European Affairs

Spring 2004

 

Trade
The WTO Must Open Up its Trade Dispute Proceedings
By James Bacchus

 

Perhaps no other important international institution is more misunderstood than the Geneva-based World Trade Organization. And perhaps no other aspect of the important work of the WTO is more misunderstood than the way in which it attempts to resolve trade disputes.

It is partly for this reason that issues relating to WTO dispute settlement are so often the subjects of headlines and controversy around the world. There is a widespread perception that the WTO is something separate from the nations of the world, and that it is able to make governments do its arbitrary bidding in matters relating to international trade.

This is not so. The Organization is not some global Leviathan of trade. The WTO is simply a framework in which the 146 countries and other customs territories that are its members have chosen to work together on trade problems.

Actions taken by the WTO are not arbitrary. They are all governed entirely by treaty obligations, which the member countries have previously accepted, and which require consensus among all the member states. That includes actions taken to help resolve international trade disputes.WTO members have agreed to use the WTO dispute settlement system for all their treaty-related disputes, and to be bound by its rulings. This is the source of much of the controversy about the WTO. But it is also the source of much of the strength of the WTO as an international framework for resolving international trade disputes and for upholding global trade.

For the past eight years, I have spent much of my time in Geneva as one of the seven international members of the WTO's Appellate Body, which is the instance of final appeal in WTO dispute settlement. Now that I have completed my final term on the Appellate Body, I am freer to comment on many general aspects of WTO dispute settlement.

My first point is that WTO members must begin to shine greater light on the Organization. For the past eight years, I have helped keep the doors to the oral hearings of the Appellate Body closed, in accordance with the rules established by the WTO member governments. Now I am free to say for the first time what I have always thought.We must open the doors and let in the light of public scrutiny.

We must let the five billion people in the world who are served by the WTO see the Organization in action. If we do not, WTO member governments will never win the increased public support needed to maximize mutual gains from trade in a rule-based world trading system. Only with more open doors shall we be able to achieve all our goals for more open trade.

Specifically, we must open the proceedings of the panels and the oral hearings of the Appellate Body to media coverage and to overall public observance. We must do the same for the meetings of the General Council, the Dispute Settlement Body, and all the other major councils of the WTO.

I am not proposing that the deliberations of panels or the Appellate Body should be open. No judicial system in the world does that. Nor am I suggesting that trade negotiations that are separate from the general meetings of the various WTO councils should be conducted in public. No one who has ever negotiated trade agreements would favor that.

But there is every reason for other WTO proceedings to be open to public scrutiny. It is only because the doors are closed that critics can claim any credibility in referring to the WTO as a "star chamber" or a "kangaroo court." It is only because the doors are closed that there are suspicions that the process of decision making in the WTO may not be consistent with the WTO treaty.

If the doors were opened, the world would see that those who have been entrusted with the responsibility of helping resolve trade disputes are fulfilling that responsibility correctly and conscientiously. WTO jurists are independent, impartial, fair, objective, and utterly exhaustive in examining virtually every nuance of every issue that is raised in every dispute. It is only because the doors are closed that anyone is able to suggest otherwise.

Perhaps the biggest beneficiaries of opening the doors of the WTO would be the member governments themselves. As it is, a majority of WTO members have never even seen a hearing of the Appellate Body. That is because only parties and third parties to a dispute are allowed to attend and participate in an oral hearing in a WTO appeal. Opening the doors would allow many WTO members to see what happens in WTO dispute settlement proceedings for the first time.

Keeping the doors closed is self defeating for the WTO. It feeds the unfounded paranoia about the WTO that prevails among anti-globalists, hard-core protectionists and all the other groups that oppose what WTO members are trying to accomplish.

To be sure, on the first day the doors were opened, the panels and the Appellate Body would undoubtedly attract a few demonstrators wearing turtle costumes, or displaying other symbols of opposition to WTO policies. But the novelty of the first day would soon pall. As someone who has sat through endless hours of discussions about the meaning of a single footnote among the more than 30,000 pages of the WTO “covered agreements,” I am confident that within a few days only those turtles with the hardest shells would remain.

I am certainly not proposing that Non-Governmental Organizations and other private interests should be parties to dispute settlement proceedings or to trade negotiations, or that they should have any form of official standing in the Organization. The WTO must remain an intergovernmental body consisting exclusively of countries and other customs territories. NGOs and other private interests are not governments, and should not have the rights of governments. Ways, however, should be found for those outside the WTO with a demonstrated interest in the outcome of WTO proceedings to have their say. As well as opening the doors, we must open the windows.

Such openness can be achieved nationally, as is done routinely in the United States under American law, which requires that many varying views must be heard in the making of trade policy. It can also be achieved internationally. At the WTO, there have been increasingly successful efforts to involve NGOs and other private interests more closely in the ongoing process of global trade decision making. These efforts must continue and increase.

In particular, dispute settlement panels and the Appellate Body must continue to accept "amicus curiae" briefs in their proceedings, and they must make greater use of such briefs in dispute settlement. The opportunity to submit such briefs can give those from the wider world a say, without in any way undermining the essential intergovernmental nature of the proceedings. Amicus briefs can provide an additional and valuable point of view, as they do for judiciaries throughout the world.

