Institutional Reform of the WTO

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Institutional Reform

of the WTO

Oxfam GB Discussion Paper

March 2000


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This discussion paper was produced by the Oxfam GB Policy Department. It draws on a paper commissioned

from Jacob Werksman, Senior Lawyer, at Foundation for International Environmental Law and Development

(FIELD), London. Parts of which were used to stimulate discussion in a workshop on WTO Institutional

Reform: A Development Perspective, held in Geneva in February 2000. The workshop was sponsored by theSouth Centre Pilot Project on WTO and Oxfam GB.

For further information, please contact Penny Fowler, Policy Adviser:

Tel: + 44 1865 312331

Fax: + 44 1865 312245

Email: [email protected]

Website: http://www.oxfam.org.uk
http://www.oxfam.org.uk/http://www.oxfam.org.uk/http://www.oxfam.org.uk/


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of the WTOContents

Summary ................................................................................................................................................. i

1. Introduction ..............................................................................................................................1

2. Agenda-setting and Decision-making .....................................................................22.1 Overview of the WTO ...................................................................................3

2.2 Lessons from other International Institutions ................................................42.2.1 Formal Rules

2.2.2 One Member One Vote/Equitable Geographic Distribution:

the UN System

2.2.3 Weighted Voting: the Bretton Woods System

2.2.4 Hybrid System: Global Environment Facility

2.3 Informal Practices and Mechanisms ..............................................................9

2.4 Reform Proposals...........................................................................................10

2.5 Preliminary Observations ..............................................................................11

3. The WTO Dispute Settlement System.....................................................................12

3.1 Design ............................................................................................................12

3.2 Practice...........................................................................................................13

3.3 Options for reform .........................................................................................14

4. External Transparency......................................................................................................154.1 Access to Information/Input of Information ............................................................ ...............16

4.2 Access to Policy-Making Processes..................................................................... ...................17

4.3 Access to Dispute Settlement Process.................... ............................................................ .....19

4.4 Options for Reform........................................................... ....................................................19

5. Global Governance ...............................................................................................................20 5.1 Meeting Global Challenges ..................................................................... ................................21

5.2 Review and Enforcement Mechanisms .................................................................. .................21

5.3 Global Policy Coherence.............................................. ...........................................................22

6. Conclusion...................................................................................................................................23


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of the WTO

Summary

The WTO is facing a crisis of legitimacy. In the aftermath of Seattle, the one point on which most WTO

Members appear to have reached consensus is that the Organisations method of operation has become

fundamentally unworkable. Even those WTO Members most in favour of a new Round concede that the WTOs

shadowy processes are more medieval than Millennial.

This paper argues that if the WTO is to produce decisions that are both effective and legitimate, its institutional

arrangements must be reformed to reflect its increasing membership, and the broadening scope and complexity

of the issues that it covers. Proposals for institutional reform must begin by addressing demands forgreater transparency and participation, particularly from developing country Members, but also from

representatives of civil society.

Agenda-setting and Decision-making

In Seattle, African, Caribbean and some Latin American Member countries took unprecedented steps publicly

to register their frustration at being excluded from the decision-making process. Their crucial concern is

representation in policy-making processes. The paper considers:

different models by which economically and politically weaker developing country Members could use

formal or informal constituency groups to ensure that the huge numbers of people they represent have a

voice at the WTO.

WTO Dispute Settlement System

Making use of the Dispute Settlement System (DSS) is another crucial requirement for developing countries

effective participation in the WTO. In theory, this system should strengthen and protect the interests of

economically weaker WTO Members which are less capable of exercising informal, diplomatic means for

ensuring enforcement of trade rules. It is, however, clear that participating in the DSS requires significant

human and technical resources that are beyond the means of many developing country Members. Options

for reform include:

the adoption of more specific special and differential treatment with regard to the timing of filings and the

implementation of rulings involving developing countries.

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the provision of more technical assistance for developing countries, and particularly least-developed

countries, in bringing and defending WTO disputes.

