Bronckers 2001

Journal of International Economic Law (2001) 41–65  Oxford University Press
    ?

Marco C. E. J. Bronckers*

Because of its unique characteristics (package deals; effective dispute
resolution), the WTO has the potential to become a key pillar of global gov-
ernance. In principle, it could very well take on additional duties relating to
the environment, labour, investment, competition law, etc. Yet in its present
form, the WTO cannot responsibly assume a larger mandate. A number of
fundamental, institutional changes will first have to be made. Trade and other
societal values incorporated in the WTO framework ought to be recognized
as equals; a liberal trade bias to interpret each and every rule in the WTO
package is to be excluded. Co-operation with specialized international organ-
izations, and NGOs, to prepare and implement new norms must intensify.
To a greater extent the WTO ought to operate as an open, rather than a
self-contained, regime under public international law. It is up to its members,
the now some 140 countries including the European Union, to enable the
WTO to take up this challenge. If national governments do so, and thereby
take the need for global governance seriously, the WTO deserves a better
name: the World Economic Organization, the WEO.

After the debacle of the WTO Ministerial in Seattle in December 1999, and
subsequent demonstrations against the IMF and the World Bank, (most
recently in Prague in September 2000), clearly a rethink of the functioning
of the present international institutions is in order. Any such exercise must
take into account the realities of today’s globalizing world. Whether one likes
it or not, more and more issues can no longer be resolved domestically –
and, if domestic measures are taken, they easily create conflicts with other
jurisdictions.
Examples are manifold: health measures taken in one country can pro-
voke anger in another country, even if these health measures do not
discriminate between local and foreign goods (an EC ban on hormone-
* Professor of Law, University of Leiden; partner, Stibbe, Brussels. Correspondence address: Stibbe,
Henri Wafelaertsstraat 47–51, 1060 Brussels, Belgium. E-mail: M.C.E.J.Bronckers@law.leidenu-
niv.nl. The author has benefited from discussions with Petros Mavroidis, Reinhard Quick, Natalie
McNelis, Axel Desmedt, and Kim Van der Borght. They are entitled to the usual disclaimer.
42 Marco C. E. J. Bronckers
treated beef,1 or a US ban on certain blood plasma2). Fisheries practices

of one country create environmental or economic concerns in other coun-
tries.3 Stock exchange regulations issued by one country can have far-
reaching implications for foreign companies listed there and elsewhere.4
Mergers between two companies located in one country can be prohibited
by an antitrust authority in another jurisdiction, even if their trade in
that jurisdiction represents a relatively small size of their total world-wide
turnover.5
Interestingly, even the severest critics of the present-day institutions see
a need for global governance. They believe that international rules and
1
The Hormones dispute between the EC and the US being a prominent example. On the resolution
of this dispute by the WTO see Reinhard Quick and Andreas Blüthner, ‘Has the Appellate Body
Erred? An Appraisal and Criticism of the Ruling in the WTO Hormones Case’, 2(4) J Int’l Econ L
603 (1999).
2
In early 2000, German newspapers reported that a new rule of the US Food and Drug Administra-
tion (‘FDA’) created considerable unrest amongst international pharmaceutical companies, as well
as the German Red Cross, which annually sells more than 800,000 litres of blood plasma to these
companies. According to this rule, adopted out of concern for the ‘Mad Cow Disease’ (BSE) that
had erupted in the UK, blood and blood preparations from donors who had spent more than six
months in the UK between 1980 and 1986 could no longer be accepted in the United States. This
restriction had immediate effect on blood donations in Germany (and the income of the German
Red Cross), as this blood plasma was sold on to pharmaceutical companies for the production of
blood preparations, which they traded world-wide. According to German scientists, the health risk
posed by the targeted blood transfers was ‘theoretical’, and the FDA rule lacked scientific justifica-
tion. Nevertheless, Canada, Australia, and Japan followed the FDA-example ‘Waren Sie in England?
Und wenn ja, wann und wie lange?’, Frankfurter Allgemeine Zeitung (31 January 2000), at 14.
3
The Tuna/Dolphin and Shrimp/Turtle disputes litigated in the GATT/WTO concerning US envir-
onmental measures are obviously well known. On the latter dispute see Arthur E. Appleton, ‘Shrimp/
Turtle: Untangling the Nets’, 2 (3) J Int’l Econ L 477 (1999). Other environmental measures may
also become the subject of WTO scrutiny. For example, following an investigation at the request of
the Spanish fishing industry under the Trade Barriers Regulation (the EC equivalent of US Section
301), the EC Commission formally decided in April 2000 to start WTO dispute settlement proceed-
ings against Chilean conservation measures regarding swordfish. See OJ 2000, L 96/67.
4
On 10 August 2000, the US Securities and Exchange Commission (‘SEC’) adopted the so-called
Fair Disclosure rule, circumscribing the information listed companies can give to selected indi-
viduals, such as securities analysts or institutional investors. When the SEC proposed this rule, it
raised deep concerns amongst foreign companies listed in the United States, as the SEC rules were
regarded as very stringent, when compared for instance to the equivalent rules in Europe. Foreign
companies felt that any obligation they had to comply with in the United States would necessarily
impact on their disclosure of information in their home jurisdiction and elsewhere. The rules finally
adopted by the SEC formally exempt foreign companies. Yet in practice many advisers counsel that
foreign companies will have to adhere to the same standards. See Rosilla Brambilla, ‘An End to
Selective Disclosure’, 5 Global Counsel 75 (September 2000), at 76.
5
E.g., EC Commission Decision IV/M.619, OJ 1997 L11/30, blocking the Gencor/Lonhro merger
(apparently the EC consumed only 20 percent of the platinum mined in South Africa and sold
world-wide by the companies concerned); upheld on appeal by the Court of First Instance (Case
T-102/96), ECR 1999 II-000 (judgment of 25 March 1999). See also the much-publicized threat of
the EC Commission to block the Boeing/McDouglas Donnell merger. This merger squeezed through
only at the last minute after the parties made substantial concessions to the EC authorities, which
had also come under pressure from the US Government; EC Commission Decision IV/M.877, OJ
1997 L336/16.
More Power to the WTO? 43
institutions are needed to reconcile these conflicting national competencies

and to address global issues.6 Yet they argue that the mandate of the WTO,
for example, ought to be pruned back. They see this institution as being
primarily concerned with commercial interests, lacking the expertise and sens-
itivity to deal with other issues like the environment or labour standards, and
suffering from a democratic deficit because of a lack of transparency and an
unwillingness to interact with civil society. They believe that other, existing
international organizations, like the International Labour Organization (ILO),
or the World Intellectual Property Organization (WIPO) ought to be ‘re-
powered’, and new international organizations ought to be created to deal
with environmental issues.7
Another concern is that many developing countries are disappointed in the
results they have obtained so far from their WTO membership. A UN study
made public in the summer of 2000 went so far as to characterize the WTO
as a ‘nightmare’ for developing countries.8 This study came under strong
attack from the WTO Secretariat,9 which released a study at about the same
time strongly arguing that free trade helps reduce poverty.10 Nevertheless,
many in the developing world, even if not subscribing to the nightmare scen-
ario presented in the UN study, believe that the existing WTO agreements
ought to first be implemented or revised to their benefit, before they are will-
ing to grant the WTO a broader mandate. Furthermore, they seek more active
involvement in the WTO decision-making process where too often, they feel,
they have been confronted with a fait accompli concocted by the developed
world.
Governments who supposedly think more positively about the WTO are
reluctant to expand the WTO’s mandate as well. For example, the United
States, a founding member of the WTO and its predecessor the GATT, has
not shown great enthusiasm for EC initiatives to have a global round of WTO
negotiations, including such new issues as the environment or competition
law. This may be explained by a wider perception that the US Government
is becoming increasingly reluctant to participate in international institutions
and rule-making, in the apparent belief that it is strong enough to go it
6
E.g., ‘The Foreign Policy Interview: Lori’s War’, Foreign Policy 28 (118, Spring 2000), at 37–40
(interview with Lori Wallach, Director of Public Citizen’s Global Trade Watch, one of the NGOs
claiming responsibility for disrupting the WTO’s Ministerial meeting in Seattle).
7
Id (also at 47).
8
ECOSOC, Sub-Committee on the Promotion and Protection of Human Rights, ‘The Realization of
Economic, Social and Cultural Rights: Globalization and Its impact on the Full Enjoyment of
Human Rights’, E/CN.4/Sub.2/2000/13 (15 June 2000) (a preliminary report by J. Olaka-Onyango
and Deepika Udagama, approved by the Sub-Committee in August 2000), at §15.
9
WTO protests to UN over ‘nightmare’ report, Financial Times (25 August 2000), at 6 (top WTO
officials pointing out that this UN study clashed with views expressed by UN Secretary-General Kofi
Annan, and that its authors had not sought contact with the WTO).
10
WTO Secretariat, Trade, Income Disparity and Poverty (June 2000) (a report prepared by Dan Ben-
David, Håkan Nordström and Alan Winters).
alone.11 Yet even when US officials concede that some economic issues are
ripe for global governance, they look towards new international institutions
rather than the WTO. This is illustrated by a recent turnaround in US policy
on competition law. Having traditionally resisted the inclusion of competition
rules in a multilateral agreement, be it the ITO12 or the WTO, very recently
top officials in the US administration have floated proposals for an interna-
tional institution dealing with competition law issues. This institution might,
amongst others, allocate cases to one amongst several competing competition
law authorities. The US officials were quick to point out that they did not
want the WTO to handle this issue, but rather an entirely new institution
independent from the WTO and other international organizations.13
Even the EU, the most vocal proponent of expanding the role of the WTO,
asserts that its core function must remain the creation of rules and enforce-
ment regarding market access, and that additional responsibilities must be
trade-related.14
In this contribution I will submit a somewhat different view. Because of its
unique characteristics, the WTO has the potential to become a key pillar of
global governance, with added duties for environmental, labour, investment,
competition law issues, etc. The WTO ought not address such issues only
from the perspective of creating market access, but consider each of them on
their own merits. Yet, in my view, the WTO in its present form cannot
responsibly assume a larger mandate. A number of fundamental, institutional
changes will have to be agreed on by its member countries before the WTO
can realize its full potential.
.     

