WTO NEWS: SPEECHES DG PASCAL LAMY
19 May 2006, Sorbonne, Paris
The Place and Role of the WTO (WTO Law) in the International Legal Order
Address before the European Society of International Law
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I am particularly honoured by your invitation to this Second Biennial
Conference of the European Society of International Law. Indeed, I am
both honoured and pleased, not only because I am in Paris, but above all
because I subscribe to the ESIL project, the objective of which is to
develop trade and promote a better understanding among all persons
working in the field of international law.
Admittedly, I have only distant memories of the Hague Academy of
International Law where I once worked on estoppel, but the general theme
of this conference — International Law: Do We Need It? — convinced me
that there was room, this evening, for a non-specialist. It is in that
capacity that I will be speaking to you, in the hope that I can
contribute the views of a practician on the place and role of WTO law
within the international legal order. In doing so, I am seeking to
establish a constructive dialogue between doctrine and practice in the
hope of improving normative and institutional coherence within the
international legal order.
Before beginning, I wanted to mention that at the request of the
European Society of International Law, my address will be partly in
French and partly in English in order to use the ESIL's two official
languages.
Trade is at the origin of entire segments of public international law,
and accounts for one of its main sources: the treaty. Indeed, one of the
first international legal instruments to leave its trace in history was
the commercial treaty between Amenophis IV and the king of Alasia
(Cyprus) during the XIV century BC. This treaty exempts Cypriot traders
from customs duty in exchange for the importation of a certain quantity
of copper and wood. Nothing has fundamentally changed since: at the
beginning of the XXI century AD we still have bilateral trade
agreements. But they now have to be notified to the WTO where they are
checked for consistency with international trade rules.
The international legal order, on the other hand, has evolved
dramatically. The great empires have disappeared into history. Philippe
le Bel and Jean Bodin's jurists progressively conceptualized the notion
of sovereignty, the treaties of Westphalia ushered in the pre-eminence
of a society of sovereign States, the Congress of Vienna of 1815 laid
the foundations of multilateralism, and the XIX century invented the
first international organizations. With the creation of the League of
Nations followed by the United Nations system, and finally, with the
disintegration of the Eastern Bloc, the XX century saw the evolution of
traditional international law between States towards a contemporary and
universal international law open to new players such as the
international organizations and the non-governmental organizations.
Thus, the international legal order has gone through a number of
upheavals. But its evolution has been neither linear nor homogenous -
which is why international society still bears the marks of several
historical stages of the process.
As a metaphorical illustration, let us take the three physical states of
matter: gas, liquid, and finally solid. Today's international legal
order is made up simultaneously of these three states: gas is the
coexistence of particles devoid of any hierarchical differentiation: the
Westphalien order made up of sovereign States organized according to an
essentially “horizontal” logic with a decentralized responsibility
mechanism. The solid state is reflected in the European Union, the
perfect example of an international integration organization which
produces rules that it interprets “autonomously” and whose primacy and
direct applicability it guarantees through a system of judicial remedy.
The judicialization of the responsibility of member States for the
violation of Community law is a cornerstone of this integrated legal
order. Between the gaseous state and the solid state, there remains the
liquid state. It is to this category that the WTO belongs. Neither
entirely vertical nor entirely horizontal in essence, resembling an
intergovernmental cooperation organization in certain respects while
closer to an international integration organization in others, the WTO
represents a unique legal order or system of law. At the risk of
oversimplification, in fact, I will draw no distinction between a system
of law, a legal system and a legal order. The reason why the
international legal order exists in several physical states is that it
is evolving; and the WTO is both a product and a vehicle of that
evolution.
Indeed, the WTO is an international organization that brings together
two concepts of international law. Leaving aside one or two
specificities, it is a permanent negotiating forum between sovereign
states and is therefore a cooperation organization akin to the
international conferences under traditional international law. But it
also comprises a sophisticated dispute settlement mechanism which makes
it an integration organization, rooted in contemporary international
law. In simple terms, the WTO's sophisticated dispute settlement
mechanism makes it a distinctive organization.
Above all, the WTO comprises a true legal order. If we go by professor
Jean Salmon's definition, “a body of rules of law constituting a system
and governing a particular society or grouping”, we see that there
exists, within the international legal order, a specific WTO legal
order. The WTO system has two essential attributes: valid rules, and
enforcement mechanisms. But the fact that it is specific does not mean
that it is insularized or isolated. These are the two points that I will
be discussing here today in an effort to explain firstly how this legal
system fits into the international legal order, and secondly, how it
links in with the other legal systems.
Let us begin with the first point, and see what makes the WTO a
unique legal system within the international legal order.
The WTO is an international organization. This may seem obvious, and yet
it took over 50 years to achieve that result. This protracted effort to
acquire a legal existence has left its marks.