External transparency

Experience from the GATT and other international organisations show that constructive and open debates areessential to achieve successful negotiating outcomes. Options for reform that would improve the external

transparency of the WTO and help to increase public confidence that decisions taken there reflect the widest

possible range of affected interests include:

de-restricting WTO documentation to provide real-time public access.

increasing national parliamentary scrutiny of WTO policy-making.

establishing an accreditation scheme for and increasing the level of informal dialogue with civil society

groups.

allowing civil society representatives to contribute arguments relevant to WTO disputes.

Global governance

The Seattle talks re-emphasised tensions between WTO rules and international conventions and treaties on

human rights and the environment. WTO Members should consider how best to ensure that WTO rules

contribute to other international commitments such as the 2015 human development targets. This may require:

reforming the WTO mandate to make explicit that trade is not an end in itself.

more effective coordination between the WTO and other international institutions.

establishing mechanisms to improve understanding of the linkages between international trade policy and

equally important non-trade objectives, for example by expanding the scope of the Trade Policy Review

Mechanism.

establishing mechanisms to monitor the poverty impact of WTO sanctions.

Conclusion

The current period of reflection must produce WTO reforms that address demands for greater transparency and

participation, particularly from developing country Members, but also from representatives of civil society. This

will be essential for the WTO to overcome its current crisis of legitimacy and, ultimately, for the achievement of

a more equitable international trading regime.

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of the WTO

1. Introduction

The collapse of the WTO Ministerial Conference in Seattle has been attributed to a multitude of circumstances.

These range from conspiracies formed around American Presidential politics, to the impact of a wave of anger

against the pace and consequences of globalisation. In the aftermath, the one point upon which most WTO

Members appear to have reached consensus is that the Organisations method of operation has become

fundamentally unworkable. Even those WTO Members most in favour of a new Round concede the WTOs

shadowy processes are more medieval than Millennial, and have been outgrown by a larger, more diverse

and more engaged membership.

As heads cool after Seattle, questions have been raised as to whether the breakdown demands a reform of the

institution as a whole, or whether it merely revealed flaws in the management and timing of only one of the

WTOs institutional dimensions: the Ministerial Conference faced with demands for the launch of a new Round

of Multilateral Trade Negotiations. Between Ministerial Conferences, the WTO seemed to have been operating

smoothly. Previous efforts to launch trade Rounds under the GATT system had similarly buckled under

pressure, but were later re-launched when political conditions improved.

There are, however, sound reasons to believe that Seattle did expose a serious constitutional crisis. Since the

WTO came into being in 1995, it has not proved capable of reaching consensus on a significant issue of

substance. In this decision-making vacuum, policy is formed instead by non-decisions, that allow the status quo

to prevail, and by the creeping judicial activism of the WTO dispute settlement system. It is unlikely to be in

the long-term interests of any WTO Member to allow this combination of ambiguity and unpredictability tocontinue indefinitely.

This note seeks to structure a discussion on ways in which WTO procedures and institutions could be reformed

to make positive, legislative decision-making both more likely, and more transparent, accessible and

responsive to the interests of the entirety of its Membership. The central thesis is that if the WTO is to produce

decisions that are both effective and legitimate, it will require institutional arrangements that are better tailored

to its increasing membership, and to the broadening scope and complexity of the issues that it covers.

Proposals for more efficient decision-making must begin by addressing demands for greater transparency and

participation, particularly from developing county Members, but also from representatives of civil society.

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Institutional reform cannot, however, address what Oxfam believes are the fundamental inequities in many of

the WTO rules. The single undertaking approach of the Uruguay Round, which the Quad countries have

sought to extend to future rounds, wrongly assumes a parity in the readiness of all WTO Members to undertake

commitments in areas such as intellectual property rights and investment liberalisation. Many developing

country economies are not prepared for such reforms, and should not be pressurised into such all or nothing

bargains.

Oxfam believes that any reform of WTO processes must be complemented by concrete moves to change unfair

trade rules and measures which disadvantage poor countries. More than ever before, the major trading powers

need to demonstrate political commitment to ensuring that developing countries derive a fair share of the

benefits of any further multilateral trade liberalisation. A relatively easy place to start, is for developed countries

to grant tariff and quota free market access for all exports from the least-developed countries, outside of any

negotiations towards a new round. This would both generate economic benefits for poor countries and people,

and provide an important signal of goodwill.

