Life Without the WTO – Part I: Stop all this Crisis-Talk

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Editors’ Note: This is the first part of two posts by EJIL:Talk! Contributing Editor Michael Fakhri.

We hear a lot today about the WTO being in crisis. Some people have focused on institutional changes are imagining life without the DSU if it is not reformed. Others are proposing that the WTO consider life without the US. I think, however, we’re at a moment when it’s worth imagining life without the WTO (or at least radically reimagining the WTO). It is actually not too difficult a task if you look at one place the WTO should not have gotten into in the first place – agriculture – and one place where people conduct cross-border business and the WTO is nowhere in sight – the informal economy. I’ll address those in my second blog post.

But first, all this new talk of a WTO crisis is overblown. The WTO was born into a crisis. In light of the Marrakesh Agreement’s 25th birthday this month, it is worth recounting some living memory surrounding the WTO. In the final years of the Uruguay round, farmers in India argued with each other in the streets and in the newspapers over whether they would benefit from a freer market. Environmentalists around the world re-energized their protest efforts having learned some lessons in trade law from the GATT Tuna-Dolphin cases. And labor unions worried about a regulatory race to the bottom. The food sovereignty movement was galvanized by the advent of the WTO and continues strong to this day.

All this, of course, culminated at the Seattle Ministerial Conference in 1999. The protests in Seattle 1999 were not only about the WTO – they involved overlapping networks of protestors challenging a very particular version of globalization. This included militant action against NAFTA in 1994, protests against the Asia-Pacific Economic Cooperation summit in Vancouver 1997, the campaign against the Multilateral Agreement on Investment in 1997-1998, and protests against the Free Trade of Area of the Americas in Quebec City 2002 (amongst the numerous other protests against the World Bank, IMF, and G20 Summits into the 1990s into the 2000s).

Even though the WTO protests in Seattle were part of a broad-based global movement, from 1999 to the late-2000s scholars, policymakers, and trade diplomats took this as an external challenge to the WTO’s legitimacy and spent a great amount of time responding to the specific question of how to make the WTO more legitimate. In fact, the opening article for the inaugural issue of the WTO-commissioned journal in 2002 was entitled “The World Trade Organizationʼs Legitimacy Crisis” and explicitly responded to the street protests such as those in Seattle.

The WTO’s purpose was interrogated from within the trade academy and the WTO itself. Several official and semi-official reports examined what changes should be made to enhance the WTOʼs legitimacy. In 2004, the “Sutherland Report” was commissioned by the then WTO Director-General, Supachai Panitchpakdi and authored by a group of eminent experts. Two years later, the Warwick Commission was chaired by former Canadian Trade Minister Pierre Pettigrew and drew from consultations with over 250 trade experts. While attending to the recent challenges to the WTO’s legitimacy, these reports proposed changes that could be implemented within the existing WTO rules and regulations. This existential exploration of the WTO continued as the Doha Round started and stopped repeatedly, and then became even more acute with  the 2008 financial crisis.

While the WTO was taking hits from outwith, it was also being challenged from within by developing countries. These countries, however, were not against the WTO. Developing countries had always been active in GATT since its inception. While different developing countries had different political economic contexts, many relied on exporting agricultural products. What unified many developing countries, was a plan to generate as much capital as possible from the export of agricultural commodities and use that inflow of capital to invest in more lucrative sectors. For example, Raúl Prebisch and the staff at ECLA, who were the more famous advocates of import substitution industrialization in the 1950s and 1960s, would become more critical of ISI’s inward-looking policies in the mid-1960s and 1970s. By the 1970s, many developing countries were export-oriented and tied their international trade policies to domestic industrialization and diversification plans.

At the first Ministerial Meeting in Singapore, one year after the WTO came to life, developing countries were already frustrated with developed countries’ unfair dealing. Developing countries gradually liberalized certain sectors such as textiles and invited a stringent IP regime into their countries based on the understanding that North American countries and the EU would open up their agricultural markets. Instead, developed countries wanted to ignore long-standing trade issues, and create a new agenda focusing on things such as investment and competition law. In other words, developing countries have been in a long, continuous struggle that in some ways started within GATT and continued into the WTO (in other ways, it started further back in the late nineteenth century, but I’ll leave that aside for now).

So, let’s do away with all this crisis-talk. The current moment is a confluence of events that is going to lead to institutional changes. The trigger, not the cause, was the recent moves against the WTO by the US. What we have now, then, is a WTO being hit by significant new blows from within, while still dealing with legitimacy struggles on other fronts. To think that the legal and political problems are around the WTO are a matter of developing countries not having adequate legal capacity ignores the long-standing and ongoing fundamental debates about the WTO’s function and meaning.

Second, before I get into my two examples in Part II, I should be clear about my institutional agenda. I don’t provide a blueprint for any institutional design. I instead want to encourage more studies that imagine trade law without the WTO and think of different institutional places where trade law could be renegotiated. Rather than bemoaning the so-called fragmentation of international law, as has been the style for the past several decades, I would embrace the breaking of trade law into multiple institutional sites, embedding it within different contexts such as food security, public health, and transnational labor. Moreover, there is no reason why we should measure regional agreements against the WTO. I propose instead to understand them on their own terms as unique regional markets within a global landscape (I’ll briefly touch upon the African Continental Free Trade Agreement in my next post).

So, for instance, we could finally do away with TRIPS (which very few trade jurists supported at the outset), and instead address the most acute aspect of global intellectual property which has been the issue of medicine. The focus is then not about protecting patents as a goal in and of itself; the issue would instead be framed as a matter of ensuring that the global pharmaceutical market is stable, life-saving drugs are readily available at a fair price, and the commercial practices surrounding traditional medicine remains under the sovereign control of indigenous peoples. Any one of the other international institutions could then be the site of international negotiations surrounding the trade aspects of these issues such as WIPO, WHO, or even UNEP. In the past, the tactic has been one of regime shifting, which involved using the complex institutional landscape to challenge TRIPS (or any other part of the WTO). We may be in a moment, however, of regime renegotiation in which the global institutional landscape itself is being transformed. 

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Abdulmalik M Altamimi says

April 25, 2019

The current WTO crisis is an enforcement not a legitimacy one. Separating the two is difficult i.e. non-enforceable law diminishes its legitimacy. However, the WTO enforcement itself is in need of a deeper analysis, drawn on both law and IR sources. I agree with Michael that the current talk of a crisis is “overblown” with commentaries such as the WTO is “irreparable” or no longer can enforces its rules. First, WTO enforcement is best viewed as an interactional members-driven legal process of cooperative rather than coercive enforcement. The WTO accession process (domestic compliance requirement), the TPRM, the committee system, and the DSB starting with consultation to the AB (out of 583 disputes, only 152 required the AB’s attention). These procedures, some active others are still weak (e.g. members’ notifications on enforcement) represent the interactional process. Some inaccurately call this an informal process, but why would it be an informal when these procedures are in the WTO since 1995? Second, I agree with Michael “the WTO was born into a crisis”; the US DISC case history, and the deal struck between the US and other GATT members on the future of world trading system are evidence of fruitful contestations. The GATT legal history is one of, to use Petersmann’s term, “progressive legalization”. The WTO will not be taken hostage by populist politicians, and the US opposition to the WTO will not make it or its law more legitimate for civil societies. When it comes to fairness in trade, first “all politics is national”.