General Agreement on Tariffs and Trade (GATT) Article X has been consistently overlooked in literature even though it is a unique provision in the GATT-regime: it acknowledges standing for private actors who can challenge trade-related administrative action by World Trade Organization (WTO) members. This provision is an unusual instantiation of the need to provide transparency for private actors about state policy. It is equally eccentric in seeming to provide a right for private actors to challenge governments, albeit only before domestic fora. How did the GATT end up with this provision? And are these apparent private rights meaningful in practice? Since implementation of Article X rarely arises in WTO disputes, this paper proposes an answer to the second question based on six case studies of the United States of America (US), Canada, the European Union (EU), Brazil, China, and India. This is a heterogenous group that comprises big trading nations. We find wide variance in state practice. We conclude with suggestions that would strengthen the WTO demos by providing better information through WTO monitoring on the rights accorded to private actors and the introduction of an explicit code of good practice.
Using trade policy to achieve foreign policy objectives, such as stable international relations, has a long history, from Kant to the founders of the GATT. Punishing enemies and rewarding 'friends' by granting or withholding market access is also not new, and sanctions or blockades are a venerable form of trade policy used as foreign policy. A more recent form is influencing the domestic policy of another country with non-commercial provisions in trade agreements. All these tools are based on linkage, on the assumption that a desired outcome can be achieved by interventions that would increase or decrease trade. The latest instance is so-called ' friend-shoring', which would in principle isolate enemies, although it will be difficult in practice and risks undermining multilateralism. The cost of these interventions is susceptible to economic analysis, even if the conclusion is that it is worth paying. Influenced by AlanWinters who referred to national security as a motivation for agriculture protection as a 'so-called non-economic objective' or SNO, I argue that using a trade policy tool for a foreign policy purpose as if there is no cost is a SNO job, an attempt to justify an intervention aimed at one objective by framing it as being valuable for another.
Do representatives of member states in Geneva and officials based in capitals agree on priorities for cooperation in the World Trade Organization? Exploiting an original survey of trade policy officials, we find that respondents representing their countries in Geneva often accord substantially different priorities to institutional reform and policy issues than officials based in capitals. We hypothesize that this ‘Geneva effect’ reflects bureaucratic capacity in capitals and autonomy of Geneva-based officials, and that the effect should be smaller for officials from OECD member states, given extensive interaction outside the WTO to define good regulatory policies and address trade issues of common concern. Empirical analysis supports these hypotheses but also reveals differences in prioritization between Geneva and capital-based officials from OECD countries for specific issues. The results suggest that the prospects of international cooperation may be influenced not only by well-understood differences between states that reflect material interests and domestic political economy drivers, but by differences in relative priorities accorded to issues by officials representing states in international organizations and officials based in capitals.
China, the EU and the U.S. are the world’s largest traders, and many of the tensions in the trading system arise in the relations among them. Our premise is that reforming WTO is a necessary condition for the organization to be a more salient forum for the three large economies to address trade tensions, and that agreement among these three trade powers in turn is necessary to resolve the problems of the WTO. After a brief discussion of the global challenges that ought to be on the WTO agenda and of the systemic context, we discuss both how China understands WTO reform, and how the other two leading powers see the China problem in the WTO. We consider how the three see transparency, plurilateral negotiations, economic development differences, fisheries and industrial subsidies, WTO working practices, and dispute settlement. We conclude by considering the implications of our analysis for fostering cooperation between the three major trade powers in the WTO.
An original survey of trade policy officials is used to estimate ordered probit discrete choice models to explore a factor not usually considered in analyses of international negotiations: the extent to which representatives of member states and officials based in capitals agree on priorities for cooperation. The analysis reveals that representatives of World Trade Organization (WTO) member states often accord substantially different priorities to policy issues and WTO reform areas than officials based in capitals. This “Geneva effect” varies between officials representing Organization for Economic Cooperation and Development (OECD) member countries and non-OECD countries, reflecting potential differences in bureaucratic capacity of capitals and the autonomy accorded to Geneva missions on different types of issues. The results suggest that the prospects of international cooperation may be influenced not only by well-understood differences between states that reflect material interests and domestic political economy drivers, but by internal differences regarding relative priorities. An implication is that studies of international organizations should consider the possibility that representatives of states may have different priorities (preferences) than officials based in capitals.