The discussion that follows is divided into four main parts. The first two parts focus on the institutions and

procedures governing the WTOs two primary functions: 1) agenda setting and decision-making, and 2) dispute

settlement. Part three explores opportunities for improving the external transparency of the WTO system to

civil society. Part four examines the WTO in the broader context of global governance and its relationship to

other international institutions and mechanisms.

2. Agenda-setting and decision-making

This part seeks to raise and to provide a framework for addressing the following questions about agenda setting

a decision-making:

Do WTO formal rules and informal practices exclude the effective participation of developing countries?

Is WTO institutional reform in the interest of developing country Members?

Are reforms possible/necessary at the formal or the informal level?

If so, what models and precedents from other institutions might guide such a reform?

In exploring models, precedents and recent new proposals for redesigning the WTO, the discussion will focus

on two main questions:

Is there a need for a smaller or executive body within the WTO?

What principles or rules could help to create formal or informal constituencies within the WTO

membership?

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2.1 Overview of the WTO

The WTO, like all international institutions, has both formal and informal rules that shape decision-making.

Formal rules are, by definition transparent in their design. Because they have been brought into force by the

consent of states, in theory they have an inherent legitimacy. But that consent may itself not have been

achieved by legitimate means. Furthermore, the combination of states interest that established the institutions

formal rules may have changed over time, opening a gap between past and present legitimacy. Into these gapsinformal practices tend to appear. By contrast, informal mechanisms can be inherently non-transparent in

nature, both to members of the regime, and to the outside world. Informal practices may not have emerged

through the express consent of the membership. They may, nonetheless have a de facto legitimacy if they

reflect the interests of all participating states.

The WTO Charter sets out the formal rules and institutions that govern WTO decision-making, which, in

essence, provide for one equal vote for each member and universal participation of all members in all meetings.

Decisions are to be taken by consensus, which is reached when no Member, present at the meeting when the

decision is taken, formally objects to the proposed decision. If consensus should fail, various rules of One-

Member-One-Vote (OMOV) majority voting can be invoked. On their face, these rules appear to be a model of

democracy.

However, the participatory and democratic nature of the WTOs formal rules masks the informal procedures

that govern day-to-day decision-making. Voting has been and continues to be avoided in the WTO, and indeed

has never taken place. Consensus-based decision-making provides an environment in which the strong and the

few can block decisions until they are satisfied their interests are protected. It is difficult for developing country

Members to resist a consensus pushed by countries with greater economic power and higher stakes in the

decision, particularly if they fear that they may lose more than they gain by making any one particular stand.

This situation was best illustrated in the context of the appointment of the WTOs new Director General, which

most likely would have been resolved differently had the developing country majority of WTO Members been

allowed to express their numerical power through a vote.

With regard to the negotiation of new rules, each previous General Agreement on Tariffs and Trade (GATT)1

round of trade negotiations developed its own methods of negotiation, but followed a basic top-down,

pyramidal approach. Tariff reductions operate on the basis of reciprocal; largely bilateral deals struck betweenthe major trading countries, which are then extended outward via the Most-Favoured Nation (MFN) principle.

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Negotiations would typically begin with the core group of Quad countries (Canada, the EC, Japan and the

US), and would then, through the Green Room process, seek to accommodate the interests of mid-sized

developed and the largest developing countries. Thus, informal methods have emerged to fill the power gap

between a system that is formally based on OMOV, but that is regulating economic interests overwhelmingly

concentrated in the governments of a handful of members.

1 The GATT was established in 1948 as a provisional system for international trade negotiations. It was

subsumed into the WTO as a trade agreement in 1995.2The MFN principle prohibits discrimination among Member countries. No Member is to give special trading

advantages to, or discriminate against, another; all are to be treated equally favourably.

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Any proposals to reform the WTO will have to recognise that WTO informal structures responded to elements

that have been essential to decision-making in the past:

the need to negotiate in groups of a manageable size, and

the need to accommodate the interests of economically powerful Members.

