Self Enforcing Trade: Developing Countries and WTO Dispute Settlement

Citation

Ezeani, E.C. (2010), "Self Enforcing Trade: Developing Countries and WTO Dispute Settlement", Journal of International Trade Law and Policy, Vol. 9 No. 2, pp. 213-215. https://doi.org/10.1108/14770021011054331

Chad P. Bown, a Fellow in Global Economy and Development at the Brookings Institution and an Associate Professor in the Department of Economics and International Business School at Brandeis University in this scholarly work, has clearly identified an area of significance in the trade and development issues surrounding the World Trade Organisation (WTO). He sets out the basis of his eight chapter examination into the relationship between developing countries and the WTO dispute‐settlement mechanism straight away in the introductory pages of the work by emphasising the importance of the role the WTO dispute‐settlement process plays in the international trading arena. He points out that this role is “under appreciated precisely because the institution has prevented dozens of obscure mini trade battles from turning into recognisable major trade wars” (p. 2).

His preoccupation with the WTO and with the development issues arising from the increased developing country participation in global trade (increased with greater participation by developing countries in the WTO) echoes the considerable volume of material both on the subject of the organisation's activities and on the even more popular considerations on how effective participation in the organisation has been for these countries. He, however, endeavours to be more specific on, and at the same time, to provide more detail as to, the relevance of these considerations weighed against the impact of developing country participation in the dispute‐settlement process.

His approach begins by introducing the reader to the general agreement on tariffs and trade, and to the WTO, highlighting the basic principles guiding the organisation – reciprocity, national treatment and the most‐favoured nation treatment. The second chapter on Developing Countries, the WTO Agreements, and Trade Liberalisation forms a springboard for the next two chapters which dwell on the central themes of the work: the WTO dispute settlement, and the activity of developing countries in relation to trade disputes, respectively. Chapter five introduces and explores Bown's reference to “extended litigation process”; the author's designation of a descriptive model adopted to explain the compel nature of the litigation process demanded at WTO dispute‐settlement level. This model deserves further mention for its importance. In the author's setting, where a foreign government implements a new policy that is not only illegal but also reduces an exporting firms market access, Bown identifies six steps (broadly divided into pre‐litigation, litigation and post‐litigation) involved in this self‐enforcement process:

Prelitigation: identify the foreign WTO‐inconsistent policy; estimate the economic benefits of removing the WTO‐inconsistent policy; convince the domestic government to pursue the case at the WTO; litigation: develop and prosecute the legal case; calculate the WTO‐sanctioned economic retaliation threats for arbitration. postlitigation: generate public and political foreign support for policy removal (p. 112).

There is no doubt that economics, law, policy, politics, including many other variables are fundamental to an understanding of how the WTO and its dispute‐settlement mechanism works. Bown points out interestingly, an aspect of the limitations encountered by all WTO members engaged in the dispute‐settlement process – developing and developed country alike – that “access to masterful knowledge of WTO law is a necessary but insufficient condition for exporters” (p. 102). Thus, apart from the ELP model, Bown highlights the involvement of firms and their nexus with certain WTO disputes, deliberately or inadvertently exposing the bigger picture behind the impression that the parties in a WTO dispute settlement being only Member States with an interest in maintaining breached WTO agreements or in pursuing the benefits which have been adversely affected by another Member State's trade activity or policy. By identifying this connection, the author thus points to the commercial interests underlying trade disputes. In particular, he identifies that these interests are significantly by firms who are not merely global brands (in the case of developing countries), but principally, firms who are able to get their governments to enforce their market access.

Chapters six and seven consider the work and the impact of the Advisory Centre on WTO Law set up in 2001, and the influence of non‐governmental organizations (NGOs) with a development focus in the area of WTO enforcement, respectively. In Bown's view, NGOs (though one may be inclined to argue that they are equipped to do so) are not sufficiently empowered to provide critical information on identifying WTO‐inconsistent policy adopted against another country. He, therefore, suggests the creation of a new institution – an Institute for Assessing WTO Commitments (IAWC). While his arguments have considerable bearing, that the failure to identify the exact cause of a country industry losing market access means the affected country is unable to identify the WTO‐inconsistent policy, it is not altogether certain that a new institution albeit with a specific monitoring objective can have greater success than the current action demanding increased transparency across the WTO membership in matters relating to trade policy making, and the Trade Policy Review Mechanism, the relevance of both of which are acknowledged in the work.

That the new institution given its proposed objective of providing information on current and potential WTO violations should be politically independent, funded with private donors and staffed by experts in those areas that can guarantee effective use of the ELP model notably, economics, law, political science underscores the limitations in Bown's proposals – that what is needed is not something new; but a restructure of the rules‐based system and its dispute‐settlement mechanism, as it were. A close consideration of the proposed IAWC will point one to the incontrovertible fact: that the main indices required are only readily available in developed countries who have the experts, the private donors and the NGOs to “equip” an IAWC.

The problems of developing countries in WTO dispute settlement in actual fact have their roots in the unbalanced trading capabilities of these countries – goods of limited globally‐competitive value, small scale firms, limited economic activity and a non‐diversified sector, poor government control, limited indigenous expertise on WTO‐related matters, and the general poor socio‐economic conditions in these countries. These factors (and more) make it not only difficult to establish an enabling environment for trade at global market level, but also point to the absence of the necessary environment for informed decision making on both trade policies to be adopted, and which trade policies by a foreign government should be challenged and how.

The fact that a significant number of developing countries that have taken up WTO membership are previous colonies or long trading partners of their developed country counterparts in the organisation, and that a number of them are also recipients of aid and foreign technical assistance including under both WTO and non‐WTO agreements, also impacts considerably on the willingness of these countries for a whole‐hearted pursuit of their trading concerns (i.e. where they have a significant productive capacity enough to encourage recourse to dispute‐settlement proceedings) at WTO dispute settlement.

All of these factors are rightly at the crux of every developing country‐WTO consideration including the present one. Bown's work, by eschewing the socio‐economic considerations at the core of the developing country argument – that the organisation and its agreements are skewered (innocently or deliberately) in favour of countries with a stronger economic base, greater productive capacity and simply richer, and relying on the purely academic question of identifying the difficulty in utilising the WTO dispute‐settlement mechanism, unfortunately concentrates on the symptomatic difficulty of developing country participation in the WTO.

To the extent that the work proffers solutions for a procedural defect in the developing country access to the WTO dispute‐settlement mechanism, Bown's work like many others, stands as a point of reference. But given its limitations as briefly highlighted above, does the book in real and concrete terms, actually address the question of how developing countries can make meaningful gains out of their WTO membership?