Essentially, the WTO has two attractions if one compares it with other inter-
national organizations.
First, the WTO is not a ‘mono-culture’. It is not like the World Tourism
Organization, or the World Intellectual Property Organization. It is an organ-
ization that already deals with quite a number of issues and sectors, ranging
11
‘Engage and Prosper’, The Economist (5 August 2000), at 20–21 (‘The world and the United States
need each other more than either of them realises’).
12
The chapter on competition law in the ITO Treaty apparently constituted a major stumbling block
in the US Congress in the early 1950s, which torpedoed this organization. The International Trade
Organization would have completed the Bretton Woods system, with the IMF and the World Bank,
created after the Second World War. See Bernard Hoekman and Petros C. Mavroidis, ‘Competition,
Competition Policy and the GATT’, 17 World Economy 121 (1994), at 137–39.
13
E.g., EU/United States, Agence Europe (15 September 2000), at 8 (reporting on a speech by Joel
Klein, Assistant Attorney-General, responsible for antitrust law enforcement, at the Department of
Justice, and comments made by Robert Pitofsky, Chairman of the Federal Trade Commission).
14
EU, ‘Prospects for the New Round’, http://europa.eu.int/comm/trade/2000 round/prosp nr.htm vis-
ited 10 October 2000). The EU presented this paper to the WTO General Council on 12 October
2000.
from agriculture to patents to telecommunications. This makes it possible

within the WTO to break deadlocks where other organizations have failed,
because here governments can make package deals. The classic example is
the agreement reached in the WTO on intellectual property protection.
Where the World Intellectual Property Organization had failed to make pro-
gress for many years in the development of new norms, the negotiations lead-
ing up to the establishment of the WTO succeeded in large part because
disagreeing governments were able to make ‘trades’ involving other sectors.15
One looks towards the WTO for other breakthroughs as well. For example,
when recently the merger between British Airways and KLM fell through,
some analysts attributed this to the system of international traffic rights estab-
lished at the end of the second world war. They called for change, pointing
out that in other global industries companies have been able to pursue consol-
idation in order to cut costs and increase efficiency. While the vested interests
preventing reform in international aviation are enormous, the WTO was seen
as one arena where progress could eventually be made.16
Secondly, what is also unusual about the WTO if one compares it to other
international organizations, is dispute settlement. Only a few international
organizations have compulsory dispute settlement procedures.17 The WTO is
the only such organization with a proven track record of effective dispute
settlement. Since its inception in 1995, about 200 disputes have been raised
under the WTO Dispute Settlement Understanding. If they are not settled
amicably, these disputes are litigated rapidly, and can go through two
instances within eighteen months.18 If the losing government does not comply
with a WTO ruling within a prescribed, short time period, it exposes its
exports to retaliatory measures from the winning country.19
These characteristics make the WTO attractive for handling more issues
with global impact. To have an international organization with potential to
grow is, in itself, good news. There is a ‘deficit in international governance’,
as EC Commissioner for Trade, Pascal Lamy, has rightly pointed out.20 Yet
there are real concerns about the present functioning of the WTO.
15
See Bronckers, A Cross-Section of WTO Law (London: Cameron May 2000), ch 3 (‘The Impact of
TRIPS on Developing Countries’). This volume will hereafter be referred to as Cross-Section.
16
Editorial, ‘Merger Grounded’, Financial Times (25 September 2000), at 16.
17
One such organization is the Law of the Sea Convention. See Part XV UNCLOS http://www.un.org/
Depts/los/unclos/closindx.htm The UNCLOS compulsory proceedings are subject to limitations,
according to at least one recent arbitral award. See, below, n 69.
18
For a practised analysis of most of the issues encountered in WTO litigation see David Palmeter
and Petros C. Mavroidis, Dispute Settlement in the World Trade Organization (The Hague: Kluwer
International 1999).
19
At the time of this writing, more than $300 million of EC exports are subject to extra tariffs of 100
percent imposed by the United States in retaliation against the tardy implementation by the EC of
the WTO rulings in the Bananas and Hormones cases.
20
Interview de Pascal Lamy dans ‘Les Echos’, no 18157 du 22 Mai 2000, http://europa.eu.int/comm/
trade/speeches articles/intla01 fr.htm (visited 10 October 2000).
.     

By now, the range of institutional issues that needs to be reviewed in the
WTO is fairly well mapped out. There is a need for more internal and external
transparency. Decision-making needs to be improved.21 Revision of dispute
settlement procedures is overdue.22 Substantively, and institutionally, the
position of developing countries in the WTO requires special attention.23 Yet
it is not my intention here to give a comprehensive overview of WTO reform.
This contribution presents a selection of issues which I consider to be crit-
ical, yet underexposed. Developing countries, NGOs, and other stakeholders
have a fundamental problem with the inclusion of non-trade issues in the
WTO, such as environmental or labour issues. They are concerned that any
WTO agreement on these issues is bound to be interpreted with a liberal
trade bias. They also believe that other, existing international organizations
are better equipped to lay the groundwork and formulate policy options out-
side trade matters. These points are well taken. If the WTO is to develop into
a more encompassing organization, the respect it has for values other than
liberal trade must be clarified and fortified. In addition, while the WTO has
certain advantages to conclude and enforce international agreements, it ought
to take the valuable input of other organizations on board in the preparation
and implementation of new norms. But there is no reason to think that the
WTO could not do this. And while there is decidedly room for improvement,
the WTO has already done so to some extent.
A. Internal coexistence
To begin with, the relationship between the two liberal trade agreements of
the WTO, the GATT/GATS, and other WTO agreements has to be clarified.
This question has already proven to be somewhat controversial with respect
to the third Agreement presently included in the WTO framework: the
21
E.g., I. Garcia Bercero, ‘Functioning of the WTO System: Elements for Possible Institutional
Reform’, 6(4) International Trade Law and Regulation 103–15 (2000); Sylvia Ostry, ‘WTO: Institu-
tional Design for Better Governance’, paper presented in June 2000 at Harvard University, http://
www.ksg.harvard.edu/cbg/trade/ostry.htm (visited 13 October 2000); Oxfam, ‘Institutional Reform
of the WTO’, March 2000, http://www.oxfam.org.uk/policy/papers/wto7.htm (visited 13 October
2000).
22
For a series of incremental, sensible proposals to improve the WTO litigation process see Jacques
Bourgeois, ‘Some Reflections on the WTO Dispute Settlement System from a Practitioner’s Per-
spective’, 4(1) J Int’l Econ L 145–55 (2001). That more attention should also be paid to the pre-
litigation stage has been forcefully argued by Marc L. Busch, ‘Democracy, Consultation and the
Paneling of Disputes under GATT’, 44(4) Journal of Conflict Resolution 425–46 (August 2000).
23
The journal The World Economy devoted an entire issue to this theme, edited by Bernard Hoekman:
‘Developing Countries and the Next Round of WTO Negotiations’, 23(4) The World Economy
431–611 (April 2000), with various significant contributions. See also John Whalley, ‘Special and
Differential Treatment in the Millennium Round’, 22(8) The World Economy 1065–93 (November
1999).
TRIPS Agreement. This Agreement establishes minimum standards of pro-