The risk inherent in seeking to re-balance these informal arrangements, either through informal or formal

arrangements, is that core negotiations could be driven further underground.

2.2 Lessons from other International Institutions

2.2.1 Formal Rules

Other international institutions have sought to bridge the gap between efficiency in decision-making and

universal participation by creating Executive Bodies that limit participation to a manageable number of

Members. Indeed, the WTO is a rare exception in large, rule-based institutions, to have no formal Executive

Board of limited Membership. Even its General Council which is intended to run the institution on a day-to-day

basis, is open to all Members.

Limiting the number of seats at the table requires that the membership form itself into representative

constituencies. The ticket of admission to the table can be designed in any number of ways. The chart below

indicates three basic categories of approaches common in international institutions: the UN OMOV/equitable

geographic distribution system, the Bretton Woods shareholder model, and a third category of institutions

with sui generis (of its own kind) rules designed to reflect members interests related to specialised areas of

international co-operation.

2.2.2 One Member One Vote/Equitable Geographic Distribution: the UN System

The system of one member one vote (OMOV) combined with equitable geographic distribution (EGD)

representation has become a hallmark of most UN institutions. This division of the globe dates back to adecision of the General Assembly, in 1965, adopted for the purposes of electing 6 Vice Presidents to help

manage the UNs growing ranks. EGD divides the world into 5 regional groupings: the African region, Asia,

Latin America and the Caribbean (GRULAC), the Western European and Others Group (WEOG), the Eastern

European Group, and the Permanent Members of the Security Council.

The EGD principle is based on perceptions that this manner of dividing the world may have come reasonably

close to reflecting common political, economic and cultural interests. The geographic aspect is stretched to

allow Australia and New Zealand to join the US and Canada in the WEOG. The division of Europe into east

and west was justified over the decades to reflect the common interests of the Communist Bloc. Until the end

of the cold war, the system was perceived as legitimate by the majority of UN Members. It ensured that the

developing countries could always command a 3/5s ratio of memberships in any bodies based on this principle,

and could expect the two remaining groups of industrialised countries to be on opposite sides of most

ideological curtains.

The dividing lines followed in the EGD system appear increasingly anachronistic. This is most evident in the

collapse of the Eastern Bloc, the estrangement of Russia, and the expansion of the European Union. Asia, too is

becoming more diverse as a region, which by the UN methodology stretches to include all countries between

Jordan and Japan. In practice, the regional groups system has been used primarily for the purposes of

nominating officials for election to bureau and executive bodies, and not as a means for substantive decision-

making. Within UN bodies, policymaking constituencies have instead tended to employ informal interest

groups, or caucuses, for substantive decision-making. These are discussed in the next section.

Any developing country WTO Members thinking of importing the EGD system to the WTO will have to assess

whether the UN regional groupings make sense from a trade perspective. While the stability of the UN

regional groups has proved a source of predictability within that system over the past 50 years, it has not proved

particularly flexible in the face of changing circumstances. A question to be considered is whether geographical

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divisions, which by definition are unchangeable make sense in an economic context, characterised by constant

and rapid change.

2.2.3 Weighted Voting: the Bretton Woods System

The Bretton Woods system, with its one share/one vote or a weighted majority system, is based roughly on the

practice of share ownership and voting within commercial institutions. The World Bank and the InternationalMonetary Fund were to provide functions similar to commercial banks, acting as publicly funded lenders of

last resort for development projects and balance of payments difficulties. The formation of constituencies in

the Bretton Woods system is made necessary by the existence of executive bodies of limited size. For both the

Fund and the Bank, the full membership meets annually as a Board of Governors, but day to day operations are

overseen by an elected Board of Executive Directors. Election to the Executive Board (and thus the formation

of constituencies) is based on the institutions allocations of shares and voting rules.

