Transforming WTO to Serve as ICSID-Like Function for FTA Disputes in a Decentralized Trade Order (Presentation Slides)
15 Pages Posted: 14 Feb 2019 Last revised: 26 Feb 2019
Date Written: January 9, 2019
WTO’s stagnation in the Doha Round negotiation has proven its declining role as a forum for new rule creation. The systemic implication might be that the WTO could only operate on outmoded laws, which will not be able to address the needs of business caused by new trade problems. However, in contrast, within Free Trade Agreements (FTAs), various new trade rules have been created and expanded, which go far beyond the scope of the WTO. For instance, in the CPTPP and CETA, rules on investment, environment, labor, competition, e-commerce and state enterprises are established. As FTAs proliferate around the world, the shifting of paradigm has also changed the profile of international trade. The WTO currently faces its systemic risks from the U.S.-China trade tension and Appellate Body nominations. Obviously, what will be the future role for the WTO to play in the decentralization of governance would not only relate to the existence of the WTO, but also mark a turning point for future world trade order.
In the view of the writer, the ICSID-BITs model in international investment law provides an insightful approach for international trade. As practiced, the investment law regime is generally evolved through bifurcation, without a central authority. On the one hand, foreign investments are protected through substantive rules in various BITs. On the other hand, most investor-state disputes under BITs are resolved in light of the ICSID arbitral proceedings. Through opt-in model contained in BITs and foreign investors’ wider use, the ICSID has successfully sustained and facilitated the development of BITs. Modelled on investment law, the writer suggests that the future development of trade law run on the shared responsibilities by important FTAs and the WTO. That is, FTAs could serve as the main platform for creating new substantive trade rules in response to new economic realities. The WTO, through its effective dispute settlement mechanism, could function as ICSID-like forum, giving its robust back-up to the FTAs and FTA parties who are also WTO members. In this sense, it is suggested that WTO should transform itself to be more inclusive, flexible and accessible to all FTA-related disputes.
Keywords: WTO, FTA, ICSID, BITs, Dispute Settlement
Suggested Citation: Suggested Citation