The GATT, which was replaced by the WTO in 1994, was a provisional
agreement that entered into force in January 1948 and was to disappear
with the treaty creating the International Trade Organization. Since
that treaty never entered into force, the GATT remained, for a half a
century, an agreement in simplified form which, in principle, did not
provide for any institutional continuity. Thus, the GATT did not have
“Members” but “contracting parties”, a term which highlighted the purely
contractual nature of the arrangement. Without any international
organization in the strict sense of the term, and therefore without a
separate international legal personality, the GATT could only operate
through its CONTRACTING PARTIES and, for its every day work, with the
support of the Interim Commission for the International Trade
Organization (ICITO), a provisional commission responsible for setting
up the ITO.
Thus, it was almost 50 years later, with the Marrakesh Agreement, that a
true international organization was finally created, i.e., according to
the definition supplied by the International Law Commission in its draft
articles on the responsibility of international organizations, “an
organization established by a treaty or other instrument governed by
international law and possessing its own international legal
personality”. In order to avoid any ambiguity, the Agreement
Establishing the WTO states in Article VIII that the Organization shall
have legal personality.
The implications of this status are numerous. The Marrakesh Agreement
states that Members shall accord the WTO such privileges and immunities
as are necessary for the exercise of its functions. Thus, its legal
personality consists of an international facet, which enables it to act
at the international level, and an internal personality, which enables
it to conclude contracts for the purposes of its day-to-day operations
and among other things to employ its six hundred permanent staff
members. As with all international organizations, the competencies of
the WTO are limited by the principle of speciality. But alongside its
subject-matter competence, which is explicitly provided for in its
constituent instrument, the WTO also has implicit competencies. Thus,
the main consequence of this status of international organization is
that it enables the WTO to have its own will which is expressed in a
legislative output within the limits fixed by its constituent
instrument, and to interact with other international players.
As a true international organization, the WTO now comprises an
integrated and distinctive legal order: it produces a body of legal
rules (1) making up a system (2) and governing a community (3).
(1) A body of legal rules, first of all. The WTO is a treaty
comprising some 500 pages of text accompanied by more than 2,000 pages
of schedules of commitments. Moreover, 50 years worth of GATT practice
and decisions — what we call the “GATT acquis” — have been incorporated
in what constitutes the new WTO treaty. WTO rules are regularly
renegotiated. While it is true that the WTO Secretariat and the WTO
bodies do not have any general power to adopt formally binding rules,
the WTO bodies are able to adopt effective decisions that provide
pragmatic responses to specific needs, and in that sense, they do
produce a kind of secondary legislation. The system is no longer based
solely on the principles of a certain diplomacy which often led, under
the GATT, to the adoption of negotiated solutions that reflected the
relative power of the States involved. The WTO does not produce equity,
in the meaning given to the term by public international law — rather,
it produces legality.
(2) Secondly, these legal rules form an integrated system.
Indeed, the WTO agreements are integrated in a “single undertaking”
which forms an entity that is meant to be coherent. A number of
provisions recall this fact, and in particular Article II:2, which
states that the multilateral trade agreements “are integral parts” of
the Agreement Establishing the WTO and are “binding on all Members”.
This is why they appear in annex to the Agreement Establishing the WTO.
In the Indonesia — Autos dispute, the panel which ruled in the first
instance recalled that there was a presumption against conflict between
the different provisions of the WTO treaty since they formed part of
agreements having different scopes of application or whose application
took place in different circumstances. On several occasions, the Dispute
Settlement Body (DSB) reaffirmed that Members must comply with all of
the WTO provisions, which must be interpreted harmoniously and applied
cumulatively and simultaneously. Thus, the WTO treaty is in fact a
“single agreement” which has established an “organized legal order”.
(3) Thirdly, WTO law governs a community, namely its Members. In
United States — Section 301, the Panel confirmed the existence of a
GATT/WTO legal order and even seemed to suggest that this order was
characterized by its “[i]ndirect impact on individuals”. For, by
contrast, “when an actual violation takes place ... in a treaty the
benefits of which depend in part on the activity of individual operators
the legislation itself may be construed as a breach, since the mere
existence of legislation could have an appreciable 'chilling effect' on
the economic activities of individuals.” The qualification of nations no
longer only as objects of WTO law, but also as subjects, is still
disputed. Leaving that debate aside, I would say that the WTO rules
above all effectively govern the community of its Members, since failure
to comply is punishable in the framework of the DSB. In other words,
they do form a new legal order as defined above.
However, this integrated legal system is not “clinically isolated”:
there is a presumption of validity in international law and the rules of
its treaties must therefore be read in harmony with the principles of
international law. Thus, the WTO legal order respects, inter alia, the
sovereign equality of States, good faith, international cooperation, and
the obligation to settle disputes peacefully, not to mention the rules
of interpretation of conventions which the Appellate Body, for example,
applies without hesitation. The WTO respects general international law,
while at the same time adapting it to the realities of international
trade. In joining the international legal order, the WTO has ended up
producing its own unique system of law.
Leaving aside the doctrinal debate on the autonomy of international
economic law, it is clear that WTO law is largely a circumstantial
application of international law in general.
I shall illustrate this with two examples, two principles of general
international law which the WTO has brought to life in its own manner
and on which it has left a durable imprint: the sovereign equality of
States and the obligation to settle disputes peacefully.
