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Posted: August 2nd, 2022
Subject: International Commercial Law.
Module: International Trade and WTO Law.
The topic: ‘The WTO legal order is meant to promote free trade. It does not and should not accommodate its Member States’ interest in promoting non-trade objectives.’ Critically discuss this statement. You can either focus in your answer on the link between trade and a particular non-trade objective of your choice or take a broader approach in your analysis. Please engage in your analysis with primary and secondary sources.
could you please write at a font size of 12, 1.5 line spacing, Additionally, could you please write an introduction and conclusion, and notes the question’s request for (Critically discuss this statement), The link between trade and a particular non-trade objective of your choice or take a broader approach in your analysis, and please engage in your analysis with primary and secondary sources.
can you please rely on multiple sources such as insert issues, books, Acts, Articles, magazines, websites,
International Commercial Law:
‘The WTO legal order is meant to promote free trade. It does not and should not accommodate its Member States’ interest in promoting non-trade objectives.’
Approximately half a decade ago, the international community made its initial concerted attempt at multilateral accords within the realm of international economic relations. Following the international conference on economic relations that happened shortly after the Second World Wrm the Bretton Woods System was initially designed so the integrated efforts nu the global community to foster trade liberalization and multilateral economic cooperation, the developers of this system believed that the detrimental tariff and trade policies implemented in the 1930s led to the outbreak of the war. They wanted to develop a multilateral institutional framework consisting of rules and obligations in the economic relations between countries to foster multilateral agreement and avoid economic conflict.
Therefore, the System was established to comprise three fundamental international organizations; the IMF, the World bank and International Trade Organization (ITO). ITO was the primary organ that would deal with the entire range of trade issues as articulated in the Havana Charter. However, the lack of political will from the United States hindered the ITOP and the Havana Charter from materializing, Consequently, the General Agreement on Tariffs and Trade (GATT) would become the primary international agreement that regulated trade between countries. GATT attained impressive success in its 47-year tenure specifically in the reduction of world tariff levels. Nonetheless, it was evident that from the start GATT was ill-equipped for handling the broad obligation foi regulating the global trade relations especially without making fundamental improvements. Some of its primary weaknesses included its provisional application and grandfather rights exceptions, ambiguity in the powers vested on the Contracting Parties in making particular decisions and wavering authority, the murky legal status of the GATT as an international institution, challenges in dispute settlement, and the absence of constitutional provisions in GATT which prompted the need for continual innovation and improvisation for desired results to be attained. Nonetheless, as history would show, the developments did not still ensure that GATT reaches the international standards leading to the establishment of the World Trade Organization (WTO) to remedy GATT”s shortcomings.
To date, WTO continues to be the agreement in which its members are within an integrated, more viable and durable multilateral trading system which constitutes the General Agreement on Tariffs and Trade, the outcomes of the past trade liberalization efforts and all the outcomes from the multilateral trade negotiations. Notably, even from the simple understanding of WTO, it is evident that its existence is mainly due to its role in the management of trade relations between its members. Its historical overview that led to its existence is actually on matters related to trade. Thus, there has been a statement indicating that ‘The WTO legal order is meant to promote free trade. It does not and should not accommodate its Member States’ interest in promoting non-trade objectives.’
This essay seeks to assert that the main objective of WTO has been to promote free trade in the different member states. However, the discussion will also seek to disagree with the second part of the statement that the WTO does not and accommodate the non-trade interests of its member states. Free trade is generally a multi-faceted aspect whose prosperity does not depend solely on attaining the trade-related objectives for its member states but also on its non-trade interests with other member states.
WTO’s Position As an International Legal Order and Role In fostering Free Trade
According to Article VIII of the WTO Agreement, the organization has been awarded an international legal personality. There is actually no other global organization that needed to reiterate in its constitution that it is an international organization but the WTO members felt the need to repeat this statement. Notably, the assertion of this status brings in numerous implications. Similarly to other international organizations, the organization’s competencies are limited to the specialty principle. The WTO is hence concerned with trade matters and is not intended to go beyond this. From its objectives, its guidelines and even the established rules, it is evident that the organization’s intent and people relate to upholding international free trade.
