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I am glad to be with you today and to be
involved in this series of lectures on international law for the Audio
Visual Library of the United Nations. I am a great believer in the
importance of the work of the United Nations for the maintenance of
peace among all nations, rich and poor, large and small, and for the
construction of a better planet based on the equality of all states and
the respect of human rights and freedoms of all women and men. I believe
that learning and education are fundamental pieces of these construction
efforts.
Today, I will try to highlight four aspects of
the role of the WTO in today's international legal order. First, I will
describe why and how the WTO is both a very classical yet modern
organisation. Secondly, I will show that although the WTO is a powerful
organisation focusing on international trade, it recognizes the
importance of non-trade concerns and that opening trade markets for the
benefit of all does not mean that trade trumps other concerns or values.
Thirdly, I will argue that the WTO is in constant dialogue with many
other international organisations and indeed gives legal weight to norms
developed by them. Finally, I will conclude by discussing how the WTO
seeks to work with the United Nations on several fronts in its efforts
to address the troubles of humanity and in particular those relating to
trade. In so doing, the WTO contributes to improving coherence in the
international legal system.
1. The WTO is both a traditional and
modern institution
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The WTO is an international organization. This
may seem obvious, and yet it took over 50 years to achieve that result!
This protracted effort to acquire a legal existence has left its marks.
This may explain why today it remains a very traditional and classical
international organisation while, at the same time, it has developed
very modern features.
The General Agreement on Tariffs and Trade,
which was replaced by the WTO in 1994, was a provisional agreement that
entered into force in January 1948 and which was to disappear with the
treaty creating the International Trade Organization (ITO). Since that
treaty creating the ITO was never ratified, the GATT remained, for a
half a century, an agreement in simplified form which, in principle, did
not provide for any institutional framework. Thus, the GATT did not have
“members” but “contracting parties”, a term which highlighted the purely
contractual nature of the arrangement.
It was only with the creation, some 50 years
later, of the Marrakech Agreement establishing the WTO that a true
international organization was finally created possessing its own
international legal personality. To avoid any ambiguity, the Agreement
Establishing the World Trade Organization (WTO) states in Article VIII
that the “Organization shall have international legal personality”. No
other international organization needs to repeat in its constitution
that it is an international organization but the WTO members felt they
had to do so — and I believe they were proud to do so.
The implications of this status are numerous.
As with all international organizations, the competencies of the WTO are
limited by the principle of speciality. The WTO is concerned with trade
and it does not seek to go beyond this although, of course, it
recognizes that WTO members must deal with policies and international
obligations that go beyond trade.
As a true international organization, the WTO
now comprises an integrated and distinctive legal order: it produces a
body of legal rules that govern the actions of its members. The WTO
legislative basis is important. It has the institutional capacity to
produce new rules, amendments and implementing instruments. The WTO is a
treaty of some 500 pages of text with more than 2000 pages of scheduled
commitments. In addition, 50 years of GATT practice and decisions —known
as the “GATT acquis” — are now included as part of the new WTO treaty.
But in the WTO the trade rules are always being negotiated. The Doha
Development Agenda, the DDA, represents the latest “round” of
negotiations. In these negotiations, a broad range of issues are open
simultaneously to negotiation and lead eventually to the adoption of new
legal obligations.
These legal rules form an integrated system.
Indeed, the WTO agreements are integrated in a “single undertaking”,
which forms a single coherent entity. A number of provisions recall this
fact, and in particular Article II:2, which states that the multilateral
trade agreements “are integral parts” of the Agreement Establishing the
WTO and are “binding on all Members”. This is why they appear in an
annex to the Agreement Establishing the WTO. On several occasions, the
Dispute Settlement Body (DSB) has reaffirmed that Members must comply
with all of the WTO provisions, which must be interpreted harmoniously
and applied cumulatively and simultaneously. Thus, the WTO treaty is in
fact a “single agreement” which has established an “organized legal
order”.