The sovereign equality of States requires formal equality between States
of different sizes and power. This principle is fully respected at the
WTO.
While most international economic organizations have a restricted body
alongside their plenary body, the WTO is unusual in that the totality of
its Members participate, as a matter of law, in all of its bodies from
the Ministerial Conference, which meets at least once every two years,
to the General Council, which functions during the interval, not to
mention each of the councils and committees. All of the decisions are
taken according to the principle “one government/one vote” and by
consensus. While it is true that this rule of consensus is responsible
for a certain sluggishness in the negotiations, it does enable all
States, whatever their share in international trade, to express their
views and to participate on an equal footing.
The principle of equality is also reflected concretely in the
substantial rules of the WTO. For example, in the form of the principle
of non discrimination it can be found in the most favoured nation clause
and the national treatment rule. It also underlies the principle of
reciprocity, which is at the heart of the negotiating mechanism. Indeed,
as recalled by the UN Secretary-General before the General Assembly in
2004, equality is a fundamental requirement:
“At the international level, all States — strong and weak, big and small — need a framework of fair rules, which each can be confident that others will obey. Fortunately, such a framework exists. From trade to terrorism, from the law of the sea to weapons of mass destruction, States have created an impressive body of norms and laws.”
But as Kofi Annan points out, these rules must also be fair — which is
why the WTO goes beyond formal equality and seeks to establish real
equality. True equality can only exist between equals. When it comes to
trade, some of the less developed countries require certain
flexibilities if trade and development are to continue to exist side by
side. So the developing countries can enjoy non-reciprocal benefits, in
particular special and differential treatment. This deviation from the
GATT principles for the developing countries was made official in 1964
with the addition to the GATT text of part IV, “Trade and Development”.
Article XXXVI.8 states that “[t]he developed contracting parties do not
expect reciprocity for commitments made by them in trade negotiations to
reduce or remove tariffs and other barriers to trade of the less
developed contracting parties.” And there is also the so-called Enabling
Clause, which provides for the establishment of a “generalized system of
preferences” that authorizes the developed countries to grant tariff
advantages to the developing countries as an exception to the most
favoured nation clause. These are positive discrimination mechanisms to
ensure effective equality among Members. They are in no way inconsistent
with the sovereign equality of States — on the contrary, precisely as in
the case of domestic laws, where social legislation is an essential
corollary to equal dignity of men and women, this adaptation of
applicable rules to the real situation of States is a way of ensuring
more genuine equality. You will probably recognize, here, the very
pertinent remarks of my old friend Professor Alain Pellet.
The WTO, then, rests largely on the principle of sovereign equality of
States. But this does not mean that it is incapable of showing the kind
of pragmatism that befits the area of trade in applying the principles
of traditional international law.
Let me add, with regard to the sovereignty of States, that in principle,
only sovereign States are equal. This is why in principle, the
traditional international organizations are made up of States only. It
is true that the WTO remains an inter-State framework. However, once
again it has been able to adapt to the evolution of the international
society and the emergence of new actors.
Members may be “customs territories”, so that Chinese Taipei has been
able to join the WTO, and Hong Kong has been able to continue
participating as an autonomous Member following its return to China.
Similarly, the participation of the European Community as a WTO Member
is unique. In the 1970s, the Commission participated de facto in GATT
meetings, substituting for the European Economic Community Members to
express a common position. With the creation of the WTO, this practice
was formalized. The Organization's constituent treaty provides that the
number of votes of the European Communities and their member States
shall in no case exceed the number of their member States. What is new
here is above all the participation of the Community alongside its
member States.
Also worth mentioning in this respect is the growing participation of
NGOs — a term which the WTO interprets in a very broad sense. Article
V:2 of the Agreement Establishing the WTO stipulates that “[t]he General
Council may make appropriate arrangements for consultation and
cooperation with non-governmental organizations concerned with matters
related to those of the WTO.” There has been no detailed arrangement to
date, but in 1996, the General Council adopted guidelines specifying the
nature and scope of relations between the WTO Secretariat and the NGOs.
These new rules have served as the basis for a policy of greater
transparency towards the NGOs. This does not mean, however, that they
are allowed into the actual negotiating forum: the WTO remains an
inter-State negotiating framework. Nor are the NGOs given access to the
Dispute Settlement Body, although they have been allowed a growing role
in the proceedings through amicus curiae briefs since the report of the
Appellate Body in United States — Shrimps.
It is in fact necessary to preserve the inter-State framework of the WTO
while keeping an ear open to the non-State actors that represent civil
society. This balance aims to ensure that the WTO acts in the general
interest which, in principle, is embodied in the State, while the NGOs
defend — quite legitimately — interests that are often specific.
Nevertheless, by recognizing the role of the NGOs the WTO is
contributing to their impact within the international legal order. Thus,
the WTO has also acted as a vehicle in the evolution of international
law towards its contemporary form, and indeed a driving force in the
progressive transformation of international society into an
international community.
