite satisfied.
Significant transaction costs and undesirable political inefficiencies could be prevented if a private party had direct access to the WTO panel.[200] In this way, a private company, as a direct party to the dispute without an intermediary, could more efficiently participate in the panel process by presenting the most up-to-date information. A panel would then be able to make a more relevant ruling. Moreover, in the course of the panel process, a private party would be in a more suitable position to settle, releasing the panel from the burden of ruling on non-violation nullification or impairment. Furthermore, the governments would no longer bear the political burden of the WTO dispute, since they would neither file the complaint nor participate in the panel process.[201]
Direct access to the panel process would not be without challenges. For instance, institutional reform would be needed to allow direct access by a private party under the current WTO regime since the DSU does not explicitly authorize it. Furthermore, more sweeping allowance of this new complaint method would probably inundate the WTO with complaints as well as produce side effects such as misuse of the dispute settlement system. Therefore, selective but rational criteria and some screening mechanism would be necessary in order for direct access to work.
Direct access could be feasible under a two-tiered approach. In the first tier, in the absence of any particular circumstances which would justify direct access, the traditional championing mode should be applied. In the second tier, however, private parties directly concerned in disputes would be granted direct access to a panel when they have a "substantial" interest in doing so. Some candidates for this method are discussed below.
First, consider the example of a number of foreign exporters or foreign suppliers of services that have the same complaint against the same importing country or host country. Supposing these exporters or foreign suppliers of services provide over half of the total imports of one like product[202] or over half of the total of foreign supplies of one service, they would most likely have substantial interests in having direct access to the WTO panel. For instance, if half of the foreign bank branches in one country have the same complaint against a certain supervisory measure introduced by their host country's monetary authority, they could directly file a complaint with the WTO without being championed by their own governments. In this hypothetical case, two possible procedural options could be considered: filing one complaint by foreign banks as "multiple complainants"[203] or initially filing an individual complaint by one foreign bank and later participation by the other foreign banks as "third parties."[204]
Second, if a multi-national enterprise has a complaint against one country, it may have a substantial interest in obtaining direct access because there may not be one particular country which could represent such an enterprise.[205]
Some additional but important aspects of the above-mentioned process should be recognized. First, domestic administrative and judicial procedures should be exhausted before direct access to the WTO panel is permitted.[206] This constraint would help reduce the number of actual cases which come before the WTO panel by providing an opportunity for smooth settlement between domestic regulators and foreign suppliers of goods and services with relatively less political noise. Second, technical filtering by a panel to prevent spurious complaints would also be needed.[207] Finally, ex post intervention by governments should be guaranteed to respond to the possible necessity of securing the integrity of domestic policies following the judgment.[208]
[121] In fact, the origin of this kind of effort could be found in the GATT panel history. The panel sometimes restricted itself to violation when the real issue was non-violation. See e.g., Vermulst & Driessen, supra note 10, at 136; PIERRE PESCATORE ET AL., HANDBOOK OF GATT DISPUTE SETTLEMENT (1991); Semi-Conductors, supra note 32; Sugar, supra note 29. I use "violationize" to refer to a positive and intentional shift in perspective from bilateral (contract-like) reciprocity to adjudicated rule of law. See Vermulst & Driessen, supra note 10, at 137; JACKSON ET AL., supra note 5, at 364.
[122] Id. at 522 - 50. It would not be exaggerating to say that most recent cases of Article III (National Treatment) of the GATT 1994 are regarded as disguised discrimination. In coping with this type of discrimination, the panel seems to rely largely on the interpretation of paragraph 1 of Article III, in particular the phrase of "so as to afford protection to domestic production". See, e.g., Alcoholic Beverages, supra note 64.
[123] The interpretation here, of course, is different from "definitive interpretation" or "authoritative interpretation". See WTO Agreement, supra note 2, art. IX, ¶ 2; DSU, supra note 31, art. 3.9. In Alcoholic Beverages, the Appellate Body made it clear that an adopted panel report would not constitute a definite interpretation of the relevant provisions of GATT 1947 as well as GATT 1994, citing Article IX:2 of the WTO Agreement and Article 3.9 of the DSU. (It should be noted that a quorum of three-fourths majority necessary for a decision of such a definitive interpretation is as difficult to achieve as that of an amendment of the WTO charter, see WTO Agreement, supra note 2, art. X). However, the Appellate Body further noted that adopted panel reports create "legitimate expectations" among WTO Members, and, therefore, should be taken into account where they are relevant to any dispute, see Alcoholic Beverages, supra note 64. Therefore, although these panel or Appellate Body reports are not technically "binding", they have a certain "legal" effect, functioning as a quasi-precedent or practice, see PIERRE PESCATORE ET AL., supra note 121; John H. Jackson, The Legal Meaning of a GATT Dispute Settlement Report: Some Reflections, in 1 TOWARDS MORE EFFECTIVE SUPERVISION BY INTERNATIONAL ORGANIZATIONS 149 (1994).
