simon.fiala@seznam.

cz

Zweifel, T. D. Chapter 6: The World Trade Organization

In International Organizations and Democracy: Accountability, Politics, and Power. Boulder: Lynne Rienner, 2006. Pp. 115-130.

Notes:
After the WWI there was no hegemonic power that would sponsor free trade. Trade barriers mounted as national governments were trying to protect domestic industries GATT designed as a temporary substitute for ITO (International Trade Org.) 116 o ITO was supposed to be launched at the 1947 conference in Havana o GATT was not a rule-maker, but a treaty 117 o Operated on principles of Non-discrimination (equal treatment) Reciprocity (concessions made to one member automatically open to others) Trade expansion o GATT is generally thought of as something that benefited to the expansion of international trade and significantly helped its developing members (especially those who qualified for MFN - Most Favoured Nations) o Shortcomings of GATT Outgrew its purpose Lacked a dispute settlement mechanism Lacked the teeth the institutional credibility and authority (essentially a talk shop) The WTO 1995 118 o shallow deep, positive regulation o Scope enlarged: It now includes services, trade-related intellectual property rights, foreign investment, competition policy, and a quest for harmonisation of national rules in traderelated investment services 118 o Lowers risks and costs of transactions for millions of entrepreneurs o WTO is a standalone legal person with its internal processes o Unprecedented power questions of legitimacy and democracy o Critique: Bias towards one-size-fits-all solutions Appointment (0) o Its membership vastly expanded GATT originally: 23, in 1979 84. The WTO now (2013: 159 + 25) Decision-making done by consensus strained by the variety and scope of member base o Strengthening of the WTO Bi-annual ministerial meetings A powerful dispute settlement mechanism First an attempt to settle bilaterally, then the WTO may be asked to establish an ad-hoc panel, which will deliver a binding decision within 60 days. Both parties may appeal. Dispute panellists appointed by the secretariat; altered if unacceptable Panellists: experts, who have served in trade ministries of equal positions 1

simon.fiala@seznam.cz o Bias towards status-quo The dispute settlement mechanism frequently used o Ministerial Conference the highest body composed of government members (trade ministers or equal); meets once in 2yrs o General Council Oversees the WTO daily operations Meets 12 times a year Representative of members trade officials (equal representation to states) Oversees also the DSB, TPRM, CTG, CTS, CTRIPs; doesnt control the plurilat. agr. Participation (-1) o Back-room negotiations are an important part of functioning of the WTO green room procedure Many developing countries stay out because of lack of resources and capabilities o The WTO should find a way how to reduce costs of participation on dispute settlement processes o Presence of representatives in Geneva should be enhanced Transparency (-1) o Dispute settlement is confidential o Lately the WTO opened certain procedures to outside scrutiny and began publicising materials online o Half-hearted approach to transparency and democratic accountability o Panel meetings should be opened, secrecy should be diminished Reason giving (0) o It is not based on clear, objective criteria, and is based towards the Washington Consensus o Binding code of conducts should be established for cooperating TNAs Overrule (+1) o WTO is both rule-making and rule-supervising body o Requires compliance and harmonisation of domestic laws with the WTO principles o Is overrule possible The DSB again decides by consensus, therefore each member has veto power Dispute panels have the power to override national governments and no appeal outside of the panel is possible 125 o Decisionmaking too intrusive to sovereignty, missing checks and balances Monitoring (-1) o WTO rarely scrutinized from the outside, let alone by an elected (democratic) body o Only civil society groups and media attempted to survey the WTOs activity o Even though there are cases when NGOs were invited to participate on appellation processes, the penetration remains weak and selective o The WTO should grant consultative status to NGOs, institutionalize its scrutiny Independence (0) o The WTO has no power to enforce its decisions. Decisions are being policed bilaterally injured countries may demand compensation and in the case of noncompliance retaliate. That gives strong states much more power over enforcement; countries that can afford to lodge a complaint generally win costs of maintaining a lawsuit are extremely high. 2

simon.fiala@seznam.cz Panels often dominated by powerful industry lobbies The economic sovereignty of states has narrowed in consequence of the rising power of the WTO WTO graded through the democratic indicators system o The WTO has improved its transnational democracy recently o It operates with a modest budget (91m in 2005; UPDATE: 196m in 2013) o +1: overrule o 0 : appointment, reason giving, independence o -1: monitoring, transparency, participation o Challenge ahead: to integrate growing players into the core decisionmaking club o Major problem: the dispute settlement mechanism is costly to access and as long as enforcement lies with the injured state, it is highly unequal. Some developing countries lose even when they win they are unable to enforce the solution or the enforcement would cause them even more harm o o