*
Let us turn to another example of the WTO respecting general
international law while adapting it to the constraints of its own legal
order: the principle of the obligation to settle disputes by peaceful
means.
This obligation is a principle that lies at the heart of general
international law and is enshrined in the United Nations Charter.
Twenty-five years later, the General Assembly voted the famous
Declaration on the seven principles of peaceful coexistence, which
recalls that “States shall settle their international disputes by
peaceful means in such a manner that international peace and security
and justice are not endangered”. Thus, when they created the
international organizations, the States ensured that their chief goal
was to maintain peace through appeasement and prevention of
international tensions, and then introduced the dispute settlement
systems. In this context, the creation of a multilateral trading system
was a means of ensuring both peace through law and peace through
prosperity.
The implementation of the principle of the obligation to settle disputes
by peaceful means, with bodies created to that end, is a way of
institutionalizing international responsibility, the main characteristic
of which, in traditional international law, is decentralization. It has
now been established that States are responsible for any negative impact
of their wrongful acts; but the determination of their responsibility
and above all, its implementation, remain essential to the effectiveness
and efficiency of any legal system. One of the WTO's distinctive
features is its sophisticated dispute settlement mechanism which, as I
mentioned earlier, tends to make it more of an integration organization,
“solid” rather than “liquid”. Under Article 56 of the text of the
International Law Commission on “Responsibility of States for
Internationally Wrongful Acts” which appears in annex to General
Assembly Resolution 56/83, the WTO dispute settlement mechanism is a
special system, or lex specialis. Consequently, the DSB can go beyond
general international law on the road to communitizing WTO law — that
is, consolidating its legal system in the wake of an
institutionalization of international responsibility.
Although still influenced by its origins, when, in the words of
Professor Canal-Forgues, it was more of a quasi-judicial conciliation
mechanism, the WTO dispute settlement system introduced a new
“jurisdiction” which ensures the enforcement of rulings and
recommendations. At the same time, the procedure tends to preserve the
fundamental requirements of fair trial. It is a compulsory jurisdiction
that is broadly accessible to Members; it decides according to law; the
procedure for adopting decisions is quasi-automatic; rulings are made by
independent persons, and their implementation is subject to continuous
multilateral monitoring until full satisfaction of the complainant where
a violation has been found. Moreover, the Appellate Body functions more
or less like a court of cassation, which hears only matters of law. This
confirms the essentially legal nature of the system.
Above all, WTO jurisdiction is compulsory for all WTO Members. No Member
may oppose the initiation of a dispute settlement procedure by another
Member: in other words, that Member must submit to WTO law. Contrary to
what may happen in other international forums, for example the
International Court of Justice, all WTO Members have, by definition,
accepted the compulsory and exclusive jurisdiction of the Dispute
Settlement Body for all matters relating to the WTO agreements.
In order to avoid the fragmentation of the dispute settlement mechanisms
that existed under the GATT regime, the Marrakesh agreements also sought
to preserve the unity of the system under the DSB. Thus, the settlement
of all disputes relating to WTO rules has been placed under the auspices
of a single institutional body, the Dispute Settlement Body, and is
subject to a single body of rules and procedures contained in the
Understanding. In other words, it is an integrated system.
An important, and in many ways innovative feature of this system is the
presumption of legal and economic interest in bringing proceedings,
which confirms the hypothesis of a “communitization” of WTO law: each
Member State can enforce WTO law whether or not it has a direct and
personal interest — in the interests, so to speak, of the “community of
States parties”. This principle, which dates back to the GATT period,
was revived by the Appellate Body in EC — Bananas when it confirmed that
the United States had sufficient interest to bring proceedings against
the European Community, even though, in practical terms, the Americans
did not export bananas. In other words, any State may initiate dispute
settlement procedures on the basis of a claim that another Member is not
complying with its obligations under WTO law.
Everything is done to ensure that the complaint, if it is substantiated,
is followed by concrete effects. After the adoption by the panel, and
possibly the Appellate Body, of their “recommendations”, WTO Members
continue to monitor and to follow up the implementation by the losing
country of the conclusions of the case. Furthermore, if the conclusions
are not fully implemented, the winning party that so requests may impose
countermeasures in the form of trade sanctions.
What can we conclude from all of these mechanisms? First of all they are
the confirmation of a certain “communitization” that is under way at the
WTO, with an institutionalization of international responsibility. The
idea is essentially to ensure respect for the rule rather than
reparation, a clear sign of the transformation of a society into a
community. It is no longer the interest of the adversely affected party
that counts, but the common interest. Indeed, violation of the law that
applies to the community is in itself an infringement of the rights of
all of the States parties, which are all entitled to feel that they have
been adversely affected. In other words, responsibility is generated by
an objective “fact”: it is the result of non-compliance, whatever the
consequences may be.
