The Domain of WTO Dispute Resolution

Abstract:     
While trade diplomats and scholars have expressed pride at the Uruguay Round achievement of more binding and more "law-oriented" dispute resolution, the same group and a variety of NGO and other commentators question the jurisdictional scope of dispute resolution. After all, should these small tribunals, lacking direct democratic legitimacy, determine profound issues confronting the international trading community, such as the relationship between trade values and environmental values? Many voices, including this author's, have called for greater international legislation (specific treaty-making) in these important fields. This article is intended to outline a more realistic and nuanced view, based on law and economics analytical techniques. It is intended to suggest the reasons why dispute resolution could be the appropriate place to determine these issues. Conversely, it is intended to suggest a way to determine or predict when these issues might better be subjected to more specific legislative action. This article seeks to begin to delineate the role of dispute resolution in the international trade law system.

In order to do so, I first examine the function and vocation of WTO dispute resolution. I explore the discontinuity between the domain of WTO dispute resolution and the body of general international law. The disparity between the positive law dispute resolution system of the WTO and the more political, natural law style of dispute resolution available in connection with most other forms of international law raises jurisprudential and practical concern. Second, I examine two related analytical techniques of law and economics to attempt to suggest the reasons for the assignment of competences to WTO dispute resolution, as opposed to WTO legislation (treaty- making). These two techniques are (i) incomplete contracts, and (ii) rules and standards. Finally, I apply these techniques to two important examples in the WTO legal system: (a) the kind of trade and environment conflict exemplified by the recent Shrimp/Turtle decision of the Appellate Body, and (b) the problem of non-violation nullification or impairment, addressed in the recent Film panel decision.

JEL Classifications: F1, K3, K4

Working Paper Series