tection for intellectual property rights such as patents, trademarks, copyrights,
and others. Whenever a right holder exercises his or her intellectual property
rights, (as recognized in the TRIPS Agreement), to prohibit the sale of ‘pir-
ated’ or infringing goods before a national court or through customs authorit-
ies,24 trade is restricted. From this perspective, there is tension between the
TRIPS Agreement and the WTO’s liberal trade agreements. Yet this tension
is more apparent than real, as both of these liberal trade agreements recognize
public policy exceptions to their principles, for instance for the protection of
intellectual property.25 The good thing about the TRIPS Agreement is that
governments have weighed the relative benefits of intellectual property rights
and liberal trade in more detail, and struck a balance when fleshing out these
rights in the WTO framework.
It turns out though, that all is not yet well in WTO-land where intellectual
property is concerned. The TRIPS Agreement left one important issue expli-
citly unresolved: how one is to deal with parallel imports. Traders see an
incentive for parallel imports when the holder of, say, a patent right decides
to sell his pharmaceuticals at a lower price in country X than in country Y.
In those circumstances, a trader might buy a batch of pharmaceuticals in
country X and sell them at a lower price than the patent holder in country Y.
The price-decreasing effect, and loss of sales caused by these parallel imports,
will obviously upset the patent holder. The legal question then is: can the
patent holder block the sales of the parallel imports in country Y? The TRIPS
negotiators could not reach agreement on this issue, and concluded that this
issue ought not be resolved through WTO dispute settlement proceedings on
the basis of the TRIPS Agreement.26 Because they worded this agreement to
disagree slightly ambiguously, and because the Marrakesh Agreement27 does
not clearly establish the relationship between the different WTO Agreements,
a grand debate has sprung up. Could this question not be decided through
WTO litigation after all, on the basis of the GATT Agreement? And if it were
so litigated, should parallel imports not be allowed, given the GATT’s (and,
so it is alleged, WTO’s) overarching principle of trade liberalization?
In this debate I have argued, first, on legal grounds, that this issue could
not be litigated under the GATT Agreement. One of my arguments was that
24
Both actions, as well as other enforcement measures, are envisaged in Part III of the TRIPS Agree-
ment. See generally Marco Bronckers, Feer Verkade, and Natalie McNelis, A Practical Guide to the
Enforcement Rules of the TRIPS Agreement (Luxemburg: EC Commission Publication Office, 2000).
25
See Article XX(d) GATT and, more implicitly, Article XIV GATS.
26
See Article 6 TRIPS.
27
This is the basic WTO Agreement, setting forth the various institutional arrangements for the WTO.
The GATT, GATS, TRIPS, DSU and other agreements are technically speaking ‘Annexes’ to the
Marrakesh Agreement. The classic introduction to the WTO system of agreements is John H. Jack-
son, The World Trading System (Cambridge: MIT Press, 2d ed, 1997).
the TRIPS Agreement struck a new balance between intellectual property

and liberal trade principles. Reverting to the GATT Agreement would
undo this balance. I rejected the notion that the interpretation of all
WTO rules would somehow be subject to an overarching principle of trade
liberalization. If the TRIPS negotiators felt that no agreement could be
reached on the issue of parallel imports, and decided they did not want a
‘judge-made’ solution, then this should be the end of the story.28 Second,
I have argued, on policy grounds, that such a fundamental question as to
the relationship between different WTO Agreements ought not be made
by WTO tribunals. This is a political decision to be taken by the member
governments of the WTO.29
I submit that these conclusions, drawn in connection with the TRIPS
Agreement, can help to design the relationship between the GATT and
GATS Agreements on the one hand,30 and future WTO agreements on issues
like the environment, labour or competition law on the other. Once incorpor-
ated into the WTO framework, the substance of each of these agreements
ought to be interpreted on its own terms. This will clarify their meaning and
promote legal certainty.
Elsewhere, for instance, I have illustrated that it might make quite a differ-
ence if one would interpret a WTO agreement on competition law in terms
of competition law proper, or against an ‘overarching’ principle of trade lib-
eralization.31 WTO panels as well have already had occasion to distinguish
between competition law and trade law approaches.32
In other words, I recommend that each of the WTO agreements be co-
equal. Their approach may differ, but this does not mean that these agree-
ments could not coexist in the WTO, contribute to overall human welfare,
and be enforced through the WTO’s integrated system of dispute
28
Bronckers, Cross-Section, above n 15, at ch 4 (‘The Exhaustion of Patent Rights under WTO Law’) –
with ample references to opposing viewpoints.
29
Bronckers, Cross-Section, above n 15, at ch 9 (‘Better Rules for a New Millennium: A Warning
against Undemocratic Developments in the WTO’).
30
For good measure, I note that the Appellate Body has decided that the relationship of these two
agreements is very close, and that they can be applied simultaneously to the same fact situation. See
WTO Appellate Body Report, European Communities – Regime for the Importation, Sale and Distribution
of Bananas, adopted 25 September 1997, WT/DS27/AB/R, at para 221; see also WTO Appellate
Body Report, Canada – Certain Measures Concerning Periodicals, adopted 30 July 1997, WT/DS31/
AB/R, at 21. Given that these two WTO Agreements share two very similar objectives, this approach
is sensible.
31
Bronckers, ‘The WTO Reference Paper on Telecommunications: A Model for WTO Competition
Law?’, in Marco Bronckers and Reinhard Quick (eds), New Directions in International Economic Law:
Essays in Honour of John H. Jackson (The Hague: Kluwer International 2000), at 371–89. This
volume of essays will hereafter be referred to as New Directions.
32
Thus, panels have defined markets more broadly in trade than in competition law. In their view,
trade law addresses the ‘potentiality to compete’, whereas competition law is designed to protect
‘the actual mechanisms of competition’. WTO panel, Korea – Taxes on Alcoholic Beverages, WT/
DS75/R, WT/DS84/R, dated 17 September 1998, at para 10.81 (confirmed on appeal). See also
WTO panel, Chile – Taxes on Alcoholic Beverages, WT/DS/87/R, WT/DS/110/R, dated 15 June 1999,
at para 7.87 (confirmed, and modified on other grounds, on appeal).
settlement.33 Although the preamble of the Marrakesh Agreement is already

broad enough to encompass a variety of instruments leading to an improve-
ment of ‘standards of living’, it is advisable to enshrine this principle of coex-
istence explicitly in an amended text. Otherwise, inventive lawyers will con-
tinue to ‘find’ principles in the WTO package that would put trade
liberalization at the top of the list.34
B. External co-operation
Furthermore, whenever possible, any WTO agreement on new issues ought
to be prepared by international organizations having a particular expertise in
this area. Labour standards can be, and have already been, prepared by the
ILO, for instance. As intellectual property standards presently incorporated
in the WTO were largely derived from treaties negotiated within the frame-
work of the WIPO, so could ILO standards be transposed to the WTO – with
perhaps some modification or elaboration.
Once these norms are incorporated into the WTO framework, the WTO
ought to develop solid working relationships with the specialized organiza-
tions to facilitate the implementation of the norms. Again, the working experi-
ence in recent years between the WTO and WIPO is encouraging in this
respect.35 In fact, in the intellectual property area, other international organ-
izations like the World Bank have also been active, helping developing coun-
tries implement and draw benefits from the TRIPS Agreement.36 Not unim-
portantly, the Bank, WIPO and other institutions have more funds than
the WTO, which is kept on a notoriously tight budget, to finance technical
assistance.37 The WTO ought to intensify such co-operation with other insti-
tutions, including NGOs with relevant expertise.38
33
As is now already the case with specific WTO Agreements, like the Agreement on Subsidies in the
Goods Sector, where needed special procedural steps or time limits could be envisaged for a particu-
lar area.
34
See, for example, Meinhard Hilf, ‘Power, Rules and Principles – Which Orientation for WTO/
GATT?’, 4(1) J Int’l Econ L 109–28 (2001). Needless to say, I heartily disagree with Prof. Hilf on
this point.
35
This point is eloquently made by Frederick M. Abbott, ‘Distributed Governance at the WTO-WIPO:
An Evolving Model for Open-Architecture Integrated Governance’, in New Directions, above n 31,
at 15–34.
36
See, e.g., the recent World Bank initiative to help develop the music industry in Africa, as one
example of empowering developing countries in the WTO. http://wbln0018.worldbank.org/essd/
essd.nsf/all/ca8f5ddf16d1d00485256923006ae103 (visited 16 October 2000).
37
For example, in the year 2000, the WTO Secretariat had a total staff of 500, and an annual budget of
some 73 million dollars (127 million Swiss francs). See http://www.wto.org/english/thewto e/thewto
e.htm (visited 13 October 2000). In contrast, as at 30 June 2000, total staff at the World Bank
numbered 11,103. The Bank’s net administrative budget, excluding lending and grant facilities,
for fiscal 2000 amounted to 1.45 billion dollars. See http://www.worldbank.org/html/extpb/annrep/
board.htm (visited 13 October 2000).
38
Different procedures can be envisaged to structure the dialogue with civil society: formal ‘accredita-
tion’ of NGOs by the WTO itself, following the example of the UNECOSOC, or a more informal
economic model of co-operation adopted by the World Bank. See Bercero, above n 21, at 113.
When members propose WTO-related initiatives they, too, would do

well to take account of the work done in other international organizations.
A good example was given by the EU, when Trade Commissioner Lamy
recently proposed to grant duty-free access to least developed countries
(‘LDCs’), in an effort to garner support for a new global round of WTO
negotiations. In defining the class of beneficiaries, Commissioner Lamy
explicitly referred to the list of 48 LDCs drawn up by the United
Nations.39 That is not an obvious, and therefore positive connection, since
the WTO is not a UN organization.
Co-operation works both ways. Not only should the WTO seek out differ-
ent institutions to help fulfil its mandate, other international organizations
should also engage the WTO. The world has really become too small for
specialized negotiators to remain in their respective corners, recognizing that
their agreements may well create tensions with other international regimes,
such as the WTO, but leaving these tensions unresolved. One recent example
is the Cartagena Protocol.
1. The Cartagena Protocol