But what is interesting about the institutionalization of international
responsibility by the Dispute Settlement Body is that sovereign States
ultimately retain a certain control on the result of peaceful settlement
of disputes. When it comes to enforcing the consequences of a DSB
decision, we revert to law in its most traditional form, since the
decision in fact authorizes the State that has won the case to exercise
its right to countermeasures. The countermeasures are determined by the
State itself, which is free within the limits of the treaty and subject
to arbitration, to decide on their scope. These countermeasures
(formerly “unarmed reprisals”) are the product of international law in
its most traditional form: the right of each State to take the law into
its own hands. Thus, there is a margin of controlled freedom or
sovereignty, a balance between the decentralized responsibility of
traditional international law and the complete jurisdictionalization of
the peaceful settlement of disputes. The WTO is one of the rare systems
to have truly succeeded in regulating the countermeasures applied by the
powerful States by making their application contingent on the prior
collective approval of Members.
In the end, I share the view of Professor Ruiz-Fabri: to all intents and
purposes the WTO is a true jurisdiction, since the political control
that the DSB is able to exercise remains largely theoretical. The
“reverse” consensus mechanism practically automatically requires the DSB
to reach a decision as long as the complainant remains determined to
pursue the case.
Thus, WTO law is a body of legal rules making up a system and governing
a community. As such, the WTO incorporates an integrated and distinctive
legal order. Bringing together traditional international law, which it
respects, and contemporary international law, which it is helping to
promote, the WTO has become a part of the international legal order as a
sui generis legal system. But how does WTO law link up to the legal
systems of other international organizations within the international
legal order?
*
Which leads me to my second point, which will review “The link between
the legal system of the WTO and the legal systems of other international
organizations.”
The effectiveness and legitimacy of the WTO depends on how it relates to
norms of other legal systems and on the nature and quality of its
relationships with other international organisations. In order to
address more specifically the place and the role of the WTO's legal
system in the international legal order, I will briefly discuss how the
WTO's provisions operate and treat other legal norms, including norms
developed by other international organisations. My focus will first
address this issue from a normative point of view, and then from an
institutional perspective. I will show that the WTO, far from being
hegemonic as it is sometimes portrayed to be, recognizes its limited
competence and the specialization of other international organizations.
In this sense the WTO participates in the construction of international
coherence and reinforces the international legal order.
The WTO, its treaty provisions and their interpretation, confirms the
absence of any hierarchy between the WTO norms and those norms developed
in other fora: WTO norms do not supersede or trump other international
norms.
In fact the GATT, and now the WTO, recognizes explicitly that trade is
not the only policy consideration that Members can favour. The WTO
contains various exception provisions referring to policy objectives
other than trade, often under the responsibility of other international
organisations. Our Appellate Body has managed to operationalize these
exception provisions so as to provide Members with the necessary policy
space to ensure if they do wish, that their actions in various fora are
coherent.
Let me give you a few examples of how our system deals with non-trade
concerns and norms developed in other fora and you will see why I
believe that the WTO has been pro-active in stimulating efforts of
international coherence.
The WTO is of course a “trade” organisation; it comprises provisions
that favour trade opening and discipline trade restrictions. The basic
philosophy of the WTO is that trade opening obligations are good, and
even necessary, to increase people's standards of living and well-being.
But at the same time the GATT, and now the WTO, contains provisions of
“exceptions” to these market access obligations. The old — but still in
force — Article XX of GATT provides that nothing prevents a Member from
setting aside market access obligations when a Member decides,
unilaterally, that considerations other than those of trade must
prevail. This can happen when, for instance, a Member has made
commitments in other fora, say on an environmental issue, when such an
environmental commitment may lead to market access restrictions.
The revolution brought about by WTO jurisprudence was to offer a new
teleological interpretation of the WTO that recognizes the place of
trade in the overall scheme of States' actions and the necessary balance
that ought to be maintained between all such policies.
How is this done within the WTO legal order?
First, and very simply, the WTO treaty was considered and interpreted as
a “treaty”. In the very first WTO dispute, an environment— related
dispute (US — Gasoline) the Appellate Body concluded that the Panel had
overlooked a fundamental rule of treaty interpretation, expressed in the
Vienna Convention on the Law of Treaties (the “Vienna Convention”). I am
sure this sounds very obvious to you international legal experts! The
Appellate Body first recalled that these general rule on treaty
interpretation had attained the status of a rule of customary or general
international law. It was important to do so because, as you may know,
neither the USA nor the EC have ratified the Vienna Convention on
Treaties. Then the Appellate Body made its first statement, now famous,
on the nature of the relationship between the WTO and the international
legal order: “the GATT is not to be read in clinical isolation from
public international law.”
Recalling that pursuant to Article 31 of the Vienna Convention, terms of
treaties are to be given “their ordinary meaning, in their context and
in the light of the Treaty's object and purpose”, the Appellate Body
noted that the Panel Report had failed to take adequate account of the
different words actually used for each of the Article XX exceptions.
This led to a reading that offered much more flexibility in the
so-called environment exception and a categorical turn about in 50 years
of GATT jurisprudence.
