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Forum Paper Title: A Theory of WTO Law
Description of Forum Paper:
On April 15, 1994 representatives from 111 countries met on a parade ground outside the old walls of Marrakesh, Morocco. Their purpose was to sign the Marrakesh Agreement Establishing the World Trade Organization, also known as the WTO Agreement, thereby ending eight years of international trade negotiations (Fn1). By mid-afternoon the necessary signatures were received and the celebrations began. Luminaries such as Bill Clinton, John Major and François Mitterand were on hand to salute the negotiators and toast the host, King Hassan. All in all it was a glittering affair.
The ceremony at Marrakesh highlighted the fact that the new WTO Agreement did a number of important things. First, it consolidated rules about international trade originally embodied in the General Agreement on Trade and Tariffs of 1947.(Fn2) Under the WTO Agreement countries agreed to an integrated package of obligations backed up by a binding system of dispute settlement. Second, the WTO Agreement extended rules about international trade to a wider range of goods, services and intellectual property than had been the case in the past. The extension was designed to achieve a better balance between producer and consumer interests (Fn3). Third, the WTO Agreement established the WTO as an international organization, thereby ending the uncertainty surrounding GATT’s status in international law and confirming the new organization as the common framework for the conduct of international trade among its member countries (Fn4).
In retrospect the events at Marrakesh appear tinted with optimism. They took place at a hopeful time, both for international trade law and for international law more generally, and all that has happened since suggests that countries acting together may not always fulfill such high promise. Nevertheless, what Marrakesh unmistakably conveys is the image of the WTO Agreement as a political and economic arrangement. According to it, the countries there concluded a historic deal.
What I offer in this book is something different. What I offer here is an account of the WTO Agreement as a reflection of justice. By justice I mean “the fair and proper administration of the law”.(Fn5) This is distinct from an account of the treaty as simply the sum of trade-offs between governments. Instead, what I seek to demonstrate is the way in which the treaty’s architecture and operation are consistent with classic ideas of justice, and how in so being, they express a theory of WTO law.
A theory provides us with an independent way of thinking. Pursuant to it the WTO Agreement can be distinguished from its immediate context and understood as something grounded in legal principle. More to the point, a theory of WTO law confirms the WTO Agreement’s normative validity because the treaty can be seen to conform with generally accepted views of what is right. Therefore, following WTO rules is not merely about observing the law, but about doing justice.
However, justice is a difficult concept to identify in relation to the WTO Agreement both because the treaty is formally silent about it and because the treaty is traditionally thought of as the result of self-interest. Yet this book is about a theory of WTO law, and as we shall see, law and justice are closely related. Law is the instrument through which justice is achieved, and to that extent, when we speak of WTO law we cannot help but speak of justice. While the WTO Agreement may be formally silent about justice, examination reveals that the concept is nevertheless a continuing concern under international law. Article 2(3) of the United Nations Charter refers to the principle that all U.N. members “shall settle their international disputes by peaceful means in such a manner that international peace and security, and justice, are not endangered.” The hierarchy of norms implies that justice must be taken as seriously in the WTO Agreement as it is in the U.N. Charter.(Fn6)
Still, justice is notoriously ill-defined, something which makes the task of analyzing anything in terms of justice challenging. That task has been made all the more challenging in recent years by the proliferation of descriptive categories of justice. The literature now refers to “retributive justice”, “restorative justice”, “transitional justice”, “transformative justice” and so forth, without always being clear as to what is meant. The theory I present here attempts to avoid this confusion by returning to original Aristotlean definitions of justice and showing how WTO law is consistent with them, thereby providing a convenient framework for thinking about the treaty.
The usual way of thinking about it is, of course, along the lines of events that culminated at Marrakesh. The accepted version of things is that countries met in a number of negotiating rounds during which they made concessions on a range of items, often in pairs. This gave rise to the impression of GATT and the WTO Agreement as a deal composed principally of bilateral obligations.
But as I will demonstrate, the aim of GATT and the WTO Agreement was to go beyond bilateralism and to create a more secure multilateral trading environment. What actually resulted were collective obligations. These require a distinct form of justice.
The principal purpose of the WTO Agreement is to protect expectations about the trade-related behaviour of governments.(Fn7) Those expectations arise from the promises made by each WTO member towards all other WTO members under the treaty. The promises therefore constitute collective obligations in international law.
Collective obligations require distributive justice, a form of justice which is concerned with the maintenance of a given distribution. In the case of the WTO Agreement the relevant distribution is equality. Producers in every WTO country are deemed to have an equal expectation of the competitive conditions in other WTO countries.(Fn8) The role of WTO law is therefore to ensure that this equal distribution is maintained. I refer to WTO law in this mode as a law of expectations.
Nevertheless, while expectations may be the treaty’s primary concern, they are not its sole concern. There is some merit to a bilateral view of WTO obligations and it lies in the fact that notwithstanding emphasis on the protection of expectations, the WTO Agreement is also secondarily about realities. By this I mean that the treaty gives some flexibility to governments to deal with situations actually encountered in the pattern of trade. That pattern is often concrete enough to appear bilateral, a concreteness which naturally gives rise to the impression of WTO obligations as bilateral and of justice as corrective, that is, as rectifying harm done. I refer to WTO law in this mode as a law of realities.