The Cartagena Protocol on Biosafety of 29 January 2000,40 a protocol to the
Convention on Biological Diversity of 5 June 1992,41 stands as one of the
most recent illustrations of an international agreement in which the precau-
tionary principle is circumscribed in great detail. Under the Protocol, signat-
ory States (hereafter ‘Parties’) agreed on certain procedures:
to ensure an adequate level of protection in the field of the safe transfer, hand-
ling, and use of living modified organisms resulting from modern biotechno-
logy that may have adverse effects on the conservation and sustainable use of
biological diversity, taking also into account risks to human health, and spe-
cifically focusing on transboundary movements.42
The Protocol is also of particular importance in view of the fact that the
negotiators agreed to including the precautionary principle in operational
clauses (Articles 10.6 and 11.8). One of these clauses states that:
Lack of scientific certainty due to insufficient relevant scientific information
and knowledge regarding the extent of the potential adverse effects of a living
modified organism on the conservation and sustainable use of biological
diversity in the Party of import, taking also into account risks to human health,
shall not prevent that Party from taking a decision, as appropriate, with regard
39
See ‘EU announces proposal granting duty-free access to LDCs’, 26 September 2000, at http://
www.ictsd.org./html/weekly/story4.26-09-00.htm (visited 30 October 2000).
40
Cartagena Protocol of 29 January 2000, at at http://www.biodiv.org/biosafe/Protocol/pdf/Cartagena-
Protocol-e.pdf (visited 16 October 2000).
41
UNEP Convention on Biological Diversity, Na. 92-7807, available http://www.biodiv.org.
42
Article 1 of the Cartagena Protocol.
to the import of the living modified organism in question as referred to in

paragraph 3 above, in order to avoid or minimize such potential adverse
effects.43
Thus, the precautionary principle becomes operational, as it will determine
the actions of a Party with regard to the import of a living modified organism
(hereafter ‘LMO’). Also, contrary to what was often the case in international
environmental instruments, the principle appears in a binding agreement (as
opposed to a ‘Declaration’, ‘Conference’, etc.). Apparently, only the SPS
Agreement preceded the Protocol in that respect.44
During the negotiations of the Protocol in Cartagena, the different negoti-
ating groups fell out over a number of issues, one of the most important of
which was the relationship of the Protocol with the WTO agreements, and in
particular the SPS Agreement.45 One group of negotiators led by the US and
Canada – note that the US was only an observer during the negotiations46 –
favoured an approach according to which the WTO agreements would prevail
over the Protocol. (Recall that the US prevailed in its long-running dispute
with the EU on the EU ban on hormone-treated beef on the basis of the SPS
Agreement.) To that effect, it was proposed to include a so-called ‘savings
clause’ which would reverse the otherwise applicable lex posterior rule set out
in Article 30(3) of the Vienna Convention on the Law of Treaties.47 That
proposal was rejected by the EU and by the negotiating group largely made
up of developing countries.
The alternative proposal was a compromise, apparently tabled by the
Chairman of the negotiations, which is now expressed in the preamble of the
definitive text of the Protocol. In this regard, the three relevant paragraphs
from the preamble in this regard state the following:
Recognizing that trade and environment agreements should be mutually sup-
portive with a view to achieving sustainable development;
Emphasizing that this Protocol shall not be interpreted as implying a change
in the rights and obligations of a Party under any existing international agree-
ments;
Understanding that the above recital is not intended to subordinate this Proto-
col to other international agreements;’
The inspiration for this contradictory language was found in the preamble
of the Rotterdam Convention on the Prior Informed Consent Procedure for
Certain Hazardous Chemicals and Pesticides in International Trade (this
43
Article 10.6 of the Cartagena Protocol.
44
See Article 5.7 of the SPS Agreement.
45
18 Inside US Trade (4 February 2000), at 1 and 25.
46
The US is not a Party to the Convention on Biological Diversity either.
47
Such that the ‘later in time’ treaty would take precedence.
Convention contains a Prior Informed Consent Procedure which is similar to

the Cartagena Protocol).48
To summarize: In a potential conflict between the SPS Agreement and the
Cartagena Protocol, normally one would expect the Protocol to prevail as a
result of the ‘later in time’ rule or lex posterior rule.49 Yet the Protocol is
ambiguous. It explicitly rejects the lex posterior rule in its preamble, by provid-
ing that existing rights and obligations under international agreements remain
unchanged. This recital suggests that the WTO agreements remain in full
force. However, the next recital stipulates that the Protocol is not subordinate
to other international agreements, which suggests that the Protocol might
trump the WTO. As a result, there is no clear-cut answer in the case of
conflicting provisions.50
It seems that negotiators wilfully left the text unclear during the negoti-
ations in Montreal, as the problem of the relationship between the Protocol
and WTO agreements provoked the breakdown of the negotiations in Cart-
agena. In order to avoid another breakdown, the Parties apparently chose to
let judiciary bodies, such as the WTO Appellate Body, decide on the issue.51
This is not to say that there necessarily need be a conflict between the WTO
and the Cartagena Protocol. Conciliatory interpretations have already been
advanced.52 Yet it would have been preferable if the negotiators would have
found means to resolve any divergences up front, rather than fuelling con-
cerns about incompatible regimes, and environment-unfriendly resolutions as
a result of WTO dispute settlement.
However worthy the Cartagena Protocol is, taken in isolation, it represents
a poor example of global governance. By not resolving the tensions they
recognized might exist between different international regimes, the negoti-
ators effectively abdicated their responsibility as political decision-makers.
They have thrown the ball to the judiciary, most likely WTO tribunals,
48
Signed on 11 September 1998, not entered into force yet. http://www.pic.int (visited 16 October
2000). While this Convention does not as such refer to the precautionary principle for human health
or environmental reasons, it does implement a ‘precautionary technique’ for hazardous chemicals
and pesticides, i.e. the prior informed consent procedure. That technique allows a country of import
to ban or restrict the import of listed chemicals and pesticides and obliges a country of export to
notify the export of listed products to the country of import.
49
Article 30(3) of the Vienna Convention. Note that the lex posterior rule is not without problems to
resolve conflicts between environmental agreements and the WTO. See Chris Wold, ‘Multilateral
Environmental Agreements and the GATT: Conflict and Resolution?’, 26(3) Environmental Law
Volume 841 (Fall 1996), text at notes 499–507.
50
Apparently, the EU views the contradiction in the preamble of the Protocol as a factor that will ‘most
likely’ lead interpreters such as the WTO Appellate Body to the application of the Vienna Convention
and, in particular, the lex posterior rule. In that sense, the Protocol would prevail over the WTO
agreements after all and the EU would have met its objective.
51
Note that the Cartagena Protocol’s dispute settlement provisions are not compulsory, which is why
litigation through the compulsory proceedings of the WTO seems more likely.
52
Barbara Eggers and Ruth Mackenzie, ‘The Cartagena Protocol and Biosafety’, 3(3) J Int’l Econ L
525 (2000), at 539–40.
thereby at the very least creating legal uncertainty. Moreover, whichever inter-
national tribunal is asked to take up this challenge will also face a fundamental
problem: will its decision be seen as a legitimate exercise of power, or an
infringement of democratically approved international norms?
Filling in the gaps, or resolving ambiguities consciously left in a legal text,
is obviously something courts are regularly asked to do. However, the point
is that such ‘judicial law-making’ is more easily accepted in a national than
in an international context. Internationally, and especially in the WTO, coun-
tries prefer to think that tribunals should be merely a ‘mouthpiece of the law’,
to paraphrase Montesquieu, when resolving a particular dispute.53 Even if this
ideal cannot be fully reached, it is fair to say that WTO tribunals are generally
expected to make stronger efforts to approximate this idea(l) than national
courts, so as not to create concerns about the legitimacy of their rulings.54
Accordingly, governments can rely less on general standards (as opposed to
specific rules) when they make law internationally, for instance in the WTO,
than when they make law domestically.55
C. From trade to economic policy