To this effect, the WTO is the multilateral organization regulating trade relations between states. It has a distinctive tripod objective. First, the organization intends to encourage a progressive trade liberalization and remove the restrictive trade barriers that members place on imports and exports of both goods and services. These restrictions are known to distort trade flows and decrease the overall economic well-being and development. The second objective is that it acts as the negotiating forum also known as “rounds’ ‘ wherein the members meet to negotiate the terms for the trade liberalization treaties that will be binding on all members. Finally, the WHO intends to avail clear rules of engagement for ensuring a transparent and predictable international trade, the WTO hence has established principles which define and determine respective policies and agreement. The MFN andnational treatmentprinciplesare the most important tenets, teh MFN principles stipulated that there should be non-discrimination among the members such atht all menmvers would give and receive similar treatments when it comes to tariffs or concessions related to a specific product. This is the measure that impeded the member states from using internal regulations that are discriminatory on the imports that may adversely impact the reduction of tariffs and other strategies of trade liberalization.
Consequently, WTO would succeed in the conclusion of several trade agreements that liberalize trade between the member states. This success would lead to an increase in the volume of global trade . The increase has been measured to make up 25% in the past 8 years. Additionally, there are prospects for further increase due to the more rounds of negotiation happening in distinct fields of trade and services. The member states have gone on to maintain an economic openness. Therefore, a country such as China acceding to the WTO in 2001 had its average tariffs reduced from an estimated 40% in 1985 to below 10% currently. The increased openness for the large developing markets has provided room for new export opportunities for the countries. This is a positive indicator for growth. Globalization has been attributed to the emergence and expansion of the WTO regime that encouraged both free and less restricted trading in different products and services, technology and capital transfer in different states. The different conditions such as trade barriers, financial assistance, privacy and more importantly the infringement of intellectual property rights that had for the longest time impeded the growth of global trade have now been handled. WTO provides the international avenue for the members to meet and handle the issues so that strategies could be established for guaranteeing generally accepted solutions that will ensure a smooth transition to bigger free trade regimes.
Notably, the WTO agreement actually acknowledged that its members will have to deal with policies and global obligations that go beyond trade. As a true international organization, the organization now constitutes an integrated and unique legal order. It brings forth a body of legal rules governing the actions of the member states. The legislative basis of this organization is fundamental specifically because it has the institutional capacity of producing new rules, amendments and the implementation of instruments, the agreement is actually a treaty of an estimated 500 pages of text with over 2000 pages of scheduled commitments. Furthermore, 50 years of GATT practice and decisions called the “GATT aquis” have also been included in the new WTO treaty However in the treaty, the trade rules can also be negotiated always. For instance the Doha Development Agenda (DDA)_ is a representation of one of the latest rounds of negotiations. In the DDA, a wide range of issues have been made open simultaneously to negotiations which could lead to the development of new legal rules.
The legal rules established the integrated system. Therefore, the WTO agreement has been integrated in a single undertaking to form one coherent entity. Several provisions have recalled this fact including Article II:2 which asserts that the multilateral trade agreements are integral parts of the agreement establishing the WTO and are binding for all member states; this is the reason they appear within the annex of the agreement that established the WTO. On numerous occasions, the Dispute Settlement Body had made the affirmation that the members need to comply with all the provisions in the WTO and the interpretations need to be applied harmoniously, cumulatively and simultaneously,. Therefore, the WTO treaty is in actual fact a ‘single agreement’ that has been established until an organized legal order.
The WTO results considerably lie in the tenet on the sovereign equality of countries. However, this doesn’t mean that it is not in a position of demonstrating the kind of pragmatism which fruits trade in the application of principles established in the traditional international law. Equality is particularly apparent in decision-making for instance. Formally, the WTO rule is that each country represents one vote which is unlike decision-making in other global economic organizations such as the IMF and World Bank. However, the practice of taking decisions by consensus in now widely acknowledged in the respective decision-making process and all the stages, while it is true that the need for consensus led to to specific sluggishness in the nthe negotiations, it does allow all the members regardless of their share in international trade to express their views and engage on an equal footing.
