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This article invites the reader to take a step back and look at the big picture
of the world trading system. After putting the WTO into its historic perspect-
ive, seven catch phrases that sound reassuring, but are almost never thought
through, the so-called seven ‘Mantras’, are questioned. Observations from
Seattle lead to reflections on internal decision-making, before the focus is
broadened to external relations of the WTO, a discussion of transparency and
the participation of non-state actors. In its conclusion, this article suggests
that systemic or ‘constitutional’ issues deserve deeper discussion and analysis
for a healthy evolution of the system as a whole.
1
Since its beginning more than fifty years ago, the post-war world trading
system has gone through numerous stages of development. This article
explores this world trading system, in brief historical context and in light of
recent developments, with emphasis on the institutional developments and
reforms needed in light of the constitutional questions that have arisen
recently.
Section I surveys the landscape of the world trading system, and in particu-
lar it undertakes to understand the perspective of the statesmen who signed
the various treaties on world trade at the end of the second world war. It then
looks at both the historical and current policy objectives of the world trading
system. Section II examines the internal questions of the institution of the
World Trade Organization, such as the procedures concerning decision-
* University Professor of Law, Georgetown University Law Center, and Director, Institute of Interna-
tional Economic Law at GULC. Email: jacksojh@law.georgetown.edu
1
This manuscript is derived from a lecture and discussion delivered 15 March 2000 in Geneva to a
group of WTO Ambassadors, officials, and scholars as part of the Program for the Study of Interna-
tional Organizations at the Graduate Institute of International Studies. The author has also
developed some of these themes in a recent article. See John H. Jackson, ‘International Economic
Law in Times That Are Interesting.’ 3 J Int’l Econ L (2000): 3–14, and John H. Jackson, ‘Dispute
Settlement and the WTO: Emerging Problems.’ 1 J Int’l Econ L (1998): 329–51.
68 John H. Jackson
making. Section III examines the external relations of the world trading
system, focusing on transparency and participation. The issue of participation
encompasses non-governmental organizations (NGOs) and civil society. The
final section of this article concludes by offering some suggestions for future
development.
2
See also John H. Jackson, The World Trading System: Law and Policy of International Economic Rela-
tions, 2d edn, (Cambridge, MA: MIT Press 1997). A bibliography of principal publications of this
author may be found at the Georgetown University Law Center Web site. See also a compilation of
a number of relevant articles by this author in John H. Jackson, The Jurisprudence of the GATT and
the WTO: Insights on Treaty Law and Economic Relations (New York: Cambridge University Press
2000).
The WTO ‘Constitution’ and Proposed Reforms 69
B. Implications
Looking at the landscape of the world trading system, what are the implica-
tions of these circumstances? As the countries of the world become increas-
ingly interdependent, nation-state governments cannot regulate effectively on
many subjects. As a result, national governments cannot meet the expecta-
tions of their constituents and cannot deliver upon their promises to their
constituents. This imposes a considerable amount of tension on governments,
and makes governing much more difficult. Within this context, there is a
worry that there will be a ‘race to the bottom’ and that there will be a tend-
ency for governments to redress their inability by using barriers of one type
or another. For example, it leads to what some economists analyze as the
prisoners’ dilemma: when one country raises barriers, another is likely to do
so, and soon all countries will be hurt. What is the solution?
The solution is cooperative mechanisms at the international level. These
mechanisms should be based on rule orientation, as opposed to power orienta-
tion. These rules should be well formulated and effective. In other words, they
should cause certain kinds of behavior and inhibit other kinds of behavior.
70 John H. Jackson
This raises the issue of sovereignty. We are seeing that the rule-oriented
measures that emerged from the Uruguay Round and earlier rounds of multi-
lateral trade negotiations, deeply affect national regulation internally, not
merely at the border. As a result, some people in the United States have
argued that we should reverse course and take the WTO back to the time
when it was only responsible for border measures, thereby limiting its ability
to affect national regulation internally. This is folly, because such time never
existed. It was always recognized that there were measures in the GATT that
would have effects behind the border. In particular, Article III, paragraph 4,
of the GATT, which deals with internal regulations and national treatment,
has always had enormous implications on sovereignty and sovereign decisions
relating to internal regulations.
3
See Douglass C. North, Institutions, Institutional Change, and Economic Performance (Cambridge, UK:
Cambridge University Press 1990); Ronald H. Coase, The Firm, the Market, and the Law (Chicago,
IL: University of Chicago Press 1988). See also Jan Tumlir, Protectionism: Trade Policy in Democratic
Societies (American Enterprise Institute for Public Policy Research 1985).
4
See, e.g., Reactions to Seattle, 3 J Int’l Econ L 167 (2000) (discussing factors that contributed to the
failure to launch a new round at Seattle); Joseph Kahn, ‘Swiss Forum Has Its Focus on Memories
from Seattle’, N.Y. Times (29 January 2000), at C1 (stating that ‘government officials have stressed
that the failure of trade talks owes more to negotiating positions taken by World Trade Organization
members than to the influence of demonstrators’); Michael Littlejohns, ‘Embattled WTO Looks for
Allies at the UN World Trade Body: Moore Says Public Confidence Must Be Rebuilt to Stem
Threat to Economic Globalization’, Fin. Times (20 January 2000), at 10 (quoting WTO Director-
General Mike Moore as stating that the NGOs and anti-trade groups at Seattle contributed but were
not the ultimate causes of the failure).