China, the European Union, and the United States are the world's largest traders. They have a big stake in a multilateral system of rules to manage the inevitable frictions among interdependent economies organized on different principles. This paper discusses elements of the WTO reform agenda through the lens of positions taken by these three WTO members, identifying the extent of alignment on key subjects, including transparency, dispute settlement, and plurilateral negotiations. We draw on findings of a recent research project on WTO reform and use responses to an expert survey to assess the prospects for actions that all three trade powers might support. Our premise is that reforming WTO is a necessary condition for the organization to be a more salient forum for the three large economies to address trade tensions, and that agreement among these three trade powers, in turn, is necessary to resolve the problems of the WTO.
'Thematic sessions' bring dynamism to WTO by allowing committees to consider what works well under an agreement, including sharing experiences with implementation, what is not working, and what is next on the agenda. Thematic sessions are a broad class of meetings that are sponsored by or associated with a WTO body in some way, but that are not part of its formal meetings. The WTO held over 100 such sessions in the three years from 2017 to 2019. We found variation in how meetings are organized, which is related to the type of session, and we found variation in how themes are chosen, participation (who speaks), the degree of transparency, and funding. Comprehensive improvement is needed: some committees never hold thematic sessions, participation by capital-based officials from developing countries is uneven, and too few sessions have a forward-looking agenda. Enhanced use of thematic sessions can contribute to strengthening the pipeline between Geneva and capitals, and to better understanding in Geneva of what is happening on the ground.
This paper reports on the results of an expert survey to solicit views on what WTO members and the international trade community consider the most important attributes of the Director-General of the WTO and the substantive policy and institutional reform priorities confronting the WTO. The results suggest strong support for a leader with managerial and political experience, and a professional network that spans international organizations, major capitals, and international business. Competence, political experience, a network that spans major capitals, international business and international organizations, knowledge of the WTO negotiating process and a background in economics are all characteristics that are ranked highly. Resolving the dispute settlement crisis is the highest priority for most respondents. There is broad agreement on the importance of addressing a range of negotiating topics and institutional reforms, but substantial variation in the rankings assigned by different groups of respondents to specific issues.
State support remains a leading cause of tension in international commercial relations. Governments can see trade distortions that look like they were caused by industrial subsidies, but they lack the data to illuminate that state support. In the 1980s at the height of the farm wars the Organisation for Economic Co-operation and Development (OECD) developed an index that helped countries to see the overall incidence of agricultural subsidies, initially called the Producer Subsidy Equivalent (PSE) and the Consumer Subsidy Equivalent (CSE). Are there lessons for today in the PSE approach? In this paper I try to answer that question from the standpoint of economics: how did the PSE evolve, what is it, is the concept relevant to industrial subsidies? And of politics: how was OECD able to create the tool, and do present conditions permit something similar? The brief answer is that the PSE was a response to a shared perception of crisis, but it was pushed by finance, not trade or agriculture ministers. It drew on well-established concepts in the agricultural economics and trade literatures. And it works best in a context where market power is sufficiently diffuse that a price gap between domestic and world prices can be calculated. Only some of those conditions can be met when applying the approach to concentrated industries dominated by large firms that operate in multi-country supply chains.
The WTO dispute settlement system is in crisis, following the decision of the United States to block new appointments to the Appellate Body (AB). The AB went into hibernation in December 2019, not having enough sitting members to be able to operate. What do WTO members think of the performance of WTO dispute settlement? How much do WTO members care about the existence and operation of an appeals mechanism? In this article, we report on the results of a survey of WTO Members’ perceptions of the AB and the role it plays (should play). We complement this with data on Members’ revealed preferences in their use of the dispute settlement system, their intervention in WTO debates on the AB crisis and their responses to demise of the AB. The data reveal strong support for the basic design of the dispute settlement system but also that the United States is not alone in perceiving that the AB went beyond its mandate. There are substantive questions that need to be addressed if the Appellate Body impasse is to be resolved. WTO, Appellate Body, dispute settlement, conflict resolution
With its dispute settlement system in peril, the role of the World Trade Organization (WTO) in mitigating commercial conflict is more important than ever, but its working practices need reform, notably procedures for discussing trade concerns. The Sanitary and Phytosanitary Measures (SPS) and Technical Barriers to Trade (TBT) committees have developed a mechanism for representatives to raise “specific trade concerns” (STCs) about laws, regulations, or practices by their trading partners. These can mitigate sources of friction and help avoid recourse to formal dispute settlement.This article assesses experience with STCs and assesses suggestions for reform of the process and its extension to all WTO committees. The important WTO reform question is whether procedural changes in Geneva can make STCs more effective for all members while facilitating enhanced participation by members who do not now make full use of the possibilities that such procedures offer.