The distribution of votes in both the Fund and the Bank begins with the allocation of an equal number of votes

to each Member, in recognition of the principle of sovereign equality. Within the IMF, each member is then

given additional votes on the basis of its quota allocation, which is calculated from its respective economic size

and strength. The calculation is based on the Bretton Woods formula which takes into account GDP,

international reserves, and a number of other macroeconomic criteria. In practice this formula is subject to ahigh degree of political manipulation as Members seek to maintain power within the system. The size of a

members quota determines not just the amount of votes it holds, but also the amount of gold or currency

reserves that member must be prepared to make available to the Fund for members use. Similarly, a members

votes in the Bank are determined by its share in the Banks capital. Thus the main rationale for this approach is

to ensure that the power structure within the institution gives the most power to those members that have the

largest investment in the institution.

The five largest shareholders of both the Fund and the Bank are automatically entitled to seats on the Executive

Boards of each institution. The remaining 19 seats are filled either by individual members who have reached a

certain threshold amount of quota/share ownership, or by group constituencies formed by the remaining

shareholders. The membership of the group constituencies changes occasionally, but a number of basic patterns

have emerged: regional/northern constituencies, including the Nordic group and the EC group; regional

southern constituencies, including south east Asia, and southern Africa; mixed North/South constituencies thatare anchored by a large Northern shareholder and that have formed along historical/colonial ties, such as the

Spain/Latin America, and Canada/Caribbean groups. Once elected, the members of the Executive Board have

the authority to cast the number of votes held by the constituency they represent. While the Executive Directors

are not allowed to split up their votes (they must vote all the votes within their constituency the same way),

they are not bound to canvas or consult members of their constituency before voting. Most decisions are taken

by consensus, though voting does occasionally prove necessary on controversial issues.

The Bretton Woods weighted voting and elected constituency system has been criticised as illegitimate for a

number of reasons. Although the shareholder system allows investors the power to protect their investment, it

fails to reflect that the impact of Bank and IMF policy is felt most strongly by its minority shareholders. These

countries, which draw most frequently on IMF/Bank resources, and are most likely to be subject to its

conditionalities, should have a more powerful voice in how policies and priorities are set and enforced. The

system leaves a significant democratic deficit as well. The Bretton Woods formula upon which the powerstructures are based, does not take into account the relative population of members, allowing rich, but less

populous countries more votes than poorer but larger countries.

Other examples of weighted majority voting systems include international commodity agreements, which

balance power between producers and consumers of the commodity and weight votes by market share; the

International Energy Agency, which weights votes on the basis of oil consumption; and the UN Convention on

the Law of the Sea, which seeks to balance the rights of coastal, land-locked, small island and other relevant

groupings of states.

Constructing a weighted majority system for the WTO based on objective criteria would be technically possible,

but overwhelmingly challenging from a political perspective. It would require agreement on a number of

objective criteria by which voting rights could be shared out. WTO Members do not, of course, invest in

shares of the WTO, so some other criteria would have to be agreed. The WTO already calculates a scale of

assessments for the purpose of collecting the Organisations budget. According to the WTOs financial rules,

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each Members contribution to the budget is assessed in accordance with its share of international trade (imports

plus exports) in relation to the total international trade of all WTO Members in goods, services and intellectual

property rights. Members that drop below a certain level are required to make a symbolic contribution. If the

Bretton Woods approach would apply to the WTO, votes could be distributed along similar lines.

Using a formally weighted decision-making system to distribute power and construct constituencies within the

WTO would basically formalise the informal structures that allow the most powerful trading nations todominate the WTO processes. It is difficult to imagine any political support from the WTOs present

developing country majority.

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2.2.4 Hybrid System: Global Environment Facility

One hybrid between the UN and the Bretton Woods systems that may hold some useful lessons for building

constituencies and executive bodies in the WTO, is the Council of the Global Environment Facility (GEF). The

GEF underwent a conscious process of restructuring aimed at transforming an informal and donor-dominated

arrangement into an equitable and balanced system of governance. This required a balancing of powerbetween industrialised countries, which are the main source of GEF funds, and the developing countries and the

economies in transition which would host GEF projects.

While all 166 GEF Participants may attend the Participants Assembly, the main authority and day-to-day

functioning of the GEF are vested in the Council. The Council is made up of 32 constituencies structured on

the basis of a combination of donor/recipient status, geographical distribution and self-selection in accordance

with agreed subjective criteria, as is indicated in the chart, below. The donors right to protect their financial

investment is balanced against the recipients right to influence funding policies on projects taking place in their

countries. The use of subjective criteria to guide the formation of constituencies encourages Parties to ensure,

for example that at least some of the constituencies are held by countries that share global, regional and sub-

regional concerns, or that have natural resource endowments or environmental vulnerability in common.