5
See, e.g., John H. Jackson, The World Trade Organization: Constitution and Jurisprudence (London:
Royal Institute of International Affairs 1998).
The WTO ‘Constitution’ and Proposed Reforms 71
6
See John H. Jackson, ‘The Great 1994 Sovereignty Debate: United States Acceptance and Imple-
mentation of the Uruguay Round Results’ in The Jurisprudence of GATT and the WTO: Insights on
Treaty Law and Economic Relations 367, above, n 2.
The WTO ‘Constitution’ and Proposed Reforms 73
not view it as sacrosanct in its purity, because it has major problems, such as
the free-rider problem and the tendency towards the lowest common denom-
inator.
(7) Finally, there has been talk about the need for so-called
‘deliverables’. At the outset of discussions regarding a new trade negotiating
round, diplomats have worried about the length of time a round often takes
(ten years or more) and have spoken of the need to conclude some parts of
the round early and have those implemented so that the benefits are
‘delivered’ early.
Indeed, deliverables have advantages, as do these other items. On the other
hand, deliverables tend to push policymakers towards sacrificing longer-term
institutional strengths for short-term political advantages.
I have raised each of these mantras, and my suggestion is that they should
not be off limits from more careful examination.
There are real concerns about the current decision-making structure. This
structure developed in the Uruguay Round negotiations, when negotiations
focused on a WTO, a World Trade Organization, particularly in the fall of
1993 when major players worked hard to alter some of the previous drafts.
While alterations were appropriate in many ways, one of the things that the
negotiators did was to constrain and put checks and balances on the decision-
making process. They did this by requiring decision by consensus and by
super-majorities and through certain other kinds of procedures. Today we
realize that those constraints can lead to a lack of effectiveness of the decision-
making process. This is one of the issues (and one of the dilemmas) that we
have before us and that requires more examination.
C. Decision-making
There are advantages and disadvantages to a consensus-based decision-
making process. One downside of requiring full consensus is that it may be a
recipe for impasse, stalemate, and paralysis. In other words, the result may
be that things do not get done. We have seen some very interesting examples
of that in the last year. There are also examples that often are not easily
visible.
For example, there are situations where the participants in this constitution
would like to see some evolution and change. These changes may be rather
detailed and technical, such as modifying elements of the Dispute Settlement
Understanding. Yet, proponents of change may abandon such an effort even
before trying, because of their perception that the consensus process makes
it impossible to do what they want to do.
What are some alternate methods for decisions? One possibility is to figure
out a way to distinguish the more detailed procedural aspects from things
that have real substance. There is already a distinction in the amending clause
of the WTO between the non-substantive and the more substantive issues.
There might be ways to develop a similar distinction in the consensus process.
Of course, one of the problems with the consensus process is that in order to
change it you must have consensus. Therefore, any country can block a pro-
posed change. This leads us to a search for alternative ways to make changes
without amending either the DSU or the WTO as a whole. Often this is a
delicate question, and I am not sure the alternatives are workable. If they are
not workable, and the parties are without recourse to make changes, we are
likely to be in very great trouble.
There are, however, some other possibilities. One possibility is a so-called
‘critical mass’ idea, which has been experimented with. The basic idea is to
develop a practice where countries refrain from blocking consensus when a
critical mass of countries support a proposed change. This critical mass of
countries could be expressed as an overwhelming majority of countries and
an overwhelming amount of the trade weight in the world, such as 90 percent
The WTO ‘Constitution’ and Proposed Reforms 75
7
See Jackson, above, n 2.
76 John H. Jackson
out. If these provisions appear to have been effective, the parties could renew
them for an additional period of time.
8
United Nations Non-Governmental Liaison Service, The NGLS Handbook of UN Agencies, Programmes
and Funds Working for Economic and Social Development (2d ed, 1997).
78 John H. Jackson
This article examines the world trading system in its historical context and in
light of recent developments. Looking ahead, it is useful to consider how to
move forward. By providing leadership, the trade superpowers – the United
States, the European Union, and Japan – can play a major role. There are
other groups of countries that could get together and try to thrash out ideas
and discuss the pros and cons of some of these measures, and then see if
there is some in-between measure that tends to maximize the advantages and
minimize the disadvantages. Such measures could then be introduced for lim-
ited periods of time.
Already suggested by the European Community and the Director-General
and others, is an idea of forming a group of parliamentarians to meet at the
WTO on a regular basis to exchange information, ideas, and attitudes. Other
ideas that have been set forth include the formation of a steering group9 and
an NGO consultative group. There may be a parallel here in the European
Community, which has something like an economic and cultural consultation
committee that works with it on various subjects. Suggestions for increasing
transparency include public sessions and increased access to reports and other
documents. Short of amending the agreements, there are many steps that can
be taken to strengthen the institution and its agreements. It is worthwhile to
focus our efforts on these steps. Clearly, this brief article only touches the
surface, so let us hope much further analysis and discussion on these and
other WTO ‘constitutional issues’ will occur in the near future.
9
See Jeffrey J. Schott and Jayashree Watal, Decision-making in the WTO (Institute of International
Economics Policy Brief No. 00–2, March 2000) http://www.iie.com/NEWSLETR/news00–2.htm
(suggesting that ‘the WTO needs to establish a small, informal steering committee (20 or so in
number) that can be delegated responsibility for developing consensus on trade issues among the
member countries’).