The World Trade Organization (WTO) needs reform to strengthen its vital role in mitigating commercial conflict, notably its procedures for discussing trade concerns. As Committees do not need permission to improve their own procedures this might be a logical starting point, but General Council guidance and a central decision on ad-ditional funding can help Officials need to keep each other informed about implementation of WTO rules, and they do in thousands of so-called notifications through the WTO every year. Knowing what is going on is the first step in managing conflict. Officials also need to be able to talk to each other about implementation, which they do in dozens of committee meetings every year. In those meetings they often raise “specific trade concerns” (STCs) on behalf of their firms. Most often those concerns about laws, regulations, or practices are addressed by their trading partners. A relative handful cannot be resolved this way and are raised as formal disputes. The Sanitary and Phytosanitary Measures (SPS) and Technical Barriers to Trade (TBT) committees are a bench-mark showing the place of STCs in the great pyramid of the WTO legal order. I draw three implications from the pyramid in SPS and TBT: 1. Only a small fraction of the huge number of SPS and TBT notifications ever become a source of con-flict leading to a dispute. From 1995 until early 2019, there were 34,000 TBT notifications, 580 STCs and only 6 disputes with Appellate Body reports. 2. One reason is that discussion of STCs can mitigate some sources of friction, sometimes by modifica-tion or withdrawal of a measure. 3. Dispute settlement is at the tip of the pyramid. There are probably many more enquiry point com-ments than STCs, and there are certainly many more STCs than disputes. The committees do not settle formal disputes, but they have demonstrably served to diffuse trade conflict in their respective areas.
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It is a truth universally acknowledged that every ambitious 21st century trade agreement is in want of a chapter on electronic commerce. One of the most politically sensitive and technically challenging issues is personal privacy, including cross-border transfer of information by electronic means, use and location of computing facilities, and personal information protection. States are learning to solve the problem of state responsibility for something that does not respect their borders while still allowing 21st century commerce to develop. A comparison of the Canada-European Union Comprehensive Economic and Trade Agreement (CETA) and the Trans-Pacific Partnership (TPP) allows us to see the evolution of the issues thought necessary for an e-commerce chapter, since both include Canada, and to see the differing priorities of the U.S. and the EU, since they are each signatory to one of the agreements, but not of the other. I conclude by seeking generalizations about why we see a mix of aspirational and obligatory provisions in free trade agreements. I suggest that the reasons are that governments are learning how to work with each other in a new domain, and learning about the trade implications of these issues.
The World Trade Organization (WTO) has three primary tasks, to negotiate new rules, monitor implementation, and settle any disputes that arise. It is not fulfilling any of these tasks very well at the moment. Should Members just muddle along, hoping for the best, or seek external advice on how to change the WTO operating system? This paper suggests a third possibility: a systematic discussion of transparency by encouraging institutional learning could help Members to recover a shared sense of collective purpose. On the basis of such a detailed vertical review, Members might be able to come to a consensus on how to improve the functioning of the system.Some may see in any discussion of information an attempt by large countries to impose new obligations. Better information might help Members navigate current negotiation impasses, but that is an incidental benefit of a discussion in each committee about whether the organization is doing as well as it can monitoring current obligations.This paper discusses the meaning of institutional learning, and whether other international organizations have lessons for the WTO on how to do it, with particular emphasis on the OECD In-depth Evaluation of Committees process. It then suggests reframing the debate on transparency by asking first whether WTO information is good enough then why Members do not notify as much as they might. If Members think that they lack information on the trading system, the trade policy review process might help. After a review of previous efforts to improve WTO transparency, including the processes launched by the Nairobi ministerial declaration, the paper concludes with a proposal on how WTO can encourage institutional learning by a systematic discussion in each committee of whether WTO information is good enough.
The USMCA avoids the worst of what President Trump wanted and reduces uncertainty for investors and traders about the rules for North American trade.