In relying on the steps and principles of the Vienna Convention, panels
as well as the Appellate Body have since often referred to the “context”
of the WTO treaty and to non-WTO norms when relevant. I've been told
that no other international dispute system is so attached to the Vienna
Convention! In my view, this insistence on the use of the Vienna
Convention on Treaties is a clear confirmation that the WTO wants to see
itself being as fully integrated into the international legal order as
possible.
The linkage between the WTO and other sets of international norms was
also reinforced when the Appellate Body stated that in WTO, exception
provisions — referring to such non-trade concerns (environment,
morality, religion etc...) — are not to be interpreted narrowly:
exceptions should be interpreted according to the ordinary meaning of
the terms of such exceptions. In this context, our Appellate Body has
insisted that exceptions cannot be interpreted and applied so narrowly
that they have no relevant or effective application.
The Appellate Body further expanded the availability of WTO exceptions
in the following manner. In WTO exceptions are subject to what we call a
“necessity test”, a test having features of a “proportionality”
requirement. When assessing whether a measure is “necessary” for any
non-WTO concern, a new and additional balancing test is to be used.
Such an assessment will have to balance first (1) the “value” protected
by such measure — and the more important this “value”, the easier it
will be to prove the necessity (and the importance of the value will
affect the entire balancing process); second (2) the choice of the
measure chosen to implement such a non-trade concern — is it a complete
or partial ban on trade? is it a labelling requirement? is it a
discriminatory tax?; and finally a third element (3) the trade impact of
the restriction.
Once a measure prioritizing a non-trade value or standard is considered
“necessary”, there is always an assessment as to whether the measure is
indeed applied in a non-protectionist manner, pursuant to the chapeau of
Article XX. Here again the Appellate Body has said that when assessing
whether a measure complies with Article XX, a “balance” between WTO
market access obligations and a government's right to favour policies
other than trade must always be kept.
Our jurisprudence has determined that the “control” exercised by the
chapeau of Article XX of GATT, against disguised protectionist measures,
is in fact an expression of the “good faith” general principle or an
expression of the principle against the “abus de droit”. I quote
“the task of interpreting and applying the chapeau is, hence, essentially the delicate one of locating and marking out a line of equilibrium between the right of a Member to invoke an exception ... and the rights of the other Members under varying substantive provisions ... The location of the line of equilibrium, is not fixed and unchanging; the line moves as the kind and the shape of the measures at stake vary and as the facts making up specific cases differ.”
But let's not get dizzy or sea sick! Here again, faced with tensions
between Members' market access obligations and the right to favour
non-WTO considerations (and norms of other legal systems), the Appellate
Body has introduced a form of “balancing test” or “proportionality test”
between sets of values, or between sets of rights and obligations.
I hope it is now clear that WTO Members' trade restrictions imposed to
implement non-trade considerations, will be able to prevail over WTO
market access obligations so long as they are not protectionist. In
other words, the WTO provisions themselves recognize the existence of
non-WTO norms and other legal orders and attempts to limit the scope of
application of its own provisions, thereby nourishing sustainable
coherence within the international legal order.
Another fundamental principle of the WTO is that Members can set
national standards at the level they wish, so long as such Members are
consistent and coherent. For example, in the dispute between Canada and
the European Communities over the importation of asbestos-related
material, the Appellate Body stated clearly that France was entitled to
maintain its ban since it was based on authentic health risks and
standards recognized in other fora and no alternative measures could
guarantee zero risk as required by the EC regulation.
An additional feature of the WTO that confirms its integration into the
international legal order, is the legal value and status it provides to
international standards and norms developed in other fora. For instance,
the Sanitary and Phytosanitary (SPS) Agreement states that Members'
measures based on standards developed in Codex Alimentarius, the
International Office of Epizootics and the International Plant
Protection Convention are presumed to be compatible with the WTO. So,
while Codex, and others do not by any means legislate in the normal or
full sense, the norms that they produce have a certain authority in
creating a presumption of WTO compatibility when such international
standards are respected. The SPS Agreement provisions thus provide
important incentives for States to base their national standards on, or
conform their national standards to, international standards. Therefore
the WTO encourages Members to negotiate norms in other international
fora which they will then implement coherently in the context of the
WTO.
I could give you further examples but let me simply point to the
preamble of the WTO which, contrary to that of the GATT, explicitly
refers to sustainable development as an objective of the WTO. While it
is not yet clear whether sustainable development has crystallized into a
general principle of law, the reference to such an important non-trade
principle shows that the signatories of the WTO were, in 1994, fully
aware of the importance and legitimacy of environmental protection as a
goal of national and international policy.
In the famous US — Shrimps dispute this preambular language was
considered to indicate that further flexibility should be introduced
when interpreting “natural resources” in the environment exception, and
that it added, I quote: “colour, texture and shading to the rights and
obligations” of WTO provisions. It also made explicit reference to the
need to interpret WTO provisions — and specially the old GATT provisions
— in an “evolutionary manner” taking into account the ordinary meaning
of the terms of the WTO at the time of the dispute, rather at the time
of their drafting in 1947. This allowed the Appellate Body to consider
contemporary treaties that define “natural resources” and to conclude
that these definitions should also be used in the WTO so as to ensure
some international coherence with respect to natural resources.