The WTO rests largely on the principle of the
sovereign equality of states. But this does not mean that it is
incapable of showing the kind of pragmatism that befits trade in
applying the principles of traditional international law. Equality is
especially obvious in decision-making for instance. Formally, the WTO
rule is “one country, one vote” (unlike decision-making in other
international economic organisations, such as the World Bank or the
International Monetary Fund). But the practice of taking decisions by
consensus is now broadly accepted in all stages of the WTO
decision-making process. While it is true that this need for consensus
is responsible for a certain sluggishness in the negotiations, it does
enable all states, whatever their share in international trade, to
express their views and to participate on an equal footing.
Indeed, as recalled by the UN
Secretary-General before the General Assembly in 2004, equality is a
fundamental requirement:
“At the international level, all States — strong and weak, big and small
— need a framework of fair rules, which each can be confident that
others will obey. Fortunately, such a framework exists. From trade to
terrorism, from the law of the sea to weapons of mass destruction,
States have created an impressive body of norms and laws.”
But as Kofi Annan points out, these rules must
also be fair — which is why the WTO goes beyond formal equality and
seeks to establish real equality. True equality can only exist between
equals. When it comes to trade, some of the less developed countries
require certain flexibilities if trade and development are to continue
to exist side by side. In the WTO, developing countries can enjoy a
series of non-reciprocal benefits, in particular special and
differential treatment provisions.
The WTO is a classical organisation in that
its sphere of competence is limited, it works with consensus , and it is
member driven. The WTO deals with trade and only trade. Yet as I will
develop further later on, it has important exceptions that recognize the
right of states to give priority to policies other than trade. It even
allows trade obligations to be disregarded when this is done in good
faith and without any protectionist intent.
WTO is a modern organisation
So the WTO is a classical organisation but the
WTO also has very modern features.
The WTO provides a permanent forum for
negotiations among its members concerning their multilateral trade
relations. In today's world, states need permanent forums for
discussions and negotiations and, in that perspective, the institutional
structure of the WTO is well developed. We have various levels and forms
of decision-making that have to be followed. This ensures that issues
brought to the WTO cannot simply be swept away.
The WTO is also unusual in that the totality
of its members participate, as a matter of law, in all of its bodies,
from the Ministerial Conference, which meets at least once every two
years, to the General Council, which functions as the main
decision-making body between these ministerial meetings, not to mention
each of the councils and committees. Although the consensus is a
demanding requirement, it has ensured that the new powers evolving in
today's world find room in the decision-making process. For example,
some 10 years ago the QUAD (US, EC, Japan, Canada) was seen as the core
group where draft decisions had to be tested first. Now the QUAD is dead
and we talk about the G-4 (US, EC, India, Brazil). Moreover, it is not
possible to propose any new rule without testing the waters with
countries like China, South Africa and Indonesia just to name a few of
them.
More importantly perhaps, the WTO has
developed strong and modern enforcement mechanisms. By enforcement
mechanisms, I mean both our transparency-surveillance-monitoring
mechanisms and our binding dispute settlement systems. Let's look first
at the potentially innovative surveillance mechanisms that we have in
place.
The WTO Agreement contains multiple
notification and legislation review exercises by the entire membership
as well as possibilities for cross-notification, whereby a member
notifies the WTO of a measure not notified by an originating member. All
notifications and cross-notifications are reviewed and commented by
members in relevant committees/councils. There is a collective
monitoring process, such as the Trade Policy Review Mechanism (TPRM),
which is a “Peers' Review Process” covering the full range of individual
members' trade policies and practices and their impact on the
functioning of the multilateral trading system. The aim is to achieve a
collective appreciation and evaluation of these policies and practices.
The Trade Policy Review Report also examines the impact on the
multilateral trading system of such policies and practices. The reviews
are set against the background of each country's wider economic and
developmental needs, policies, objectives, and of its external economic
environment. This is again a very innovative process that is evidence of
the level of legal and institutional sophistication of the WTO. It
explains why states, weak and strong, make great use of this forum.
The WTO's formal adjudication of disputes
between members is said to be “the jewel in the Crown” and is definitely
modern and until now unique. It is a compulsory jurisdiction that is
broadly accessible to members. No member may oppose the initiation of a
dispute settlement procedure by another member.. Contrary to what may
happen in other international forums, for example the International
Court of Justice, all WTO members have, by definition, accepted the
compulsory and exclusive jurisdiction of the Dispute Settlement Body for
all matters relating to the WTO agreements.