Following this reasoning, at some point the question will become whether
there is any issue that could or should not be brought under the WTO’s
umbrella. At this early stage, however, when it is not even clear that the WTO
would be acceptable as a ‘meeting place’ for different communities (trade,
intellectual property, environment, labour, competition law, etc.) it is really
too speculative to delineate any boundaries. What can be said, though, is that
there is nothing in the WTO that limits it to considering ‘trade-related’ issues
only. The WTO has two features (the possibility of package deals; effective
dispute settlement) that make it an attractive vehicle to effectively tackle
issues other than trade. Indeed, the WTO has already gone beyond trade
issues.
Intellectual property, as incorporated in the TRIPS Agreement, is but one
example. This Agreement suffers from a misnomer, in that it pretends to deal
with ‘trade-related’ issues of intellectual property issues only. Certainly, this
Agreement clarifies to what extent the public policy of intellectual property
53
See Article 3.2 and 19.2 DSU (WTO dispute settlement findings, recommendations and rulings
‘cannot add to or diminish the rights and obligations provided in the covered agreements’).
54
For a nuanced analysis as to when the interpretation of looser defined standards, as opposed to
more specific rules, may provoke concerns about the legitimacy of WTO dispute settlement see Joel
Trachtman, ‘The Domain of WTO Dispute Resolution’, 40(2) Harvard International Law Journal
333–77 (Spring 1999).
55
Robert Howse and Kalypso Nicolaidis, ‘Legitimacy and Global Governance: Why Constitutionaliz-
ing the WTO Is a Step Too Far’, in Pierre Sauvé and Arvind Subramanian (eds), Efficiency, Legitim-
acy and Governance: The Multilateral Trading System at the Millennium (Brookings Institution Press,
forthcoming); Bronckers, above n 29; John H. Jackson, ‘Dispute Settlement in the WTO: Emerging
Problems’, 1(3) J Int’l Econ L 329 (1998), at 346–47.
protection justifies exceptions to the liberal trade policies of, notably, the
GATT. To this extent, the TRIPS Agreement could be seen as an elaboration
of Article XX(b) GATT, and is therefore trade-related. Clearly though, this
Agreement addresses the entire panoply of intellectual property issues, which
are largely domestic in nature.56 The drafters of the Uruguay Round knew
this, of course, but for various reasons felt they needed a ‘fig-leaf ’, a pretext
that they, as trade negotiators, did not step into more sensitive domestic
issues, and on the toes of other ministries57 with different stakeholders.
By now it has also become clear that many other Uruguay Round agree-
ments, not in the least because of their rigorous enforcement by WTO panels
and the Appellate Body, touch on other sensitive domestic ground as well,
including public health and the environment. There is no reason, a priori,
why agreements on health and environmental issues could not be incorpor-
ated into the WTO either. In fact, it would be salutary if such agreements
were included in the WTO framework. Negotiators, backed up by national
parliaments, would then weigh the merits of these public policies against the
benefits of liberal trade. This would be preferable to litigators arguing over
important public policies as exceptions to the two trade liberalization agree-
ments of the WTO: the GATT and the GATS. These new WTO agreements
could address other, more ‘domestic’ issues as well (e.g. obligations to take
precautionary measures to protect public health and the environment). How-
ever, this would only be helpful if account were taken of the principle of
‘internal coexistence’ outlined above. For this purpose, the WTO would have
to distance itself from its ideological origins as a ‘free trade’ movement, and
build on its achievements as an effective vehicle in the international commun-
ity to strike and legally enforce a deal, whatever the subject matter.
This change in the WTO’s orientation should also be reflected in its man-
agement. Domestically, sector-specific ministries should become co-
responsible for the management of the relevant WTO agreement. For
instance, the ministry competent for the environment ought to be represented
in the administration of this particular agreement at the WTO; the agency
responsible for competition law ought to be involved in the WTO work on a
competition law agreement, etc. In other words, the WTO should no longer
be exclusively ‘owned’ by the Members’ trade ministries. This will ensure the
co-existence, and ‘co-ownership’, of the different values incorporated in the
WTO. Co-ownership should reduce domestic resistance of other ministries
and their constituencies to the ‘over-bearing’ influence of the international
trade lobby, and smoothen acceptance of some measure of effective global
governance in the WTO. Diverging views between different national minis-
tries working on the WTO first ought to be resolved domestically; ultimately,
56
The European Court of Justice recognized this early on in its Opinion 1/94, ECR 1994, I-5267, at
recitals 57–58.
57
Or, in the case of the European Community, the Member States.
diverging views between different sectors should be reconciled in the WTO

General Council.
When giving a larger mandate to the WTO, something should be done
about the name of the organization too. More than five years after the Urug-
uay Round’s conclusion, one can still hear national parliamentarians exclaim:
‘if only I had known what the WTO agreements meant, I would never have
signed on to them; I thought the Uruguay Round had produced just another
tariff and trade package.’ This should not happen again. Such a lack of under-
standing about what the WTO is all about undermines the credibility and the
legitimacy of the organization. Let us therefore clarify what a new compre-
hensive round of negotiations under the aegis of the WTO means, if this
exercise is in fact undertaken: We will be negotiating broadly about economic
policy issues. That should be reflected in the name of the organization: the
World Economic Organization, the WEO. This more ambitious name will
underscore the need for the membership, including national parliamentarians,
to take the work of this organization more seriously.
Along similar lines, another institutional change ought to be considered.
The WTO has moved far ahead of the limited membership and historical
foundations of the GATT. The GATT was in large measure the product of
a concerted diplomatic effort between the United Kingdom and the United
States following the Second World War to construct a new international eco-
nomic order, in which they saw themselves as primary actors.58 This is
reflected in the fact that the GATT’s, and for the time being WTO’s, official
languages are English, French, and Spanish, while English effectively has
been the working language.
The geo-political circumstances in which the WTO has been established
are rather different. This organization has broader ambitions, exemplified by
the impending accession of China. This is a major event, in itself calling for
a thorough institutional review. To illustrate that the house of WTO is wel-
coming the active participation of a more diverse group of countries, I pro-
pose that at least two more official languages are added, into which the more
important WTO documents and proceedings will be translated: Chinese and
Arabic. With this, the WTO would follow the example of the global organiza-
tion par excellence, the United Nations, which currently has six official lan-
guages (the sixth one, apart from the ones already mentioned being Russian,
which the WTO should consider adopting as well if and when Russia joins).
The added costs for the organization by having more official languages are
dwarfed by the positive political and cultural implications for the Asian and
African world. At the same time, these costs could be reduced, and the day-
to-day business of the organization facilitated, if the working languages would
be limited to English and French, as the largest common denominator of the
58
See Jean-Christophe Graz, Aux Sources de L’OMC: La Charte de la Havane (Genève: Droz, 1999);
Richard Gardner, Sterling-Dollar Diplomacy (New York: McGraw Hill, 2d revised ed, 1969).
languages normally used by WTO diplomats and staff in Geneva. Again, like
the name change from WTO to WEO, adding official languages would signal
that the work of this organization is directly affecting the life of individuals in
its members, many of which are developing countries.59
D. Towards an open regime under international law

If the WTO is to become a vehicle for global governance one thing has to be
clear: this vehicle ought not travel without a road map, and should be mindful
of other traffic. In legal terms, a renewed WTO must take as a starting point
that it is not a self-contained regime, ‘where things can easily be done differ-
ently, if we want to’. As a pillar of global governance, the WTO should
observe and promote the international rule of law, including, where appropri-
ate, human rights.60 If, exceptionally, the WTO members consider it neces-
sary to make departures from general principles of public international law,
they must do so consciously and explicitly. Thanks in no small part to the
case law of the Appellate Body, which pays considerable attention to inter-
pretative rules and developments of public international law, the WTO has
become more open-minded than its predecessor. The GATT tended to be
inward-looking, sometimes producing rulings that resembled ‘ghetto’ law,
without much regard to the outside world.61 Still, the WTO has some way to
go to integrate itself more fully into the system of public international law.62
1. MEAs and the WTO