The WTO works on having fair rules that will go beyond upholding formal equality and establish a real equality. True equality will exist only when equal members are involved, when it comes to trade, the less developed countries will need particular flexibilities for the trade and development to continue existing with the developed countries. In the WTO, the developing countries could hence enjoy a number of non-reciprocal benefits, specifically the special; and differential treatment provisions. Therefore,the WTO can be characterized as the classical organization whose sphere of competence is limited, works with consensus and is driven by its members. It deals with trade and solely trade. Nonetheless, further analysis will demonstrate that it does have fundamental exceptions that acknowledge the right of the member states to prioritize policies apart from trade, it actually permits the trade obligations that could be disregarded when they have been done in good faith and with no protectionist intent.
WTO’s Should Accommodate the Non-Tarade Objectives of its Member States.
Apart from understanding the important role of the WTO in regards to fostering free trade between its member states, this discussion also intended to discredit the second part of the statement, ‘The WTO legal order is meant to promote free trade. It does not and should not accommodate its Member States’ interest in promoting non-trade objectives.’ Generally, the present WTO has already established its own precedent that does need to be involved in fostering non-trade objectives if it is to achieve the ultimate objective of international free trade.
It is however important to discuss what the discussion would be referring to when it refers to the non-trade interstate and objectives. According to Thomas Cottier and Matthias Oesch, the non-trade objectives refer to the other legitimate policy goals. They argue that the WTO provisions that focus on protecting its goals have similar values as the important constitutional principles and hence are part of a well-balanced multilateral trading system. His other legitimate policy goals will encompass the process of accommodating both the trade and non-trade issues. A random search on the non-trade objectives points out to matters such as environmental policies, labor policies, competition, intellectual property rights, cultural issues among others. Another functional approach into comprehending the trade non-trade objectives is to focus on the actual objectives which btech Appellate body may legally consider as they make decisions on cases. Considering that this body will only apply the WTO laws to a case, the model and useful start would beto consider the values which the WTO legal system considered to be the values that may legitimize a deviation from the trade regulations. These would be found in the general exception clauses of the important agreements such as (Art. XX GATT, Art. XIV GATS, Art. 73 TRIPS), specific exception clauses and the specific references to other values, a look into these values could also be considered the ‘non-trade ‘ policy objectives that should be fostered in relation to the non-trade interests of the member states.
One of the recurring themes of the first ten years of WTO dispute settlement is undoubtedly the relationship between the principles of the world trading system and policies aimed at objectives and interests which are commonly referred to as “non-trade values”, i.e. environment, health, labor, and human rights to name but a few. The tensions between these objectives and the trading system are not new, in fact some of them are “GATT phantoms” still haunting the WTO. They are also not limited to dispute settlement, but affect ongoing negotiations and policy-making in the WTO as well. What is new, is the public awareness of these tensions and their influence on the perception of the WTO by the global community. Furthermore, these tensions reveal some fundamental and systemic challenges faced by the WTO regime. In fact, tensions between trade and non-trade objectives and their possible solutions lie at the heart of the emerging system of global economic governance. Since the WTO dispute settlement mechanism is one of the prominent features of this system, it is more than appropriate to assess the relationship of trade and non-trade objectives in light of WTO dispute settlement in the last ten years.