The apprehensions about amicus briefs often expressed by WTO members are misplaced. Amicus briefs will not overwhelm or dominate the dispute settlement system. The participation of the authors of such briefs in dispute settlement proceedings should be limited to the submission of their briefs. The acceptance of such briefs should be subject to reasonable rules, as in other judicial systems.

WTO members should understand that if they do not approve new rules, amicus briefs will continue to be accepted in dispute settlement under existing procedures. And there may soon come a case in which more explicit use will be made of such briefs.

On these and many other issues relating to the WTO and to its dispute settlement system, we must also open our minds. The WTO dispute settlement system is the most successful such arrangement in the history of the world. Nevertheless, although it builds on nearly half a century of work in the GATT, the system is less than a decade old. At most, some of the provisions of the WTO have been construed a few times. Most of the provisions of the WTO treaty have not been construed at all. There are entire agreements in the treaty that still have never been construed even once by the Appellate Body. Thus, in some respects, virtually every new case that comes before the WTO is still very much what lawyers call "a case of first impression."

For this reason, we should be careful not to make sweeping generalizations about the future implications of the outcomes of the relative handful of disputes that have so far been resolved.WTO dispute settlement is a work in progress, and our continued progress will be incremental. The system will evolve rule by rule and case by case.

Many other changes are also worthy of consideration, some of which are currently under review, while others are not. For many reasons, we need rules of evidence and rules of discovery in WTO dispute settlement. One reason, for example, is the urgency of finding an effective way to balance the need for panels to find facts with the necessity for governments to protect confidential business information. We need comprehensive standard working procedures that would apply to all the procedural aspects of WTO panel proceedings, akin to the standard “Working Procedures for Appellate Review” we have had from the outset in WTO appeals.

We need a better understanding, and a stronger consensus, among all WTO members on the appropriate standard of review in dispute settlement, particularly for trade remedies.What the WTO treaty says about the standard of review for some trade remedies is not always the same as what some people in Washington think it says.

We also need a stronger consensus on the balance WTO members are seeking in the treaty between their right to apply trade remedies and their right to benefit from trade concessions through market access.

We need more and better rules enshrined in the treaty on the appropriate interrelationships between trade and the environment, trade and labor, trade and health, trade and human rights, trade and intellectual property, trade and bribery, and trade law and other international law.

Ideally, none of these issues should be resolved in WTO dispute settlement. All these procedural and substantive issues, and many more of similar significance and sensitivity, should be resolved by negotiations among member governments that lead to the adoption of rules that carry the weight of treaty obligations. But the world will not wait. If these issues are not clearly resolved through negotiations, then many of them will be resolved, necessarily, through dispute settlement.

We must also open our minds to the need for structural changes in WTO dispute settlement. Two proposals deserve special attention. First, we need a standing Panel Body as recommended by the European Union. And, second, we shall soon need to transform the standing Appellate Body from a part-time into a full-time global tribunal for trade.

There are many other issues that also merit attention. They include the need for remand powers for the Appellate Body, the anachronism of “interim reviews” and the need to enhance third party rights.We need to clarify the availability of “special and differential treatment” for developing countries, and to provide more assistance to developing countries in asserting their rights in dispute settlement.We need more resources to support the work of dispute settlement. We must also deal with murky issues such as those involving “damages” and “remedies” in trade disputes, and many more.

What we need most in dispute settlement, however, is not a change in the dispute settlement system itself.We need effective changes in all the other endeavors of the WTO that are not a part of dispute settlement. Whatever doors, windows and minds we may need to open in dispute settlement, the greatest difficulties of the WTO are not in this area. We have an effective system for clarifying and upholding rules in the WTO. What we need most of all is an equally effective system for making and revising rules through successful multilateral negotiations.

When we established the WTO, we hoped it would become a forum for ongoing negotiations on myriad emerging and ever-evolving trade issues.We hoped for a “permanent round” of global trade rulemaking by WTO members. Instead, we are now engaged in the ninth round of multilateral trade negotiations, which is in many ways much like the previous eight.

I certainly believe that the overriding priority must be the successful conclusion of the Doha Development Round. But, as we work to achieve this, we must remember our original vision for the WTO. We must continue to try to find better ways to work together to agree on the right rules for trade on a continuing basis.

We must work, too, for ways in which the WTO can become an ever better example of democratic and cooperative self-governance among the nations of the world. If we succeed in all this, then I am confident that the WTO dispute settlement system will also continue to succeed as an appropriate and effective part of the overall world trading system.

If we open the doors, the windows and our minds, we can open the way to building and sustaining a worldwide consensus for more open trade. If we have more open trade, we can have more open societies, and we can have more of the freedom that open societies make possible.

James Bacchus completed two four-year terms as one of the seven Members of the Appellate Body of the World Trade Organization in Geneva, of which he remains the longest-serving member, in December 2003. He also served as the Appellate Body's Chairman. He previously served as a Member of the U.S. Congress from Florida and as a special assistant to the U.S. Trade Representative. He is currently chairman of the global trade practice group of the international law firm Greenberg Traurig, P. A., and also a professor of law at Vanderbilt University Law School. He is the author of Trade and Freedom, published in London by Cameron May.