That the WTO still seems half-way between a closed and an open system can
be illustrated by the ambiguous position currently adopted by the WTO on
Multilateral Environmental Agreements (‘MEAs’). If a dispute arises over
trade measures pursuant to MEAs; should it be resolved through the WTO,
59
On the use of languages in international organizations see Henry G. Schermers and Niels M.
Blokker, International Institutional Law: Unity within Diversity (The Hague: Martinus Nijhoff, 3d
revised ed, 1995) 256–62.
60
The proper relationship between human rights and international economic law is yet to be estab-
lished. See, e.g., Ernst-Ulrich Petersmann, ‘Human Rights and International Economic Law in the
21st Century – Need for Clarifying Their Interrelationships’, 4(1) J Int’l Econ L 3–39 (2001); Chris-
topher McCrudden, ‘International Economic Law and the Pursuit of Human Rights: A Framework
for Discussion of the Legality of ‘‘Selective Purchasing’’ Laws under the WTO Government Procure-
ment Agreement’, 2(1) J Int’l Econ L 3 (1999); Barbara Brandtner and Allan Rosas, ‘Trade Prefer-
ences and Human Rights’, in Philip Alston, The EU and Human Rights 699 (Oxford: Oxford Univer-
sity Press 1999).
61
For instance, it was exceedingly rare for GATT panels to refer to general principles of public interna-
tional law, or to refer to case law of other international tribunals.
62
Note that the drafters of the WTO intended to create a self-contained regime. See P. J. Kuyper,
‘The Law of the GATT as a Special Field of International Law: Ignorance, Further Refinement or
Self-contained System of International Law?’, in XXV Netherlands Yearbook of International Law
227 (1994), 252.
or through the dispute settlement mechanisms that exist in the MEAs them-
selves? According to the WTO’s web-site:
Suppose a trade dispute arises because a country has taken action on trade
(for example imposed a tax or restricted imports) under an environmental
agreement outside the WTO and another country objects. Should the dispute
be handled under the WTO or under the other agreement? The Trade and
Environment Committee says that if a dispute arises over a trade action taken
under an environmental agreement, and if both sides to the dispute have
signed that agreement, then they should try to use the environmental agree-
ment to settle the dispute.63
The recognition here that WTO members should give precedence to MEA-
resolution is positive. It reflects a move to situate the WTO as an open regime,
which is prepared to give precedence to other, for instance more specialized,
treaty arrangements where appropriate. Yet this statement does not explain
how the WTO, when pressed, can cede ‘adjudicative jurisdiction’ to the relev-
ant MEA, given the clear and strong language of the WTO Dispute Settle-
ment Understanding establishing that the WTO dispute resolution mechan-
ism is the exclusive forum for determining violations of WTO agreements.64
The Trade and Environment Committee does not seem to have pursued this
question. In 1996 it felt that any clarification, ‘as necessary’, could be pro-
vided through WTO litigation.65 Subsequent reports do not refer to this ques-
tion anymore.66
Perhaps when the Trade and Environment Committee deferred to WTO
litigation in 1996, possible conflicts between MEA obligations and the WTO
were not yet clearly identified. Conflicts between the WTO and unilateral
environmental measures taken by its members were then at the forefront of
the agenda (this was the time, it will be recalled, when the Shrimp/Turtle
dispute67 was being litigated). By now, however, it is no longer necessary to
speculate. The possibility for conflicts between the WTO and MEAs, such as
the Cartagena Protocol, or the Law of the Sea Convention, are well recog-
nized. The as yet unresolved question is that of which forum will be compet-
ent to resolve such conflicts, if parties do not agree to follow the solution
given by the Trade and Environment Committee above.
As some MEAs have no compulsory jurisdiction,68 or do not seem to
63
See Trade and Environment Section of the WTO website at http://www.wto.org. (visited 16 October
2000).
64
This was highlighted by Trachtman, above n 54, at 366 (referring to Article 23 DSU).
65
See the 1996 Report of the WTO Trade and Environment Committee, at para 10 (PRESS/TE 014).
http:// www.wto.org (visited 16 October 2000).
66
See the 1997 Report (PRESS/TE 020); the 1998 Report (PRESS/TE 026); and the 1999 Report
(PRESS/TE 030). http:// www.wto.org (visited 16 October 2000).
67
See above, n 3.
68
For instance, dispute settlement under the Convention on Biological Diversity is dependent on
acceptance by the parties to the dispute. See Article 27 Convention.
establish a comprehensive system of compulsory jurisdiction,69 one may be

inclined to think that this responsibility will easily fall on the WTO dispute
settlement system, which is broadly compulsory regarding any disputed meas-
ure affecting WTO rights and obligations.70 Then again, although this has not
been very well explored to date, there are also limits to the WTO legal system.
For those who characterize the WTO as a closed, rather than as an open,
regime in international law, it logically follows that WTO panels and the
Appellate Body cannot (directly) apply general substantive international law
or other conventional law.71 This view has not gone uncontested.72 Yet if it
still holds, WTO panels and the Appellate Body, and the WTO Dispute Set-
tlement Body to begin with, will have good reason to circumscribe the ‘auto-
maticity’ and ‘exclusivity’ of WTO litigation. Otherwise, action under the
WTO dispute settlement system is unlikely to be ‘fruitful’, and cannot ‘secure
a positive solution to a dispute’.73 Thus, a WTO panel, or the Appellate Body,
might well be unable to give precedence (‘effet utile’) to another norm of
public international law, such as a MEA, if this were to conflict with a WTO
rule.74 Interpreting another, environmental, agreement merely through the
lens of a trade agreement may also cause distorted views.
Given the proliferation of international courts and tribunals whose jurisdic-
tion is limited in various ways, the International Court of Justice conceivably
could be the ultimate legal authority to allocate jurisdiction to one of the
competing jurisdictions, or to handle such a multi-faceted case itself.75 Yet in
69
This was a recent finding of the Arbitral Tribunal established under the UNCLOS Convention in
the Southern Bluefish Tuna Case. See Australia and New Zealand v Japan, Award on Jurisdiction
and Admissibility, 4 August 2000, at para 62. The full text of the award is posted on the web-site
of the International Centre for the Settlement of Investment Disputes (this Centre rendered adminis-
trative services to the Tribunal) http://www.worldbank.org/icsid. This award, through which the
Arbitral Tribunal decided it lacked jurisdiction to decide the dispute on the basis of the UNCLOS
Convention, in view of a prior bilateral agreement between the parties, is notable for various reasons.
For one thing, the full International Tribunal of the Sea earlier had issued provisional measures,
having decided by a large majority that the resolution of the dispute was covered by the UNCLOS
dispute settlement provisions. See the Order of 27 August 1999, posted at http://www.pict-pcti.org/
news/archive/August//ITLOS.08.27.Order.html. This Order of the standing UNCLOS-Tribunal was
effectively overruled by the ad hoc Arbitral Tribunal.
70
See Article 23 DSU.
71
See Trachtman, above n 54, at 342–43, 347–49.
72
See Paolo Mengozzi, ‘The WTO Law: An Analysis of Its First Practice’, in Paolo Mengozzi Interna-
tional Trade Law on the 50th Anniversary of the Multilateral Trade System (Milano: Dott. A. Giuffrè
Editore 1999), at 22; Thomas Schoenbaum, ‘WTO Dispute Settlement: Praise and Suggestions for
Reform’, 47 International and Comparative Law Quarterly 647 (July 1998), at 652–53.
73
Quotations are from Article 3.7 DSU.
74
In Trachtman’s view, for instance, international law could only be taken into account by WTO
dispute settlement bodies so as to interpret, and avoid a conflict with WTO law. Trachtman, above
n 54, at 343. A similar view has been advanced by Gabrielle Marceau, ‘A Call for Coherence in
International Law: Praises for the Prohibition Against ‘‘Clinical Isolation’’ in WTO Dispute Settle-
ment’, 33(5) Journal of World Trade 87 (October 1999), at 107, 109 n 70.
75
This point was made by Judge Jennings, ‘The International Court of Justice after Fifty Years’, 89(3)
American Journal of International Law 493 (1995), 504.
fulfilling this task this Court itself is hampered by limitations of its own, not
the least of which is its lack of compulsory jurisdiction.
If the option to go to the International Court of Justice is not available, the
WTO and its members seem well advised to do one of several things, so as
to ensure that conflicts between the WTO and other treaty regimes do not
turn into calamities. They can exercise self-restraint in initiating WTO litiga-
tion, and, if one of them forgets to do so, remind this member of the con-
straints already present in the WTO Dispute Settlement Understanding.76 Or
they can more explicitly support the notion that the WTO is not a closed,
but rather an open regime under public international law. In order to credibly
choose the latter option, the WTO would have to recognize that, if and when
it is competent to decide a particular dispute, its interpretations of other inter-
national legal norms cannot be driven by a liberal trade bias; and that, where
a conflict does arise between a WTO norm and another substantive rule of
international law, the WTO panels and the Appellate Body are free to give
precedence to the latter.
Without such restraint, or ‘openness’, claims that the WTO dispute settle-
ment mechanism protects the ‘rule of law’ more effectively than any other
world-wide treaty ring hollow: the effective enforcement of WTO law, in
isolation from the rest of international law, does not contribute to responsible
global governance.
2. Remedies
One consequence of opening the WTO regime more fully to public interna-
tional law that would be of particular interest to developing countries would
be in the area of remedies.
The remedies envisaged in the WTO Dispute Settlement Understanding
for WTO violations can be understood to be compliance first. In the excep-
tional case where the member concerned is unable or unwilling to comply
temporarily, it can negotiate and offer compensation (alternative trade
concessions) to the successful litigant, in the absence of which the successful
litigant can retaliate by imposing countermeasures, normally in the same
sector as the one where the violation took place; or, if this is not considered
effective to pressure the violating member to achieve compliance, in other
sectors (‘cross-retaliation’).77
However, this order of remedies (compliance being the priority; retaliation
a temporary second best) is still not generally accepted. Academically, the
argument persists that compensation in the WTO sense of offering alternative
trade concessions or accepting retaliation is a legitimate, and even desirable
76
See, above, n 73.
77
Article 22(3) DSU.
alternative to compliance in the WTO.78 The European Court of Justice

