- The Washington Times - Tuesday, January 1, 2002

The rule of law has 2000 years worth of allure in the West and plenty of appeal elsewhere in the world. So, following the ravages of war, like-minded nations in North America and Europe set up the colorlessly named General Agreement on Tariffs and Trade (GATT) in 1946 to lend a predictable legal structure to international commerce and began reducing sky-high tariffs that had deepened a worldwide depression a decade earlier. But, unlike domestic laws that have police forces and judges lurking behind them, the GATT worked on the honor system, because its clients were proud sovereign nations, not citizens. If a country jacked up a tariff beyond what it had promised in negotiations, the rest of the world could blow off steam but not much else.
Until 1995. Taking the jump that the war generation did not, diplomats from all over the world set up a system of binding legal arbitration to settle trade disputes, one in which sovereign nations, looking a bit like citizens under global governance, would pay the price for breaking promises. Their baby's name had a little more jazz than its predecessor: the World Trade Organization (WTO).
In those heady times, before anti-globalization protests and deep mistrust of free trade in the United States, a grand edifice for world trade seemed possible. In the eyes of Claude E. Barfield, a scholar at the American Enterprise Institute, a Washington think tank, this dream has collided with reality after six short years. "The WTO is overextended and in danger of losing authority and legitimacy as the arbiter of trade disputes among the world's major trading nations," Mr. Barfield writes in his new book, "Free Trade, Sovereignty, Democracy: The Future of the World Trade Organization."
But the problem goes deeper than the title suggests. Mr. Barfield is really highlighting the limits of law in an international setting. Sovereign nations, for all the talk of globalization and an interdependent world, still prefer to dance to their own tunes. The WTO system for resolving disputes that Mr. Barfield has analyzed is a legal procedure for determining whether countries have broken the commitments they made. A country that feels wronged can ask for a tribunal to hear its complaint. Losing nations must either comply with the agreement or submit to trade sanctions equal in commercial value to the violation they have committed.
Strictly speaking, the WTO system does not infringe on American sovereignty, since no WTO pronouncement can change U.S. law, still the exclusive domain of Congress. But it does dramatically restrict U.S. freedom of action by ratcheting up the pressure not to renege on past promises, no matter the whims of Congress.
Because trade agreements have become much more complex in the last 10 years, tribunal decisions, which can run into the hundreds of pages, hit on a myriad of issues: patent registration procedures, hormone-fed beef, banana import rules, fishing nets that harm sea turtles, antitrust enforcement in the photographic film market and environmental regulations for gasoline. But the WTO system's legally neat and clean solutions that appeal to lawyers, Mr. Barfield writes, also grate on sovereign nations whose citizens take a keener interest in trade every day. His argument shows admirable chutzpah, especially considering that his main audience is trade specialists who are usually also lawyers.
To reach legally "correct" answers to trade disputes, WTO tribunals, on unfamiliar terrain, must feel their way by creating new legal standards, tests and thresholds more or less out of whole cloth. The panels have effectively begun to make law affecting sovereign governments that thought the WTO system would enforce only those rules which they helped write. A global enforcement mechanism is one thing; a global legislature is another matter entirely.
One of the most disturbing conclusions Mr. Barfield reaches is that the hyper-legalization of the WTO process hits poorer countries where it hurts. Making nations equal before WTO tribunals was supposed to eliminate the law of the jungle. But more trade-law expertise lives in Washington, Tokyo and Brussels, headquarters of the 15-nation European Union, than in the rest of the world combined. Some nations, it turns out, are more equal than others.
Many of Mr. Barfield's prescriptions make sense. He suggests allowing a substantial minority of WTO members set aside a tribunal decision, and ways to promote mediation rather than litigation. Though he never says so outright, they harken back to the pre-1995 trading system, when politicians had a greater role in shaping how the trading system functioned.
More politicians crawling over the WTO may not satisfy the cravings of precision-minded trade lawyers who dominate the ranks of the Washington trade establishment. But political assent, in the person of elected officials, is what confers legitimacy on the law in the first place.

Carter Dougherty is an international trade reporter on the business desk of The Washington Times.


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