An important, and in many ways innovative
feature of this system, is the presumption of legal and economic
interest in bringing proceedings. Any member, large or small, trading or
not with the other challenged member, can initiate a dispute settlement
process. In the long and famous world dispute on bananas, the Appellate
Body confirmed that the United States had sufficient interest to bring
proceedings against the European Community, even though, in practical
terms, the Americans did not export bananas to the EC. In other words,
any Member may initiate dispute settlement procedures on the basis of a
claim that another member is not complying with its obligations under
WTO law. Therefore, the responsibility is generated by an objective
“fact” where all members are guardians of the system.
The system can be triggered easily and
quickly. Allegations that trade is affected generally suffices to
formally trigger the regular WTO dispute settlement process through a
simple request for consultations in writing. Procedural steps happen
automatically, within pre-determined time-limits. Panels (the
jurisdiction of first instance) and the Appellate Body (the appeal
stage) are expected to make rapid rulings on any WTO-related grief; they
decide according to law, and rulings are made by independent persons.
Moreover, the Appellate Body functions more or less like a court, which
hears only matters of law. This confirms the essentially legal nature of
the system.
After adjudication, the implementation of
dispute rulings is subject to continuous multilateral monitoring until
full satisfaction of the complainant in cases where a violation has been
found. If rulings are not implemented, the membership must authorize
retaliatory actions — i.e. counter-measures, the level and application
of which remain under WTO multilateral surveillance.
Another unique provision of the DSU is that it
rules out all unilateral measures. Only the WTO can decide whether
members' measures or actions are consistent with WTO rules. In that
sense, the WTO is a rare system that has managed to regulate
counter-measures from powerful states by subjecting such action to prior
approval by the collective membership.
So, the WTO is a sophisticated system for rule
making and for ensuring enforcement of these rules. But this does not
mean that the WTO is hegemonic and does not take into account other
international norms and other international organisations. On the
contrary, the WTO is not more important than other international
organisations, and WTO norms do not necessarily supersede other
international norms. On occasions, the WTO even gives legal value to
norms developed by others and this is recognized in the WTO treaty
itself.
2. The WTO is about trade but it
recognizes the importance of non-trade concerns
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The WTO is of course a “trade” organisation;
it comprises provisions that favour trade opening and discipline trade
restrictions. The basic philosophy of the WTO is that trade opening is
good, and even necessary, to increase people's standards of living and
well-being. But at the same time the GATT, and now the WTO Agreement,
contains “exceptions” to market access obligations. Article XX of the
GATT provides that nothing prevents a member from setting aside market
access obligations when that member decides that considerations other
than those of trade must prevail. This can happen when, for instance, a
member has made commitments in other areas, for example on an
environmental issue, when such an environmental commitment may lead to
market access restrictions.
Moreover, the preamble of the WTO Agreement,
contrary to that of the GATT, explicitly refers to sustainable
development as an objective of the WTO. While it is not yet clear
whether sustainable development has crystallized into a general
principle of law, the reference to such an important non-trade principle
shows that the signatories of the WTO Agreement were, in 1994, fully
aware of the importance and legitimacy of environmental protection as a
goal of national and international policy.
Based on this new preamble, the evolution
brought about by WTO jurisprudence resulted in a new interpretation of
the WTO that recognizes the place of trade in the overall scheme of
states' actions. The WTO now recognizes explicitly that trade is not the
only policy consideration that members can favour and respects the
necessary balance that ought to be maintained between all such policies.
Our Appellate Body has thus managed to put these exception provisions
into operation so as to provide members with the necessary policy space
to ensure that their actions take account of various commitments. The
Appellate Body has done so in establishing a number of principles
including the following ones:
First, WTO members are entitled to determine
their own level of protection for the environment, health and morality,
even if such national standards are above existing international
standards.
Secondly, in the WTO, exceptions referring to
such non-trade concerns are not to be interpreted narrowly; exceptions
should be interpreted according to the ordinary meaning of the non-trade
policy invoked. In this context our Appellate Body has insisted that
exceptions cannot be interpreted and applied so narrowly that they have
no relevant or effective application. There must always be a balance
between WTO market access obligations and the rights of government to
favour policies other than trade.
