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Foreign Affairs
The WTO on Trial
By Susan Esserman and Robert Howse
Susan Esserman is a partner at the Washington, D.C.-based law firm of Steptoe & Johnson and a former Deputy U.S. Trade Representative. She has also served as General Counsel to the Office of the U.S. Trade Representative and as Assistant Secretary of Commerce. Robert Howse is Professor of Law at the University of Michigan. He is coauthor with Michael Trebilcock of The Regulation of International Trade.
Global Law, Global Politics
Last fall, a judicial panel of the World Trade Organization (WTO) issued a controversial ruling in a high-stakes corporate tax dispute between the United States and the European Union. Paying scant attention to the complexities of the case, the panel authorized Brussels to implement retaliatory sanctions of $4 billion -- an unprecedented sum -- against Washington. Notably, around the same time the United States and its European allies were also making headlines with another fierce legal battle: that over the authority of the International Criminal Court to prosecute American soldiers for alleged misdeeds committed abroad.
In the nineteenth century, Clausewitz famously wrote that war is politics conducted by other means; today, as these examples illustrate, the same could be said for the law. Many disputes that used to be settled by negotiation or even by force of arms now end up before a proliferating range of international courts, tribunals, and arbitral panels. Legal briefs are replacing diplomatic notes, and judicial decrees are displacing political compromises.
Less often considered is whether this ascendant legalism is good or bad for global prosperity and stability. In most cases, it turns out, it is still too early to say. There is one exception, however: the WTO. Nowhere else has international conflict resolution by judges emerged more forcefully or developed more rapidly. As in a domestic court -- but unlike in most international bodies -- WTO dispute settlement is both compulsory and binding. Member states have no choice but to submit to it and must accept the consequences of the WTO's ruling.
But what, exactly, does the WTO's record reveal about how it has used its unprecedented powers? The question is a pressing one, for negotiators have only until a May 2003 deadline to take stock of the dispute settlement system and decide whether, or how, it needs to change. Will the dramatic judicialization of international trade be reversed? So far, trade experts have revealed deep ambivalence about the WTO's experiment with binding adjudication, and there is little clear sense of where the system should go from here.
At the WTO's inception in 1995, the organization's provisions for legal dispute settlement were touted as state of the art and the crown jewels of the WTO system. Today, however, even some of the organization's original architects and supporters complain that the process has gotten out of hand. Critics accuse the WTO's appellate tribunal of improper judicial activism, much as conservative American jurists lambasted the U.S. Supreme Court in the 1960s and 1970s. Developing countries, meanwhile, complain that not all states are equal in their ability to use the WTO's laws to advance their own interests. Litigation, they argue, draws on different skills, resources, and even cultural attitudes than does diplomacy, placing certain nations at a real disadvantage.
An accurate assessment of the WTO's judicial record finds that the system has indeed reduced the role of international diplomacy, while strengthening the rule of law. At the same time, a number of measures, described below, should be implemented to strengthen . . .