I agree therefore with Professor Abi-Saab, from our Appellate Body, that
in using general principles of public international law in its
interpretation of the WTO provisions, the Appellate Body confirmed that
the WTO is operating within the compound of international legal order.
The WTO does, therefore, take into account other norms of international
law. Absent protectionism, a WTO restriction based on non-WTO norms,
will trump WTO norms on market access. In so doing, it expands coherence
between systems of norms or legal order. Moreover, I believe that in
leaving Members with the necessary policy space to favour non-WTO
concerns, the WTO also recognizes the specialization, expertise and
importance of other international organizations. In sum, the WTO is well
aware of the existence of other systems of norms and that it is not
acting alone in the international sphere.
Existing relations between the WTO and other international organisations
again reflect efforts of coherence within the international legal order.
Now that the WTO is an authentic international organisation will full
legal personality, it has set up an important network of formal and de
facto arrangements with other actors on the international scene. The
greater the coherence within the international legal order, the stronger
the international “community”.
Let's look briefly at the actual interactions between the WTO and other
international organisations. There are, for example, explicit WTO
provisions on IMF/World Bank/WTO coherence with an explicit mandate to
the Director General. There exists a series of inter-agency cooperation
on technical assistance and capacity building with several international
organisations. Indeed the current Round of negotiation is to some extent
premised on coherence, as we are suggesting a new “Aid-for-Trade
programme” which brings together several multilateral organisations and
regional development banks to assist developing countries in reaping the
benefits of trade opening !
We also have formal cooperation agreements with other international
organisations. For example, in the area of standards setting, we now
have a mechanism — The Standards and Trade Development Facility —
involving the WTO, World Bank, Food and Agriculture Organisation (FAO),
World Health Organization and the World Organization for Animal Health.
Some 75 international organisations have obtained regular or ad hoc
observer status in WTO bodies. The WTO also participates as an observer
in many international organisations. Although the extent of such
cooperation varies, coordination and coherence between the work of the
WTO and that of other international organisations continue to evolve in
a pragmatic manner. The WTO Secretariat maintains working relations with
almost 200 international organisations in activities ranging from
statistics, research, standard-setting, and technical assistance and
training.
As I wrote it in 2004 in a book about “international democracy”, I am a
firm advocate of international coherence. I wouldn't dare to say that
“international coherence” is a general principle of international law!
But I recall that international cooperation is one of the United Nations
objectives as stated in Article 1 of the UN Charter. I believe that
efforts of international coherence are the only way to ensure the
peaceful evolution of international relations and of our international
legal system. But international coherence is also crucial to ensuring
the legitimacy of the WTO and the effectiveness of trade rules.
The WTO's mantra in favour of trade openness plays a vital role in
Members' growth and development, but it's not a panacea for all the
challenges of development, neither is it necessarily easy to accomplish,
nor in many circumstances can it be effective unless it is embedded in a
supportive economic, social and political context and a coherent
multi-faceted policy framework. Trade opening can only be politically
and economically sustainable if it is complemented by policies which
address, at the same time, capacity problems (whether human,
bureaucratic or structural); the challenges of distribution of the
benefits created by freer trade; the need for sustainable environment;
the respect of public morals, etc. This is also about international
legal coherence.
All these policies are intertwined with the other treaty obligations of
WTO Members. So further international coherence will only assist in
getting the best out of the WTO ! Since WTO norms are not hierarchically
superior or inferior to any other norms (except jus cogens) States must
find ways to coordinate all these policies in a coherent manner. I
believe that the WTO favours and encourages such coherence.
But this is not enough and the description I just gave you is, to some
extent, misleading.
Although I personally believe in the need for more global governance, I
am a “pragmatic practitioner”. This brings me twice back down to earth!
As international legal experts, you are well aware that States find
themselves often faced with opposite — even contradictory — sets of
international obligations. Moreover, as treaties proliferate, so do
dispute settlement systems, and the potential for clashes with the WTO's
compulsory and binding dispute settlement mechanism.
Let me give you one example and you will quickly see the “cracks” in the
coherence of our international legal order. The EC — Swordfish dispute
was concerned with the following situation. In 1999, Chile enacted
swordfish conservation measures, by regulating gear and limiting the
level of fishing through the denial of new permits. Chile effectively
prohibited the utilisation of its ports for the landing and service to
the EC longliners and factory ships that disregarded minimum
conservation standards. The EC challenged those measures as being
contrary to its WTO transit. Chile demanded that the EC enact and
enforce conservation measures for its fishing operations on the high
seas, in accordance with United Nation Convention on the Law of the Sea
(UNCLOS). Chile responded to the EC's WTO challenge by initiating the
dispute settlement provisions of UNCLOS and invited the EC to the
International tribunal on the Law of the Sea (ITLOS). The substantive
issues before the WTO included the right of Chile to benefit from the
application of Article XX of GATT on the conservation of natural
resources, when acting pursuant to UNCLOS. The issue before UNCLOS could
have included whether Chile was entitled to regulate and limit access to
swordfish as part of a conservation programme.