[124] GATT 1994, supra note 5, art. XX.
[125] Id.
[126] For example, in the first Appellate Body Report of the WTO (Reformulated Gas), the Appellate Body concluded that the regulation of the Environmental Protection Agency (EPA) of the United States, although it fell within the scope of general exceptions (Article XX(g)), eventually constituted an "unjustifiable" discrimination against foreign refiners because the United States had not pursued the possibility of entering into "cooperative arrangements" with foreign governments. Appellate Body Report: U.S.--Standards for Reformulated and Conventional Gasoline, May 20,1996, WT/DS2/9 [hereinafter Reformulated Gas].
[127] See supra Part I.B.2.
[128] See, e.g., Alcoholic Beverages, supra note 64, at 12 n.38.
[129] See ORGANIZATION FOR ECONOMIC COOPERATION AND DEVELOPMENT (OECD), 1976 OECD GUIDELINES FOR MULTINATIONAL ENTERPRISES, INTERNATIONAL INVESTMENT AND MULTINATIONAL ENTERPRISES: THE 1984 REVIEW OF THE 1976 DECLARATION AND DECISIONS 9 (1984); UNITED NATIONS, SET OF MULTILATERALLY AGREED EQUITABLE PRINCIPLES AND RULES, U.N. Doc. TD/RBP/10 (1980); JACKSON ET AL., supra note 5, at 1094 - 95.
[130] See GATS, supra note 6, art. XXVIII.
[131] See Taylor, supra note 4, at 236.
[132] Instead of violation approach, some activists of competition policies suggest that under-enforcement by the government of anti-competition practices provides an unfair advantage and thus should be designated as a "subsidy". John H. Jackson, Alternative Approaches for Implementing Competition Rules in International Economic Relations, 2 SWISS REV. INT'L ECON. REL. 2, 2 - 25 (1994).
[133] Working Party Report of the 1954-55 Review Session, GATT B.I.S.D. (3d Supp.) at 224 (1955) [hereinafter 1954-55 Report].
[134] Subsidies Agreement, supra note 91.
[135] See Australian Subsidy, supra note 35.
[136] Id.
[137] 1954-55 Report, supra note 133, at 224.
[138] See Oilseeds, supra note 20.
[139] Id.
[140] The first attempt at codification in the subsidy area was conducted in the Tokyo Round. However, the Subsidies Code which emerged during the Tokyo Round was legally porous and deficient. See supra note 51.
[141] See Subsidies Agreement, supra note 91, arts.5, 7; JACKSON ET AL., supra note 5, at 769.
[142] Bogdandy, supra note 35, at 108. However, the new Subsidies Agreement largely exempts agricultural subsidies, leaving them to the Agreement on Agriculture. JACKSON ET AL., supra note 5, at 771. In this context, non-violation regime on subsidies could still have some meaning in that it puts some discipline to agricultural subsidies.
[143] Agreement on the Application of Sanitary and Phytosanitary Measures (SPS), Annex 1A of the WTO Agreement on Import Licensing Procedures, supra note 2, pmbl. [hereinafter SPS].
[144] Agreement on Technical Barriers to Trade (TBT), Annex 1A of the WTO Agreement, supra note 2, pmbl. [hereinafter TBT]; Agreement on Import Licensing Procedures (ILP), Annex 1A of the WTO Agreement, supra note 2, pmbl.
[145] EC--Measures Concerning Meat and Meat Products (Hormones): Complaint by the United States, August 18, 1997, WT/DS26/R/USA [hereinafter Hormones].
[146] Another question would arise regarding the relationship between obligations in the different agreements. The relationship or legal hierarchy between the general obligations in the GATT 1994 and the specific obligations in the side agreements (TBT or SPS) is still controversial. According to General interpretive note to Annex 1A (Multilateral Agreements on Trade in Goods) of the WTO Agreement, in the event of a "conflict" between a provision of GATT 1994 and a provision of side agreements, the provision of the latter shall prevail to the extent of the conflict. Nonetheless, in the real cases, it would not be so simple to identify or determine whether there exists a "conflict" or not. Thus far, recent panels (Appellate Body), regardless of the identification or determination of that conflict, seem to adopt a discretionary approach with regard to which provision--a provision of GATT 1994 (general obligation) or a provision of the side agreements (specific agreement)--it should rely on first. In addition, it seems that once a panel (Appellate Body) has given a conclusion based on either of the agreements (provisions), it would not return to the other simply because there is no necessity for it. See Reformulated Gas, supra note 126; Hormones, supra note 145.