One of the important scholars in international commercial law, John Jackson, asserted that there will come a time when GATT would one time become a valuable institution and hence the subsequent WTO would be required to be established competently. International economic law has been the lens in which one would instill an analysis of international law. For John Jackson, WTO law has been the prime illustration of legal jurisprudential developments impacted by the phenomena in the contemporary world. Jackson’s vision on the function of the WTO was always being an institution that is perceptive of the changes that will come especially due to the complexities that will arise from globalization of markets, streamlined communication and transport infrastructure. There is a need for rules and institutions to evolve to accommodate the reactions and responses that will arise from the phenomena. The scholar saw that there is aneed to consider the non-trade issues in terms of their connection to trade policies established under the WTO. The WTO needs to be considered an omnipotent institution that will prosper from having effective partnerships. Complementarity is vital to responding to the problems within a globalized and interdependent world. This complementarity will be comprehended in two ways. The first way is that it implies “externalizing” the rules of some of the trade and other related issues outside the WTO. The second way is that I also call for an “internalizing” within the WTO, specifically the regulatory approaches in other conventions. The WTO Appellate Body does have case laws that lay the foundation for this approach. Considering the Shrimp-Turtle decision from the Appellate Body ,it specifically pointed out the need for addressing the WTO law within a wider framework in the international legal system. Several WTO agreements do have explicit references to the global norms and standards adopted in different fora.
The measures related to the non-trade objectives also demonstrate both the internal or external facets. They are actually a topic of real interest from the Tokyo Round even when the contracting parties in GATT realized that the primary challenge to international trade was no longer the tariff barriers to trade but the non-tariff barriers to trade. It is prudent to note the semantic shift that has been happening all along. The trade-restrictive measures that pursue public policy objectives were substantially considered to be the trade ‘barriers’ within the multilateral trading system. Therefore, Thai consideration meant the possibility of them frustrating trade. Notably, a paradigm shift did occur. The trade restrictive measures that pursue public policy objectives are now no longer the barriers to trade but rather parts of the integral part of the trade agenda. Therefore, opposite to the predominant approach incorporated during the GATT duration which survived quite a duration after the establishment of the WTO, there needs to be a stop in the animosity towards the non-trade objectives. In this context, there is aneed to adopt a more positive tone and utilize inclusive language such as the non-tariff measures rather than call them the non-tariff barriers.
The development and implementation of these non-tariff measures will be the fostering of non-trade objectives for the member states. The non-tariff measures should hence not operate in clinical isolation from the WTO’s multilateral trading system. There is a need for a more effective and efficient domestication of these measures within the WTO system and not be an outside part of it. These measures will address the critical WTO concerns, the concern ion where the WTO system encourages or is supportive to adopting these measures is of utmost importance and needs greater scrutiny in the future. Notably, it is evident that the encouragement of the WTO in adoption of the measures in the different member states will happen to particular extent. Considering the national treatment obligation in Article III of GATT, it could be interpreted to be permitting the measures that regardless of it being discriminatory, do pursue a legitimate public policy objective. There is no substantial sense to argue that is a product is potentially dangerous for the environment or health and the product is not similar to other products, the non-tariff measures that are pusing public health or environmental targets should be considered for what they are, public policy interventions, they will not be primarily analyzed in light of their impacts in trade but rather their impacts on public health ot on environmental protection among others.
That said, it would be better to acknowledge that these measures within the multilateral trading system would be fostered and strengthened through an international corporation. This is to be done through international treaties and regulatory tools that have been incorporated in other different international conventions. Mutual support in the different fiora would be a way of lessening the tensions. This support does relate to a need and concern to strengthen coherence, balans and interaction between trade and the public policy objectives. It is part of the organization’s rationale since its different instruments were incorporated such as the Doha Declaration.
The Balance Between the Trade and Non-trade Objectives
Having acknowledged that the WTO does need to foster the non-trade objectives with an equal importance to the trade interests of its member states, it is important to identify the strategies to be used by the Appellate body to balance the two. The first way is through the notion of necessity. The body actually developed the jurisprudence of balancing the two objectives through the notion of ‘necessary’ in Article XX of GATT. famously, the body established in Korea-Beef that determining whether measure is necessary will entail weighing and balancing different factors in the case. This examination will also look into the contribution made by the compliance measure to enforcing the law or regulation at issue, the importance of the mutual values or interests protected by the regulation and the accompanying effect of the law on imports or exports, arguably, this process of weighing and balancing that is needed in this concept is the most fundamental tool for balancing the trade non-trade interests in relation to the member states.