In such a situation, it is conceivable that both instances would have
examined whether UNCLOS effectively requires, authorizes or tolerates
Chile's measures, and whether the Chilean measures were compatible with
UNCLOS, an element that could influence a WTO panel in its decision as
to whether Chile may benefit from the application of the exception
provision on environment. It is, therefore, conceivable that the two
fora may reach different conclusions on the same facts or on the
interpretation of the applicable law.
Fortunately, in that dispute, the parties reached an agreement to
suspend both their disputes before ITLOS and before the WTO. But in the
absence of a mutual agreement, the WTO panel would have proceeded much
faster than that of ITLOS. Short of any agreement between the parties
and in the absence of any international rule as to how these two
different mechanisms should interact, many scenarios may emerge. In
light of the quasi-automaticity of the compulsory and binding WTO
dispute mechanism, it is unlikely that a WTO panel would decline
jurisdiction because another dispute process — albeit more relevant and
better equipped — has been seized for a similar or related dispute. And
if both processes were triggered at the same time, it is quite probable
that the WTO panel process would proceed much faster than any other
process.
This is where part of the imbalance of our international legal order
remains. If the WTO, through its dispute settlement system, can show
that it does take into account the norms of other legal orders, many
still challenge the fact that it will be for the WTO judge to determine
the balance, the “line of equilibrium” between trade norms and norms of
other legal orders. Indeed, at present, if a measure has an impact on
trade, the matter can always be taken to the WTO dispute settlement
system fairly simply and quickly. The WTO adjudicating body will then
have to determine whether the trade restriction can find justification
in the exception provisions of the WTO. In assessing the invocation of
such WTO exception justification, the WTO judge may in fact be deciding
on the relative hierarchical value between two sets of norms.
Indeed, if a WTO Member invokes the environment exception to justify a
trade restriction adopted pursuant to an multilateral environment
agreement (MEA), in practice, it is the WTO judge who will determine
whether, and the extent to which, compliance with such an MEA can
provide a WTO justification for trade restriction. If, in support of its
invocation of the WTO exception for public morals, a Member points to an
International Labor Organization (ILO) resolution condemning a specific
State for violation of core labour standards, it is the WTO judge who
will end up deciding on the legal value and impact of such an ILO
resolution on international trade and its opposability to trade rules.
But I believe there are no reasons to provide the WTO with the exclusive
authority to operate the much needed coherence between norms from
different legal orders. The lack of coherence of our international legal
system is amplified by the relative power of the WTO and in particular
its dispute mechanism. This shows the discrepancy between the WTO's very
powerful enforcement mechanism and the traditional decentralized system
of counter measures still used in several legal orders. I do not think
that the solution lies in weakening our dispute system. Many aspects of
the WTO need to be improved but I believe that the WTO dispute
settlement system works well. The solution to the potential imbalance I
alluded to lies, I believe, in strengthening the enforcement (the
effectiveness) of other legal orders so as to rebalance the relative
power of the WTO in the international legal order.
This would not solve all our problems because we would then end up with
several powerful legal orders for which coordination would still be
lacking! We also need to address the fragmentation of international law
and the disorganized multiplication of international legal sub-systems.
Until then, legal orders and legal systems will continue to co-exist and
coherence will depend on ad hoc solutions based on the goodwill and
interests of the jurisdictions concerned. Several people have suggested
unsatisfactory solutions including a referral to the International Court
of Justice (ICJ) in situations of concurrent jurisdictions. A call for
order has already been made by the ICJ against the dangers of fragmented
and contradictory international law. The International Law Commission
has undertaken important work in that direction.
Let me now conclude:
Today's international legal order will be able to evolve peacefully only
to the extent that the existing legal orders evolve through mutual
respect. There is no exception to this rule and the WTO is well aware of
its importance.
The WTO has evolved from the GATT's closure. States signatories to the
GATT wanted to reinforce the status of the international trading system
and provided it with a formal international organization: the WTO. This
international organization is now up and running well; it even produces
effective norms of derivative law (droit dérivé). The legal value and
enforcement of those norms adopted by WTO bodies are matters for debate
but the WTO normative capacity, including as a forum of permanent
negotiations and its powerful but open dispute settlement mechanism,
confirms the sui generis nature of its legal order.
In addition the WTO makes full use of its international legal
personality and is now collaborating actively with other international
organizations. But there is more. In setting a system whereby good faith
norms developed in other fora are presumed to be WTO consistent, the WTO
not only gives due deference to other legal systems but it also
stimulates negotiations in such other specialized fora and reinforces
the coherence of our legal order. In this sense the WTO is an engine, a
motor energizing the international legal order. This is, in my view, the
place and the role of the WTO and its legal order in the international
legal order: a catalyst for international mutual respect towards
international coherence and even for more global governance, which I
believe is needed if we want the world we live in to become less
violent, be it social, political, economic or environmental violence.
Thank you for your attention.