recently recognized that compliance was the main purpose of the dispute
settlement mechanism, yet found that negotiations about compensation could
always replace compliance.79 While recently, EC Trade Commissioner Pascal
Lamy has emphasized that each WTO Member must ultimately comply with
WTO rulings, earlier he reportedly echoed statements of some of his US
counterparts that ‘as long as you pay the penalties, you can go on [refusing
to comply with a WTO dispute settlement ruling].’80
I find these ‘non-compliance’ views legally unpersuasive, and policy-wise
unsound. Legally, I see insufficient evidence that the drafters of the DSU
wanted to deviate from general principles of public international law, or even
general contracts law: following a breach, the injured party can ask perform-
ance to begin with; if performance is somehow objectively impossible, then
the injured party can claim damages as a second-best remedy.81 In fact, I
subscribe to the view convincingly presented early on by Professor Jackson
that the DSU reflects a preference for compliance.82
With respect, the European Court had it all wrong when trivializing the
normative force of WTO dispute settlement rulings, by pointing to the pos-
sibility of subsequent negotiations on compensation. As one author aptly
noted: ‘[C]ompensation does not as a matter of principle accord a ‘right’ to
78
Alan O. Sykes, ‘The Remedy for Breach of Obligations under the WTO Dispute Settlement Under-
standing: Damages or Specific Performance?’, in New Directions, above n 31, at 347–57.
79
ECJ, Case C-149/96, Portugal v Council, 23 November 1999, at recitals 37-40.
80
Compare Commissioner Lamy’s speech to the European Institute’s Tenth Annual Seminar on Trade
and Investment of 2 November 2000, posted at http://www.eurunion.org/news/speeches/2000/
001102pl.htm (visited 30 November 2000) with Adrian Croft, ‘EU Trade Chief Losing Patience
over Banana Row’, Reuters News Service (22 May 2000).
81
See already Permanent Court of International Justice, Factory at Chorzów, PCIJ, Indemnity, Judg-
ment No 13, 1928, Ser A No 17, Claim for Indemnity, at 47. See also International Law Commis-
sion, 52nd Session, Third Report on State Responsibility by James Crawford, Special Rapporteur,
UN GA Doc A/CN.4/507 of 15 March 2000 at para 124–46. In article 43 of the ILC draft on State
responsibility a clear priority is established for restitution in kind, i.e. compliance.
82
John H. Jackson, ‘The WTO Dispute Settlement Understanding – Misunderstanding on the Nature
of a Legal Obligation,’ 91 American Journal of International Law 60 (1997). In my view Prof. Sykes,
above n 78, has not refuted Prof. Jackson’s analysis of the DSU. I also disagree with Prof. Sykes
analogy with contracts law. First, from a European law perspective, it is odd to think that one could
get out of a treaty obligation merely by offering compensation. That is certainly not how the EC
Treaty system works. Even assuming though that the analogy with contracts law would be appropri-
ate for the WTO, in Prof. Sykes’s view under common law a private party to a contract has the
choice to perform or pay damages. Perhaps, but generally under European continental law a party’s
primary obligation following a breach of a contract is to perform. Finally, Prof. Sykes’s policy argu-
ment that compliance may be more costly politically for a losing party than the political cost of
accepting deviation by the winning party is insufficient ground to elevate compensation to the same
level as compliance. Surely, this could not be a reason to allow the losing party to choose, at its
discretion, whether to pay rather than to comply.
violate a rule. It merely constitutes a practical option to temporarily defuse a

dispute between the [litigating] WTO parties.’83
Policy-wise, it is also ill-advised that WTO members are free either to play
along with a WTO ruling or pay compensation. First, it is not possible to
build a credible system of global governance, if compliance with any gov-
erning rule can simply be replaced with compensation. There is a good reason
why general public international law does not recognize this easy way out.
Those, like Commissioner Lamy, who believe there is a deficit in international
governance,84 and that the WTO has a role to play to fill this gap, should
instead buttress the normative force of WTO rules and rulings.
Second, there is another important advantage to confirming the primacy of
compliance. Compliance is of equal benefit to developing and developed
WTO members. It confirms that all countries are equal under the law.85 On
the contrary, it is likely easier for the developed world to find compensation,
in lieu of compliance, than it would be for poorer countries. This lack of
balance should not be institutionalized in WTO dispute settlement proceed-
ings, by according compensation equal status as compliance.
In fact, the current system of compensation envisaged in the WTO vividly
illustrates the disadvantageous position of developing countries. In case they
have won their dispute against a developed country, but run up against a
refusal to comply, developing countries can only exercise much weaker pres-
sure on the losing developed country than would be the case the other way
around. Having a much smaller market, and importing goods and services
that may well be important to their development, retaliation is usually not an
effective option for developing countries to exercise pressure on a developed
and non-complying member. Even cross-retaliation in the area of intellectual
property, which may have seemed more promising from the perspective of
compliance-seeking developing countries, is unlikely to offer them much
relief, as is borne out by Ecuador’s experience in the Bananas dispute.86
83
Axel Desmedt, ‘European Court of Justice on the Effect of WTO Agreements in the EC Legal
Order’, 27(1) Legal Issues of Economic Integration 93 (2000), at 100. For another blistering attack
on the European Court’s analysis of the WTO dispute settlement process see Stefan Griller, ‘Judicial
Enforceability of WTO Law in the European Union: Annotation to Case C-149/96, Portugal v Coun-
cil’, 3(3) J Int’l Econ L 441 (September 2000), at 450–54.
84
See, above, n 20.
85
This was rightfully stressed by Julio Lacarte-Muró and Petina Gappah, ‘Developing Countries and
the WTO Legal and Dispute Settlement System: A View from the Bench’, 3(3) J Int’l Econ L 395
(September 2000), at 400–01.
86
WTO Decision by the Arbitrators, WT/DS27/ARB/ECU, 24 March 2000, at para 177 (‘Given the
difficulties and the specific circumstances of this case which involves a developing country Member,
it could be that Ecuador may find itself in a situation where it is not realistic or possible for it to
implement the suspension authorized by the DSB for the full amount of the level of nullification and
impairment estimated by us in all the sectors and/or under all agreements mentioned above com-
bined. The present text of the DSU does not offer a solution for such an eventuality’).
With good reason, therefore, monetary damages have been proposed as a