Voting (which has never taken place) would be carried out on a double weighted majority, which requires both

a majority based on level of contribution (which favours donors) and a majority based on the number of

Participants (which favours recipients).

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Institution Plenary Executive Constituencies Rationale

United

Nations

General Assembly

188 Members

OMOV

Security Council

5 Permanent

Members

10 rotatingconstituencies

OMOV/veto

Africa/Asia: 5

Eastern Europe: 1

GRULAC:2

WEOG:2Permanent: 5

Post-WWII power

Equitable

Geographic

Distribution (EGD)

ECOSOC

54 rotating

Members

OMOV/simple

majority

Africa: 14

Asia: 11

Eastern Europe: 10

GRULAC:10

WEOG:13

EGD

Bretton

Woods

IMF

Board of Governors

182

one quota one vote

varying majorities

Executive Board

5 appointed largest

shareholders

19 elected from

remainingshareholders

Single Constituencies:

US

Japan

Germany

FranceUK

Saudi Arabia

Russia

China

Shareholder model:

Financial

commitment equals

power

Regional, historical

and colonial ties

World Bank Board of Governors

181

one share one vote

varying majorities

Executive Board

5 appointed largest

shareholders

19 elected from

remaining

shareholders

Single constituencies:

US

Japan

Germany

France

UK

Saudi Arabia

Russia

China

Shareholder model:

Investment risk

equals power

Regional, historical

and colonial ties

Specialised

Institutions

Global

Environment

Facility

Participants

Assembly

166

consensus only

Council

Non-recipients: 14

Economies in

Transition: 2

Developing:16

60% majority +

60% of

contributions to

adopt decisions

Single constituencies:

UK

France

Iran

Japan

Italy

Canada

Switzerland

Germany

US

Netherlands

China

Africa: 6

Asia/Pacific: 6

GRULAC: 4

Investment risk

equals power

EGD

Regions select own

constituency criteria

based on, e.g.,

Common

environmental

interests and

vulnerability

Multilateral

Environment

al

Agreements

e.g. Climate

Change

Conference of the

Parties

181

Rule of Procedure

not adopted,

consensus default

Bureau

(administrative

only)

2x5 Regional

Groups +

1 Association of

Small Island States

(AOSIS)

Asia: 2

Africa: 2

GRULAC:2

Eastern Europe: 2

WEOG:2

AOSIS:1

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2.3 Informal Practices and Mechanisms

Informal mechanisms for decision-making and constituency building tend to emerge when formal rules fail to

adequately reflect the balance of power or the aggregation of interests that lie behind the institution. Informal

constituencies or caucuses are particularly common in large OMOV systems that are operated primarily by

consensus. In practice, consensus-based decision-making operates under the authority of a chairman of the

meeting. The chair must formulate the decision put to the group, must interpret statements made by parties, andmust develop a sense of the meeting before determining whether a consensus has been reached. This

judgement is often based on whether a representative threshold number of parties, or of informal constituencies,

has supported, or not objected to the proposal.

In such circumstances, a less powerful participant must decide whether its voice should be heard as one in a

long list of interventions, or whether it can achieve its ends more effectively by joining with like-minded parties

in a single voice. Informal groups tend to provide the only efficient means to structure the negotiations from

one hundred plus diverse views of individual parties into tractable options.

For the purposes of this discussion, informal mechanisms include those that may be quite formal in nature but

that are not defined by the institutions own official rules. There are circumstances in which arrangements

made outside the institution, have an influence on group dynamic and constituency building within theinstitution. Within the UN system, one of the most active caucuses is the Group of 77 Developing Countries

and China. Established from the 77 original developing country participants at the first UN Conference on

Trade and Development in 1964, the G-77 now has 133 members. Its minimalist framework of rules is based

upon the 1967 Charter of Algiers and a rich tradition of practices. In many processes that have a North/South

dimension, the meetings of the G-77 provide the most important venue for building negotiating capacity and

consensus among developing countries. The 77 has Chapters in each of the UN host cities, and a special

arrangement, known as the Group of 24, which supports the Group at the Bank and the Fund in Washington.

