The WTO Dispute Settlement Understanding: Less Is More

Abstract

The Agreement Establishing the World Trade Organization (WTO Agreement) dramatically expands and improves the trade rules of the predecessor General Agreement on Tariffs and Trade (GATT), thereby facilitating trade, economic growth and jobs in the increasingly interdependent global economy.Supporters of trade liberalization generally welcome these new rules, including in particular the dramatically improved procedures for settling disputes.1 However, some environmental and labor groups have expressed concerns as to whether the new dispute settlement rules subordinate or diminish non-trade-policy objectives.These concerns have echoed loudly in sound-bite denunciations of the WTO by some American politicians advocating economic nationalism.Some claim that faceless, unelected, unaccountable bureaucrats in Geneva have usurped U.S. sovereignty by writing rules for Americans that should be determined only by Americans.In his campaign for the presidency, for example, Patrick Buchanan took up the chorus most recendy popularized by Ross Perot in his opposition in 1992 to the North American Free Trade Agreement.Buchanan's success in early primaries provoked numerous polls and extensive commentary analyzing whether support for trade liberalization had diminished.In fact, such support has diminished among some key constituencies.2 Many environmental groups, for example, were aghast when GATT panels ruled that access to die U.S. market could not be used consistendy with GATT obligations as leverage for some U.S. environmental objectives.Specifically, these panels ruled that U.S. primary boycotts of tuna imports to punish countries that use porpoise-unfriendly fishing mediods, and U.S. secondary boycotts to punish third countries that do not likewise employ such primary boycotts, are inconsistent with the GATT prohibition on embargoes and are not justified under limited GATT exceptions.Another powerful constituency that grew concerned about the application of GATT rules and rulings to their interests were state and local governments.A series of GATT panels examined several complaints about the tax measures of several contracting parties affecting imports of alcoholic beverages.Canada filed such a complaint against the United States focused not on federal, but on state and local government tax measures, some of which discriminated against imports in contravention of obligations under the GATT binding on subfederal as well as federal authorities.These rulings had revenue implications for the states concerned and provoked widespread concern among die states about the application of the GATT to subfederal governments.In view of the heat, if not light, being generated by economic nationalists in general, and the specific concerns resulting from some GATT dispute setdement rulings in particular, a review of WTO/GATT dispute settlement rules is overdue.Like the GATT rules that preceded them, the WTO rules are simply not "binding" in the traditional

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