[147] Frederic L. Kirgis, Jr., Specialized Law-making Process, in UNITED NATIONS LEGAL ORDER 109, 143 - 54 (O. Schachter & C. Joyner eds., 1995).
[148] See WTO Agreement, supra note 2, art. X.
[149] See, e.g., Declaration on International Investment and Multinational Enterprises, Annex to the OECD Declaration on International Investment and Multinational Enterprises, Jun. 21, 1976, 15 I.L.M. 967 (1976).
[150] See, e.g., Recommendation Concerning Equal Remuneration for Men and Women Workers for Work of Equal Value, ILO Recommendation No. 90, Jun. 29, 1951, International Labor Conventions and Recommendations 1919 - 1991, at 531 (1992).
[151] See, e.g., Annex 11 (Air Traffic Services: Establishment and Operation of Air Traffic Control, Flight Information and Alerting Services) to the Convention on International Civil Aviation, Dec. 7, 1944, 61 Stat. 1180, T.I.A.S.1591, 15 U.N.T.S. 295, as amended through 1991, ¶ 3.7.1.2, at 18 (9th ed., 1990).
[152] Kirgis, supra note 147, at 159.
[153] Jackson, supra note 132, at 19 - 22; Diane P. Wood, International Competition Policy in a Diverse World: Can One Size Fit All?, in EC AND U.S. COMPETITIVE LAW AND POLICY 71 - 85 (Barry Hawk ed., 1992); JACKSON ET AL., supra note 5, at 1090 - 1100.
[154] Kirgis, supra note 147, at 151. Moreover, the soft norms could be "hardened" through formal legislative mechanisms, such as amending the WTO Charter and making side agreements. For instance, in Hormones, the panel noted that even if international standards, such as Codex Standards, may not be binding on Members, Article 3.1 requires Members to base their sanitary measures on these standards. See Hormones, supra note 145; SPS, supra note 143, art. 3.1.
[155] According to Selznick, it is "the process of absorbing new elements into the leadership or policy-determining structure of an organization as a means of averting threats to its stability or existence." RONALD S. BURT, CORPORATE PROFITS AND COOPTATION 5 (1983). In the context of the WTO dispute settlement, this means that a panel or Appellate Body should try to incorporate views, findings, and technical knowledge of other international organizations into its decision-making (interpretative) process. This will enhance its problem-solving capacity and, therefore, defend the system as a whole from external criticism.
[156] Thailand--Restriction on Importation of and Internal Taxes on Cigarettes, November 7, 1990, GATT B.I.S.D. (37th Supp.) at 224 (1991) [hereinafter Thai Cigarette]; JACKSON ET AL., supra note 5, at 357.
[157] DSU, supra note 31, art. 13.
[158] SPS, supra note 143, art. 11.2.
[159] See Hormones, supra note 145.
[160] IMF, supra note 79, at 74.
[161] DSU, supra note 31, art. 8.1.
[162] Nichols, supra note 107, at 328.
[163] DSU, supra note 31, art. 13.2, app. 4; TBT, supra note 144, art. 14.2; SPS, supra note 143, art. 11.2.
[164] See Hormones, supra note 145.
[165] See Vermulst & Driessen, supra note 10, at 154.
[166] WTO Agreement, supra note 2, art. IV, ¶¶ 2, 7.
[167] See supra Part III.A.2.
[168] See generally Peter M. Haas, Introduction: Epistemic Communities and International Policy Coordination, 46 INT'L L. ORG. 1 (1992).
[169] See supra Part III.A.2.
[170] JACKSON, supra note 51, at 113.
[171] Trade Policy Review Mechanism, Annex 3 of the WTO Agreement, supra note 2 [hereinafter TPRM].
[172] Id.
[173] See Critical Issues before the WTO Ministerial Meeting in Singapore: A Declaration by an International Group of Economists, December 2, 1996 [hereinafter Declaration]; Vermulst & Driessen, supra note 10, at 154.
[174] See Declaration, supra note 173.
[175] ABRAM CHAYES & ANTONIA HANDLER CHAYES, THE NEW SOVEREIGNTY: COMPLIANCE WITH INTERNATIONAL REGULATORY AGREEMENTS 271-85 (1995); see also Declaration, supra note 173.
[176] For example, since financial transactions tend to have a great impact on the macroeconomic policy of each country and, therefore, are the object of regulatory supervision, the policy goal of free trade in financial services can often conflict with the policy goals of other domestic economic policies (e.g., protecting the balance of payments).
[177] JACKSON ET AL., supra note 5, at 364.
[178] See supra Part III.A.2-3.
