How can International Trade Law be Shaped to be Fair, Competitive, and Just? The role of the WTO.
The question of how international trade law is to be shaped to be fair, competitive, and just presupposes the presence of unfairness, injustices and distortive practices in world trade under the currently functioning legal regime. And this is admittedly true: geopolitical conflicts increasingly adopt trade dimensions, revealing the long-standing and now highly visible interdependence between trade and foreign policy. Climate challenges further question the utility and sustainability of existing trade rules while the gap between the development of the Global North and the South remains still open.
All of these challenges call for action and reform. The economic and societal gains generated by trade liberalisation are clear. Trade has contributed to the rise in living standards across the world and remains one of the most effective tools for development. However, the existing framework most of which has been drafted in the post-WWII period of stable geopolitical alignments, wide unawareness of climate issues, and when segregation was still a normality, cannot be expected to serve perfectly the contemporary needs of our constantly changing and developing society. Moreover, taking a closer look, one may see the intrinsic interplay of trade and foreign policy which has always existed and which lead to an ill-balanced trade law system which simply reflects the geopolitical power imbalances. The question that arises then is, is it possible at all to shape international trade law to be fair, competitive and just given these complex intricacies of its nature and practice? Without delving deeper into international relations theories and their view on international law given the limited scope of this contribution, this piece argues that international trade law can be shaped to be fair, competitive and just and the WTO has been playing and has the capacity to continue playing an instrumental role in doing this.
“The current nameless global order, dominated by the World Trade Organization, (...) is untenable and unsustainable” is a statement of the US trade representative which perfectly encapsulates the current crises of the WTO and the intrusion of politics in the trade (law) landscape. This, nonetheless, does not come to suggest that the intertwinement of trade and politics should be accepted, any existing rules should be eradicated and international trade is to be purely pursued as a set of bilateral business-like deals. Such a move can in no way be expected to deliver any fairness, competition and justice, as it will only seal the power politics tendency in the world, spilling it into the trade relations of states.
The only meaningful way to counteract power disparities in international trade is through a centralised and autonomous institution capable of ensuring reciprocity and equality. The WTO has demonstrated this capacity both in view of its design and substantive rules, and given its dispute settlement system which has historically been recognised as one of the most successful and effective fora for settlement of international disputes. It should and can become again the symbol of successful inter-state cooperation especially nowadays when multilateralism in general is in crisis. To do so, the WTO must be at the centre of reform. On the one hand, some of its rules need to be updated, but this should take place in a multilaterally coordinated way rather than through fragmented individual or regional initiatives that risk deepening inequalities. The consensus rule which led to the current block of the Appellate Body may be revised with a view of improving the effectiveness of the institution and eliminating the chance for future obstruction of the work of the WTO. On the other hand, as suggested by scholars, existing tools, including the possibility of situation complaints under Article XXIII (1) (c) GATT and collective responses under Article XXV GATT, offer ways forward. The willingness of most members to preserve the organisation, illustrated by the creation of the Multi-Party Interim Appeal Arbitration Arrangement, reinforces that there is political willingness for reform of the WTO through the active use of existing instruments. Eventually, shaping international trade to be fair, competitive, and competitive relies on inter-state cooperation and the overall strengthening of the multilateral trade system in which the WTO plays a central role.
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