In the US – Gambling and Betting, the Appellate Body made further clarifications and refinements on the jurisprudence relating to the necessary notion and also gave some indications on how to approach the determination of the necessity of a measure. The Appellate Body rejected the Panel’s decision that the U.S. policies and measures were not necessary because the U.S. could have and should have entered into consultations with Antigua on regulating or reducing Internet gambling, a measure which would have been less trade restrictive. The Appellate Body correctly ruled that this possibility was not “reasonably available” to the US, because the results of consultations are uncertain and not capable of comparison with the specific measures. In analyzing the term “necessary”, the Appellate Body made some interesting clarifications of its jurisprudence on this issue. The Appellate Body repeated that the determination of necessity is an “exercise of weighing and balancing”. The Appellate Body suggested the following sequence of arguments and determinations for this exercise. First, the relative importance of the interests and values furthered by the challenged measure must be determined. Secondly, the contribution of the measure to the realization of the ends pursued by it, must be considered. Thirdly, the trade-restrictiveness of the challenged measure must be considered. In this context, a comparison between the challenged measure and possible alternatives, which are reasonably available should be undertaken. Lastly, the results of the comparison between the trade impact of the challenged measure and of an alternative measure should be considered in light of the importance of the interests at issue. In other words, the level of importance of the interest at stake must be proportionate to the trade-restrictiveness: If the values pursued are “vital and important in the highest degree”, even a complete restriction on trade may be justified
The Appellate Body also specified when a measure can be considered reasonably available: “The requirement, under Article XIV(a), that a measure be “necessary”—that is, that there be no “reasonably available”, WTO-consistent alternative—reflects the shared understanding of Members that substantive GATS obligations should not be deviated from lightly. An alternative measure may be found not to be “reasonably available”, however, where it is merely theoretical in nature, for instance, where the responding Member is not capable of taking it, or where the measure imposes an undue burden on that Member, such as prohibitive costs or substantial technical difficulties. Moreover, a “reasonably available” alternative measure must be a measure that would preserve for the responding Member its right to achieve its desired level of protection with respect to the objective pursued under paragraph (a) of Article XIV.” This statement is particularly important because it deals with the question identified in the earlier GATT and WTO jurisprudence. Arguably, GATT and WTO dispute settlement practice suggested that higher enforcement costs of the alternative measure or an increased administrative burden are not necessarily considered in the context of reasonable availability. This would, of course, have serious implications on WTO members, especially developing countries with limited resources. The Appellate Body’s ruling in the US – Gambling and Betting seems to indicate that higher enforcement costs or increased burden do not per se rule out the availability of an alternative measure. However, if the burden becomes “undue”, a measure cannot be considered reasonably available.
Additionally, it is important to acknowledge that there are other two strategies that need to be looked into further. The first is the principle of interpretation in deference to the national regulatory autonomy and the principle of looking into other relevant international agreements especially in regards to interpreting the WTO law. The interpretation in reference to national regulatory autonomy would mean that the body utilizes an interpretation that leaves more space to national autonomy in case there is ambiguity in the agreement’s terms. This approach could be founded on the notion of in dubio mitius, that refers to the interpreter choosing the meaning that is the least restrictive to the parties sovereignty in case the term that needs an interpretation has distinct meanings. In the EC-Hormones, the body affirmed the importance of the approach for interpreting the WTO law and established that in dubio mitius is applicable in the interpretation of treaties in deference to the sovereignty of states. If the meaning to a term is ambiguous, the meaning to be considered is the one that is less onerous to the party assuming the obligation or which is an interference to the territorial and personal supremacy ofa party or it encompasses less general restrictions upon the parties. The body also added that it cannot simply assume that the sovereign states needed to impose in them the more onerous rather than the less burdensome obligation.