more suitable remedy for developing countries, as long as they cannot obtain
compliance.87 In fact, monetary damages appear to be salutary for the WTO
system as a whole. As the retaliatory measures imposed by the US in the
Bananas and Hormones cases have amply demonstrated, retaliatory measures
tend to injure a motley assembly of exporters and importers, often smaller
companies, who rarely, if ever, have an interest in the original dispute. These
companies have a point when arguing that any damages paid for WTO viola-
tions by a non-complying country ought to be paid from public funds, rather
than by an arbitrary selection of individuals.88 Furthermore, if compliance
really is the ultimate goal of the WTO dispute settlement understanding, then
monetary damages are apt to be more of an incentive for the non-complying
government, given ever present budgetary constraints. Retaliation is less com-
pelling, as non-complying governments can shift the costs of retaliation on to
a small and relatively powerless group of constituents.89
The right to request financial reparation for a wrongful act, including dam-
ages incurred in the past, is a basic principle of international law in case
compliance is not possible.90 Arguably, the DSU has limited these rights to
reparation by providing specific remedies. Then again, recent scholarship sug-
gests that the DSU may impose fewer limitations than has generally been
assumed. For instance, retroactive remedies may well be conceivable in a
number of circumstances.91 WTO Members can, of course, await evolution-
ary developments in WTO case law and expect to see a gradual opening up
of available remedies.92 They can also decide to overhaul the entire system of
remedies, in a new dispute settlement understanding, at the end of a new
round of negotiations. Yet, as one of the confidence-building measures to
which developing countries are entitled before they agree to an expanded
87
E.g., Kim Van der Borght, ‘The Review of the WTO Understanding on Dispute Settlement: Some
Reflections on the Current Debate’, 14(2) American University International Law Review 1223
(1999), at 1232.
88
Indeed, this system of retaliation blurs the distinction between public international law (remedies
being paid out of public coffers), and private international law (remedies being paid by private
individuals).
89
Non-complying governments may have to revise this somewhat cynical calculation though. It is no
secret, for instance, that various European companies, struck by US retaliatory measures, are con-
sidering filing damage claims against the European institutions pursuant to Article 288 EC Treaty.
90
Permanent Court of International Justice, Factory at Chorzów, PCIJ, Jurisdiction, Judgment No 8,
1927, Ser A No 9, Claim for Indemnity, at 21 (‘It is a principle of international law that the breach
of an engagement involves an obligation to make reparation in an adequate form. Reparation there-
fore is the indispensable component of a failure to apply a convention and there is no necessity for
this to be stated in the convention itself ’).
91
See generally Petros C. Mavroidis, ‘Remedies in the WTO Legal System: Between a Rock and a
Hard Place’, to be published in European Journal of International Law 2000/4; Mengozzi, above n
72, at 23–24.
92
See, e.g., WTO Appellate Body Report, United States – Import Prohibition of Certain Shrimp and
Shrimp Products, W/DS58/AB/R (12 October 1998), at §130, n 9.
system of global governance, at the very least one amendment could be made
to the DSU early on, along the following lines:
As an alternative to the above principles and procedures [i.e. retaliation and
cross-retaliation], if the complaining party is a developing country, it may
request financial compensation from a non-complying developed country
member for the damages caused by the violation to its nationals, calculated
from the date damages occurred until the date the violation has been termin-
ated, with interest running from the date damages have been claimed.93
If it were necessary to limit opposition to this proposal, one way could be
to circumscribe the class of developing countries that might claim financial
compensation. For instance, one could think of countries with a relatively low
level of per capita income.94
This is no free lunch for the beneficiary developing countries, as the estab-
lishment of causation and the calculation of damages can be cumbersome.
Yet this will give them an alternative that could be more suited to their par-
ticular circumstances than the compensatory remedies currently made explicit
in the DSU.

Bill Clinton ran, and won his first campaign for the US Presidency with the
slogan: ‘It’s the economy, stupid.’ The WTO would be better served with a
different slogan, if it is to strengthen its credibility as a pillar of global govern-
ance, and assume more powers responsibly: ‘It’s not just about trade, dear
members.’ A new round of global negotiations in the WTO should not only
be concerned with progress on economic issues, however important this pro-
gress would be. A new round should also be about institutional issues: about
improving the WTO’s accountability to the outside world, national parlia-
ments to begin with; about reinforcing the participation of less-developed
members; about re-balancing the values of trade and other societal concerns
within the WTO; about redistributing the powers between the WTO dispute
settlement and rule-making organs; about intensifying and, where necessary,
reconciling, the relationship of the WTO with other international organiza-
tions and treaty regimes.
This contribution has not dealt with all of these issues exhaustively. Instead
93
This clause could be inserted as new Article 22.3(e) DSU, the remaining clauses to be renumbered.
94
See Bernard M. Hoekman and Petros C. Mavroidis, ‘WTO Dispute Settlement, Transparency and
Surveillance’, 23(4) The World Economy 527 (April 2000), at 537, proposing a limit of $1,000 per
capita income. I believe their ‘gradualist’ approach may be helpful, but rather than devising a sui
generis limit, I would prefer connecting any such limitation in the WTO to existing criteria and relax
it a bit, for instance to low and lower middle income developing countries, as reviewed annually by
the World Bank. See http://www.worldbank.org/data/databytopic/class.htm (visited 31 October
2000). In that case, Ecuador could have asked financial compensation from the EU in the Bananas
dispute.
I have selected a few proposals for institutional reform, which to me seem

critical. In particular:
O Coexistence: Once sectors other than trade are incorporated in the WTO
framework through a specific agreement (e.g. on the environment, on
labour standards, on competition law), then it would be this agreement
that would govern the interpretation of any WTO rights and obligations
in that sector. In other words, while trade-offs with trading benefits
may have facilitated an agreement amongst the WTO membership on,
say, an environmental issue, the interpretation of that environmental
agreement shall not be subject to an ‘overarching’ principle of trade
liberalization. Any balance between trade liberalization and other values
must be assumed to have been struck in that particular WTO agree-
ment. These ‘new generation’ WTO agreements will coexist with the
two WTO agreements about trade liberalization (GATT and GATS)
on an equal footing, and will be interpreted on their own merits. This
will ensure the mutual respect of different societal values, as well as
legal certainty. The position of the intellectual property agreement
(TRIPS) in the WTO already suggests that this is possible for other
sectoral agreements. Yet, in order to avoid any misunderstanding, it is
advisable to incorporate this principle of coexistence explicitly in the
basic WTO (the ‘Marrakesh’) Agreement.
O Co-operation: In the preparation and implementation of agreements on
new issues, the WTO ought to intensify co-operation with other inter-
national organizations, including expert NGOs. On the other hand,
specialized organizations should not remain in their respective corners
either. If they recognize a potential conflict, they ought to engage the
WTO to try to resolve this. Ostrich policy, or ‘tactical’ reservations, are
to be avoided. Part of global governance is to find a comprehensive
solution for global problems, where different interests are actually
weighed against one another. On the international plane, solutions
found at the negotiating table are preferable to ‘judge-made’ solutions,
as the latter risk creating problems of legitimacy.
O Beyond trade: No matter what the labels say, the WTO’s reach presently
extends beyond trade. This ought to be recognized by involving other
national ministries than merely the trade ministry in the work of the
WTO. If its mandate is to be enlarged, and the respect for different
societal concerns well enshrined, the WTO deserves a better name too:
the World Economic Organization, the WEO. This more ambitious
name will also underscore the need for the membership to consider the
non-economic issues (outlined above) more carefully. At least two
more official languages should be added: Chinese and Arabic. Like the
name change from WTO to WEO, adding official languages would
signal that the work of this organization is directly affecting the lives of
individuals in its member states, many of which are developing coun-

tries.
O Open regime: Being a pillar of global governance, the WTO cannot
afford to operate as a self-contained regime. As much as possible it
should observe and promote principles of public international law gen-
erally. Two illustrations have been discussed. In becoming a more open
regime, the WTO can ease remaining tensions with multilateral envir-
onmental agreements. Taking inspiration from public international law,
the WTO could also reinforce the position of developing countries as
far as remedies are concerned, in disputes with developed countries.
To conclude: The changes proposed in this contribution do not reflect a
fundamental weakness that is unique to the WTO. If global governance is
taken seriously, these institutional questions will have to be addressed in any
event, with respect to any strong international organization charged with a
meaningful mission. It makes sense, in my view, to try to resolve these ques-
tions first in an existing and tested environment like the WTO. Blueprints to
create new organizations easily constitute diversionary tactics or, even if these
projects are well intentioned, risk delaying effective solutions considerably.
Governments and NGOs cannot avoid the hard choice between effective
international co-operation and institutions, or a return to power-based diplo-
macy. That choice may not worry governments and NGOs from a few very
powerful countries. It is pressing for everyone else.

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Journal of International Economic Law (2001) 41–65  Oxford University Press

    ?

treated beef,1 or a US ban on certain blood plasma2). Fisheries practices

institutions are needed to reconcile these conflicting national competencies

.     

from agriculture to patents to telecommunications. This makes it possible

.     

TRIPS Agreement. This Agreement establishes minimum standards of pro-

the TRIPS Agreement struck a new balance between intellectual property

settlement.33 Although the preamble of the Marrakesh Agreement is already

When members propose WTO-related initiatives they, too, would do

1. The Cartagena Protocol

to the import of the living modified organism in question as referred to in

Convention contains a Prior Informed Consent Procedure which is similar to

C. From trade to economic policy

diverging views between different sectors should be reconciled in the WTO

D. Towards an open regime under international law

1. MEAs and the WTO

establish a comprehensive system of compulsory jurisdiction,69 one may be

alternative to compliance in the WTO.78 The European Court of Justice

violate a rule. It merely constitutes a practical option to temporarily defuse a

With good reason, therefore, monetary damages have been proposed as a

I have selected a few proposals for institutional reform, which to me seem

individuals in its member states, many of which are developing coun-

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