[179] Croley & Jackson, supra note 102, at 212-13. A meaningful analogy to this standard of review question would be found in the context of the European Convention of Human Rights. According to the European Court of Justice, national authorities remain free to choose the measures which they consider appropriate in those matters governed by the Convention (this is the "principle of subsidiarity"). They are in principle better situated than the international judge to appreciate what is "in the public interest" because of their direct knowledge of their society and its needs (this is the "doctrine of margin of appreciation"). Rolv Ryssdall, Opinion: The Coming of Age of the European Convention on Human Rights, 1 EUR. HUM. RTS. L. REV. 18, 24-25 (1996).
[180] JACKSON ET AL., supra note 5, at 212.
[181] Davey, supra note 103, at 62.
[182] See GATS, supra note 6, art. IX (Business Practices); Klaiman, supra note 67, at 677; Vermulst & Driessen, supra note 10, at 137.
[183] See 1960 Report, supra note 80.
[184] Id. ¶¶ 4, 5.
[185] Id. ¶ 8. However, in the past, some complaining parties tried to resort to Article XXIII: 1(b) in order to challenge restrictive business practices of the foreign country. See, e.g., Nullification and Impairment of Benefits, supra note 38.
[186] Canadian Import Quotas on Eggs, February 17, 1976, GATT B.I.S.D. (23d Supp.) at 91 (1977).
[187] See generally Anne-Marie Slaughter, International Law in a World of Liberal States, 6 EUR. J. INT'L L. 503 (1995).
[188] With regards to how transnational communication (in particular, trans-executive communication dealing with policy formulation and quasi-legislation) occurs, varying patterns seem to exist. Four patterns may be listed in the order of the "density" of communication: persuasion, negotiation, strategic co-optation, and epistemic sympathization. Assume that A is a government agency of Country X and B is an agency of Country Y. First, A can persuade B to change its policy stance by providing better information or more advanced technology. This frequently happens between a developed and an underdeveloped country. Second, in many cases, A and B can negotiate over a common subject and reach an agreement on the basis of reciprocity. Third, strategic co-optation can take place. "Strategic co-optation," according to Selznick, is the process of absorbing new elements into the leadership of the policy-determining structure of an organization as a means of averting threats to its stability or existence. See supra note 155. For example, A can invite an official from B to be a policy advisor in a highly sophisticated regulatory sector because of A's needs and lack of capacity. Finally, A and B can formulate common guidelines or regulations through epistemic sympathization. Both of them, as specialists or experts in their field, may share the same policy goal as well as the same instrument by which to achieve that goal. This phenomenon can be found in cases of BIS (Bank for International Settlements, an organization of central banks) or the ICAO. It should be noted that what matters in these patterns is the "substance," not the "label." For instance, epistemic sympathization can also occur in a form of negotiation. Importantly, the outcome of these transnational communications could easily constitute a type of "soft law" in the initial stage, which could calcify with the passage of time. See generally Joseph Weiler, The Transformation of Europe, 100 YALE L. J. 2403, at 2426 (1991).
[189] See Kirgis, supra note 14748, at 160 - 62.
[190] Id. at 151.
[191] Id.
[192] See Slaughter, supra note 187, at 516.
[193] See supra note 154.
[194] See Weiler, supra note 188, at 2426.
[195] The notion of "direct access" by a private party used here is different from "direct effect" established in the European Community jurisprudence. In the EC context, direct effect (and resultant "direct invocability" by an individual) can be said to be a constitutional product that was created in the course of interpreting the EC Treaty which is totally different from the other international treaties. However, direct access discussed here is essentially a technical and procedural concept. For a discussion on direct effect, see generally JO SHAW, LAW OF THE EUROPEAN UNION (Marise Cremona ed., 2d ed. 1996).
[196] See JACKSON, supra note 51, at 87; See also John H. Jackson, Status of Treaties in Domestic Legal Systems: A Policy Analysis, 86 AM. J. INT'L L. 310, at 332 (1992).
[197] See, e.g., GATS, supra note 6, art. VI.
[198] See supra Part II.B.1.
[199] Tycho H.E. Stahl, Liberalizing International Trade in Services: The Case for Sidestepping the GATT, 19 YALE J. INT'L L. 405, at 439 (1994).
[200] See, e.g., NAFTA, supra note 48, ch. 19.
[201] JACKSON, supra note 51, at 111 - 12.
[202] See GATT 1994, supra note 5, art. III for a definition of like product.
[203] See DSU, supra note 31, art. 9.
[204] Id. art. 10.
[205] See Stahl, supra note 199, at 439.
[206] See JOHN H. JACKSON ET AL., IMPLEMENTING THE TOKYO ROUND: NATIONAL CONSTITUTIONS AND INTERNATIONAL ECONOMIC RULES 207 - 09 (1984).
[207] Id.
[208] Id.