The third approach incorporated by the body in accommodating the non0-trade objectives and the trading system was pointed out by the United Nations-Shrimp. The body gave the interpretation of ‘exhaustible natural resources’ as per Article XX GATT inter alia in reference to the United Nations Conventions on the Law of the Sea (UNCLOS), the Convention on Trade in Endangered Species of Wild Fauna and Flora (CITES), Agenda 21 and a resolution adopted in conjunction with the Convention on the Conservation of Migratory Species of Wild Animals. This third approach is also what is used by other international agreements in interpreting the WTO provisions, there is substantial debate on who needs to be a member of the conventions and how they could be appl;uied in the settlement of disputes within the WTO. Nonetheless there is consensus that the body is entitled to using other agreements at least if all its members including those that are part of a dispute are members of the agreement.
The challenging issue concerning the possibility of including non-trade policy objectives, which are not explicitly recognised in the rather limited lists of objectives mentioned in Art. XIV GATS. If the Appellate Body is willing it can stretch the limits of Art. XIV further than one would initially anticipate with reference to other international experiences, such as the ECJ and its case law on the relationship between free movement and basic rights, and with references to other international agreements such as the draft UNESCO convention on cultural diversity. These approaches would of course be less important if the Appellate Body would interpret GATS commitments and obligations with greater deference to national regulatory autonomy. This could reduce the need to derive non-trade policy objectives from outside the WTO legal order and incorporate them into that order and would therefore make the task of balancing trade and non-trade policy objectives less onerous. After all, balancing trade and non-trade policy objectives should be “no more burdensome than necessary.”
Article and Journals
Barton JH, Goldstein JL, Josling TE, Steinberg RH. The Evolution of the Trade Regime: Politics, Law, and Economics of the GATT and the WTO. Princeton University Press; 2008 Jan 27.
Boisson de Chazournes L. WTO and non-trade issues: inside/outside WTO. Journal of International Economic Law. 2016 Jun 1;19(2):379-81.
Cottier T, Oesch M, Fischer TM. International Trade Regulation: law and policy in the WTO, the European Union and Switzerland: cases, materials and comments. Staempfli Publishers; 2005.
Cottier T. The WTO permanent panel body: a bridge too far?. Journal of International Economic Law. 2003 Mar 1;6(1):187-202.
Howse R, Nicolaidis K. Legitimacy and global governance: Why constitutionalizing the WTO is a step too far. Efficiency, equity, and legitimacy: The multilateral trading system at the millennium. 2001;227:243.
J Langille, ‘Neither Constitution nor Contract: Understanding the WTO by Examining the Legal Limits on Contracting out through Regional Trade Agreements’ (2011) 86 New York University Law Review.
John H. Jackson, Sovereignty, the WTO, and the Changing Fundamentals of International Law (Cambridge: Cambridge University Press, 2006) 19.
Joost Pauwelyn, Recent Books on Trade and Environment: GATT Phantoms Still Haunt the WTO, 15 EJIL 2005, 575 – 592.
Pauwelyn J. The Role of Public International Law in the WTO: How far can we go?. American Journal of International Law. 2001 Jul;95(3):535-78.
P Malanczuk, Akehurst’s Modern Introduction to International Law (7th rev. Ed, New York: Routledge, 1997) p. 229
Solanki, G A. ‘Globalization and Role of WTO in Promoting Free International Trade’ (2012) 3 (1) Journal of Humanities and Social Science, 13
World Bank Group and World Trade Organization, ‘The Role of Trade in Ending Poverty’ (2015) Geneva: World Trade Organization, pp. 13-14.
United States and Canada (intervening) v Korea, Republic of, Appellate Body Report, WT/DS161/AB/R, Doc No 00-5347, ITL 006 (WTO 2000), DSR 2001:I, 5, 11th December 2000
European Communities Measures Concerning Meat and Meat Products (Hormones), WT/DS26/AB/R, WT/DS48/AB/R, adopted on 16 January 1998, para. 165.
The Doha Declaration
U.S. – Standards for Reformulated and Conventional Gasoline, WT/DS2 and WT/DS4, Report of the Appellate Body adopted on 20 May 1996, Section IV
US – Import Prohibition of Certain Shrimp and Shrimp Products, WTO Doc. WT/DS58/AB/R, adopted 6 November 1998.
M Igbokwe, ‘World Trade Organization and its Role in International Trade’ accessed 10 December 2021.
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