Thirdly, the Appellate Body has extended the
availability of WTO exceptions that refer to non-WTO concerns in
insisting on the importance of the value protected by this measure and
in insisting that when a measure materially contributes to a legitimate
policy goal a member is entitled to give priority to this other policy
over trade so long as it is acting coherently and consistently and so
long as there is no evidence of protectionism.
So to put it shortly WTO members' trade
restrictions that have been imposed to implement non-trade
considerations, will be able to prevail over WTO market access
obligations so long as they are not protectionist.
In other words, the WTO provisions themselves
recognize the existence of non-WTO norms and other legal systems,
thereby nourishing sustainable coherence within the international legal
order. Moreover, I believe that in leaving members with the necessary
policy space to favour non-WTO concerns, the WTO also recognizes the
expertise and importance of other international organizations. In
summary, the WTO is well aware of the existence of other systems of
norms and that it is not acting alone in the international sphere. And
the WTO does more: in some circumstances it explicitly gives legal value
and weight to such norms.
3. The WTO is open and active with other
actors in the international legal system
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How does the WTO relate to norms of other
legal systems and what is the nature and quality of its relationships
with other international organisations ? In order to answer these
questions , I will briefly discuss how the WTO's provisions operate and
treat other legal norms, including norms developed by other
international organisations. The WTO recognizes the limits of its
jurisdiction and the specialization of other international
organizations. In this sense the WTO helps to build a unified
international approach and reinforces international legal order. Let me
give you a few examples of how our system is not “clinically isolated”
from the rest of international law and how the WTO has been pro-active
in stimulating efforts of international coherence.
The WTO legal relationship with other
intergovernmental institutions
An additional feature of the WTO that confirms
its integration into the international legal order is the legal value
and status it provides to international standards and norms developed in
other fora. For instance, the WTO's Sanitary and Phytosanitary (SPS)
Agreement states that members' measures based on standards developed in
Codex Alimentarius, which is operated jointly by the World Health
Organisation (the WHO) and the Food and Agriculture Organisation (the
FAO) the International Office of Epizootics and the International Plant
Protection Convention are presumed to be compatible with the WTO's
agreement. So, while Codex and others do not by any means legislate in
the normal or full sense, the norms that they produce have a certain
authority in creating a presumption of WTO compatibility when such
international standards are respected. The SPS Agreement thus provides
important incentives for states to base their national standards on, or
conform their national standards to, international standards. Therefore,
WTO members have no choice but to be directly concerned with the work of
Codex! Therefore the WTO encourages members to negotiate norms in other
international fora which they will then implement in the context of the
WTO.
The Technical Barriers to Trade Agreement
states that when a member's national measure is consistent with an
existing international standard, that national measure is presumed not
to be more restrictive than necessary and thus consistent with WTO
rules.
We have thus established, in a manner which I
hope will convince you, that the WTO is neither a power-hungry merchant
ogre nor a Geneva gnome cowering in his lair, and that its place in
current international governance is that of an open-minded participant
ready for dialogue and by now fully integrated in a network of
administrative, legal and political solidarity that is frequently
overlooked.
Political relations of the WTO with other
intergovernmental organisations
Let me describe how in the WTO we have been
politically sensitive to working with other international organisations
and how we actually collaborate with other international organisations.
First, there are a few references to specific
international organisations in the WTO Agreement itself. For instance,
the WTO Agreement calls for improved cooperation between the WTO, the
IMF and the World Bank. In this context, the WTO's DG has a specific
mandate to continue to work to reinforce cooperation between these
specific international organisations.
We have formal cooperation agreements with
UNCTAD and together we have set up the International Trade Centre — the
ITC which helps developing countries with export diversification. In the
area of standards setting, we now have a mechanism — The Standards and
Trade Development Facility — which involves the WTO, World Bank, FAO,
World Health Organization and the World Organization for Animal Health.
Its purpose is to assist developing countries establish and implement
Sanitary and Phytosanitary PS standards to ensure health protection and
facilitate trade expansion.