So we have WTO law as a law of expectations and WTO law as a law of realities and generally speaking, that might seem to be enough, except that in their daily operation the two combine to produce law in a third mode, something I refer to as a law of interdependence. Here I refer to the tendency of the WTO Agreement to promote interaction among producers and consumers in different countries over time, and thereby to spin an indissoluble web of economic relations that goes beyond the interests of WTO members individually. In doing so, justice acts transformatively to modify thinking about the common interest. We see evidence of this in global supply chains and just-in-time delivery, in increased product differentiation and consumer choice. In short, the treaty works to create a new situation.
What becomes quickly apparent from the overview above is that there is a discernible scheme to things under the WTO Agreement. A common assumption in legal interpretation is the idea that the law-maker is rational, or in other words, that the form of the law is a reflection of logical and coherent thought.(Fn9) As treaties emerging from successive rounds of negotiations, GATT and the WTO Agreement have often seemed anything but ordered. Nevertheless, a theory of the agreements based on justice confirms that coherence is at work in the sense that, despite their ad hoc and negotiated nature, they follow a cognizable pattern. Their arrangement is not simply the result of a grand bargain.(Fn10) Rather, it follows from principle.
* Associate Professor and Canadian Director, Canada-U.S. Law Institute, Faculty of Law, University of Western Ontario, London, Ontario, Canada. This excerpt is taken from Chios Carmody, A Theory of WTO Law (forthcoming 2006).
1 33 I.L.M. 1125 (1994).
2 61 Stat. A-11, T.I.A.S. 1700, 55 U.N.T.S. 194 (Oct. 30, 1947).
3 The GATT 1947 covered trade in goods. During the later years of the General Agreement it was acknowledged that a growing proportion of world trade involved the provision of services and trade-related aspects of intellectual property. Disciplines covering these subjects were included in the WTO Agreement Annexes 1B and 1C.
4 Articles I and II of the WTO Agreement provide, respectively, for the establishment of the WTO and indicate that “[t]he WTO shall provide the common institutional framework for the conduct of trade relations among its Members.”
5 See “justice”, Black’s Law Dictionary (5th ed.) 776 (1979).
6 Article 103 of the U.N. Charter provides that “In the event of a conflict between the obligations of the Members of the United Nations under the present Charter and their obligations under any other international agreement, their obligations under the present Charter shall prevail.” GATT Art. XXI(c) responds, in part, by providing that nothing in the General Agreement shall be construed “to prevent any contracting party from taking any action in pursuance of its obligations under the United Nations Charter for the maintenance of international peace and security.” Strictly speaking, the maintenance of international peace and security only covers obligations under Ch. VII of the Charter and GATT only covers trade in goods. The gap is presumably overcome by reference to the respective sources of international law – the U.N. Charter being clearly recognized as constitutional in nature - and common interpretative rules.
7 For cases where panels stated that the purpose of GATT is to protect expectations see Working Party Report, Brazilian Internal Taxes, adopted 30 June 1949, B.I.S.D. II/181, para. 16; Panel Report, United States - Taxes on Petroleum and Certain Imported Substances, adopted 17 June 1987, B.I.S.D. 34S/136, para. 5.1.9; Panel Report, Canada - Administration of the Foreign Investment Review Act, adopted 7 February 1984, B.I.S.D. 30S/140, para. 6.6; Panel Report, Japanese Measures on Imports of Leather, adopted 15/16 May 1984, B.I.S.D. 31S/94, para. 55; Panel Report, Japan - Customs Duties, Taxes and Labelling Practices on Imported Wines and Alcoholic Beverages, adopted 10 November 1987, B.I.S.D. 34S/83, para. 5.11; Panel Report, European Economic Community - Restrictions on Imports of Apples, adopted 22 June 1989, B.I.S.D. 36S/135, para. 5.25; and Panel Report, United States - Measures Affecting the Importation, Internal Sale and Use of Tobacco, adopted 4 October 1994, DS44/R, para. 99. For some WTO dispute settlement reports referring to the protection of expectations see India – Patent Protection for Pharmaceutical and Agricultural Chemical Products, WT/DS50/R (Sept. 5, 1997); EC – Customs Classification of Certain Computer Equipment, WT/DS62/AB/R (June 5, 1998); Korea – Taxes on Alcoholic Beverages, WT/DS75/AB/R (Jan. 18, 1999); Korea – Measures Affecting Government Procurement, WT/DS163/R (May 1, 2000). For further commentary see Laurent Ruessmann, The place of legitimate expectations in the general interpretation of the WTO Agreements, K.U. Leuven Institute for International Law Working Paper No. 36 (Dec. 2002).
8 This equality arises from the commitment made by countries in GATT Art. III and GATS Art. XVII that foreign goods and services are to enjoy “national treatment”, that is, the same treatment as domestic producers of the same goods or providers of the same service.
9 “It is presumed that the provisions of legislation are meant to work together, both logically and teleologically, as parts of a functioning whole. The parts are presumed to fit together logically to form a rational, internally consistent framework; and because the framework has a purpose, the parts are also presumed to work together dynamically, each contributing something toward accomplishing the intended goal.” Ruth Sullivan, Sullivan and Driedger on the Construction of Statutes (4th ed.) 262 (2002). A further reflection of this principle is found in the Appellate Body’s identification of a presumption against conflict between WTO provisions: Indonesia – Certain Measures Affecting the Automobile Industry, WT/DS54/R, para. 14.28 (July 2, 1998).
10 “It is self-evident that in an exercise of their sovereignty, and in pursuit of their own respective national interests, the Members of the WTO have made a bargain.” Japan – Alcoholic Beverages, WT/DS8/AB/R, p. 15 (Oct. 4, 1996).
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