In addition, a notable programme of
interagency cooperation on technical assistance and capacity building is
the Integrated Framework for LDCs, which involves the WTO, International
Monetary Fund, World Bank, UNCTAD, ITC and UNDP (the United Nations
Development programme). This interagency cooperation is expanding with
the ongoing work on Aid-for-Trade programme, which brings these
organisations together with regional development banks with whom we also
have formal cooperation agreements. In the area of trade and
environment, the WTO and UNEP have entered into a cooperation
arrangement and will soon issue a joint study on Trade and Climate
Change. The WTO has also undertaken research on trade and employment
with the International Labour Organisation (the ILO) with witch it has
published its first joint study last year.
Through the work of its Councils and
Committees, the WTO also maintains extensive institutional relations
with several other international organisations. There are some 75
international organisations that have obtained formal or ad hoc observer
status in WTO bodies. The WTO is also participating as an observer in
many international organisations. Although the extent of such
cooperation varies, coordination between the work of the WTO and that of
other international organisations continues to evolve in a pragmatic
manner.
For example, although there is no formal
agreement between the World Health Organization and the WTO, the WTO has
observer status in the WHO and the WHO has observer status in the SPS
and TBT Committees. The FAO/WHO Joint Codex Alimentarius Commission,
International Plant Protection Convention and the World Organization for
Animal Health have observer status in the SPS Committee, and the WTO
participates as an observer in the meetings of these bodies.
These are just a few examples of our
interactions with other international organisations. But, in practice,
there are many more exchanges that take place amongst secretariats of
international organisations. Cooperation in global economic
policy-making goes much beyond the WTO's formal and specific
arrangements. Indeed, the WTO Secretariat maintains working relations
with almost 200 international organisations in activities ranging from
statistics, research, and standard-setting to technical assistance and
training.
But we also know that we need the other
international actors. There are limits to what trade can do so we all
need to work together.
Recognition that trade opening does not in
itself address the distributional effects between those better off and
worse off resulting from trade
The setting up of an “Aid for Trade” programme
which I just mentioned as a good example of our active collaboration
with other intergovernmental organizations is also about admitting the
limitations of trade and the fact that the WTO alone cannot ensure that
benefits of more open trade will indeed reach the people.
I remain convinced that the WTO's mandate
regarding the opening up of markets constitutes an essential
contribution to development and to the improvement of collective
well-being. It is nevertheless true that the opening up of trade can
deliver real benefits only if it is accompanied by other policies, which
allow for flexibility and job security: education policy, employment
policy, research and innovation policy. Some of these must be
implemented at national level while others are effective only if applied
internationally through the action of specialized agencies: ILO, UNESCO,
WHO … Coherence between the various international public policies — and
they are eminently complementary — is therefore essential.
Harnessing globalization which in my view we
need to do presupposes balanced international cooperation across the
board. The best trade policy cannot alone promote growth and
development. Premature market opening can even destabilize a country's
economy in the absence of certain accompanying policies. This is why
sound macro-economic policies must be supplemented by structural
policies.
Among the structural policies, I will refer
first to good governance practices at national level, without which
corruption and a lack of transparency maximize social inequalities
rather than optimizing collective welfare. A number of international
organizations work towards promoting good governance, including the IMF,
the World Bank, the OECD … But these are domestic policies for which the
WTO has no mandate.
Such action must also be supplemented by
investment policies in order to develop local infrastructure. Here too,
the World Bank, the IMF, the regional development banks and the UN
Economic Commission are there to provide the developing countries with
financial and technical support to promote their production and export
capacities. As to the WTO, it must contribute its own particular
know-how in the area of commercial infrastructure, but we have no rules
on issues like domestic investment policies.
We recognize that the WTO should not
cannot and is not be the centre of the world: its dispute settlement
system is not to enforce non-trade disputes
As I noted earlier, many actors emphasize the
power of the WTO dispute settlement system. But this system itself
recognizes its limitations.
Recently in the context of a dispute between
the US and Mexico related to their disagreements in NAFTA, the Appellate
Body decided that the WTO dispute settlement system cannot be used to
deal with “non-WTO disputes” (this was the Mexico — Soft Drinks). That
dispute was concerned with a complaint by the US that Mexico was
imposing discriminatory taxes against imports of US soft drinks, in
reaction to the US refusal to comply with the dispute settlement
procedures of NAFTA. Mexico attempted to invoke exception provisions of
the GATT. But in fact there was no exception that referred to the
actions or the policy goals pursued by Mexico: Mexico's discriminatory
taxes that were WTO inconsistent were in fact “countermeasures” to force
the United States to respect NAFTA. To do otherwise, said the Appellate
Body, “WTO panels and the Appellate Body would thus become
adjudicators of non-WTO disputes. As we noted earlier, this is not the
function of panels and the Appellate Body as intended by the Dispute
Settlement Understanding of the WTO”.
So the WTO recognizes the right of the WTO
members to set aside some of the WTO obligations for policies listed in
its Article XX but the WTO court and the WTO system will not become the
World judge of the disagreements between states in treaties other than
WTO agreements!
4. The WTO is working with the United
Nations system
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As I wrote in 2004 in a book about
“international democracy”, I am a firm advocate of international
cooperation. I wouldn't dare to say that this is a general principle of
international law! But I recall that international cooperation is one of
the United Nations objectives as stated in Article 1 of the UN Charter.
I believe that efforts of international cooperation are the only way to
ensure the peaceful evolution of international relations and of our
international legal system. But international cooperation is also
crucial to ensuring the legitimacy of the WTO and the effectiveness of
trade rules.
But there are many reasons why the WTO needs
to continue to work with the United Nations. As I mentioned, the WTO's
mantra in favour of trade openness plays a vital role in members' growth
and development, but it's not a panacea for all the challenges of
development, neither is it necessarily easy to accomplish, nor in many
circumstances can it be effective unless it is embedded in a supportive
economic, social and political context and in a coherent multi-faceted
policy framework. Trade opening can only be politically and economically
sustainable if it is complemented by policies which address, at the same
time, capacity problems (whether human, bureaucratic or structural); the
challenges of distribution of the benefits created by freer trade; the
need for sustainable development; the respect of public morals, etc.
This is also about international legal coherence and this is also where
the WTO recognizes that it must work with the UN system.
I am, as WTO DG, personally also quite active
in the CEB — the Chief Executive Board — where heads of all agencies
meet and collaborate under the direction of the Secretary General of the
United Nations, to try to increase the efficiency of their respective
work. We are also very active in the new Food Crisis Task Force set up
by UN Secretary General Ban Ki-Moon because our actions on agriculture
subsidies and tariffs are part of the medium and long term solution to
food shortage. We know that we need to increase agriculture production
in developing countries and one of the reasons why their production and
exports have been discouraged is because of the importance of distorting
subsidies and high tariffs in rich countries. Protectionism in
agriculture is at the core of the current Doha Round of negotiations
which I hope we can complete soon.
As I mentioned before, the WTO makes full use
of its international legal personality and is now collaborating actively
with other international organizations within the UN family. But there
is more and I've said it many times. In setting up a system whereby good
faith norms developed in other fora are presumed to be WTO consistent,
the WTO not only gives due deference to other legal systems but it also
stimulates negotiations in other specialized fora and reinforces the
coherence of our legal order. In this sense, the WTO is an engine, a
motor energizing the international legal order. This is, in my view, the
place and the role of the WTO in the international legal order: a
catalyst for international mutual respect and international cooperation
and also for even more global governance, which I believe is needed if
we want the world we live in to become less violent, be it social,
political, economic or environmental violence.
Conclusion
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The WTO has evolved from the GATT's closure.
State signatories to the GATT wanted to reinforce the status of the
international trading system and provided it with a formal international
organization: the WTO. This international organization is now fully
operational. The legal value and enforcement of those norms adopted by
WTO bodies are matters for debate but the role of the WTO, including as
a forum for negotiations and its powerful dispute settlement mechanism,
confirms the distinctive nature of its legal order.
Today's international legal order will be able
to evolve peacefully only if existing laws evolve through mutual
respect. There is no exception to this rule and the WTO is well aware of
its importance.
Thus, the WTO acts as a vehicle for the
evolution of international law and with other international organisation
works for the creation of a better ordered international community.
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