Although the G-77 met at ministerial level in Seattle, it has not been active in the GATT/WTO.

Similar groups have emerged from among developed countries as well. The G-5, G-7, G-8 and G-10 are each

arrangements of the richest industrialised countries that meet regularly to work towards common policy

objectives in various financial institutions. While particularly active in the IMF and the Bank, in the WTO

context, the key members of these groups co-operate through the Quad.

Informal caucuses and constituency groups also form within institutions in response to particular negotiations.

Recently, the institutions and procedures of the Multilateral Environmental Agreements have seen the formation

of such groupings. The UN Framework Convention on Climate Change operates by consensus, in part because

it has failed to adopt rules of procedure. In response, the industrialised countries have formed groups defined

by a basic allegiance either with the approach and policies of the US (the so-called JUSCANNZ or Umbrella

Group)3

or with the European positions (the EC + group). Although the G-77 continues to be the main forum

for discussions among developing country parties, subgroups have formed to represent the interest of small

island states (AOSIS), Central American states, oil exporting developing countries, and African countries. The

presence of these constituencies has undoubtedly helped to clarify and reduce the number of written

submissions and oral interventions. Informal negotiations amongst small groups are more representative and

legitimate when the caucuses are represented. This has generally streamlined the negotiations and made

consensus possible on extremely controversial issues.

2.4 Reform Proposals

In the few weeks following Seattle a number of proposals for the reform of the WTO institutions have been put

forward. The most public have come from developed countries, indeed from three of the four members of the

Quad. The proposals have not been fully or officially described, and must be taken as initial thoughts on these

issues. They are all driven by a need to create a smaller, representative grouping of Members that could help to

build consensus for the larger group.

Press reports of a Canadian proposal suggest an executive committee or a board of directors modelled on

the Security Council. It is unclear as to what aspects of the Security Council Canada finds attractive, but

3 This group includes the US, Japan, Switzerland, New Zealand, Canada, and Australia.

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mention of a need for real structural improvements suggests that they wish to explore a formal mechanism

involving representative constituencies of Member states.

Press reports of a proposal from Japan suggest a less formal approach, using the term Advisory Council to

describe a body of limited membership that might help Members to agree priorities for negotiation.

The most fully developed proposal has come from the European Commission, which has released a strategydocument on short and long-term reforms at the WTO. In the short term, and with a view to helping to launch a

New Round of trade negotiations, the Commission tentatively suggests:

Establishing an Eminent Persons Group to assist the Director General to analyse institutional issues and

make recommendations to the Membership.

Requiring that any informal group report back its findings to a plenary session with an opportunity for any

Member to express its views.

Reducing the number of WTO Meetings.

In the longer term, the Commission suggests:

Holding an annual open meeting of the WTO, aimed at highlighting for the public and parliamentarians,

policy issues affecting the world trading system.

Holding an annual meeting of parliamentarians to increase awareness of members trade policies.

Developing the best consultation procedures to foster consensus in a manner that is transparent and

participatory while ensuring effectiveness.

Enhancing the role of the General Council as a forum for policy dialogue and to maintain overall control

of WTO activities.

Establishing a Consultative Group, of limited membership, including capital-based officials, that would

have no decision-making powers, but which could advise the Director General and, where appropriate,present recommendations to the General Council.

In addition to the above proposals, which have emerged specifically in response to the Seattle failure, an

Advisory Commission, set up by the US Congress and chaired by Professor Alan Meltzer has recently made

recommendations for the reform of seven key international institutions, including the WTO. The report warns

that [a]s WTO decisions move to the broader range of issues now within its mandate, there is considerable risk

that WTO rulings will override national legislation in areas of health, safety, environment, and other regulatory

policies, and recommends limiting the WTOs authority to impose sanctions on a country for violation of

WTO rulings or decisions, unless these have been subject to explicit legislative enactment at the national level.

2.5 Preliminary Observations

Generally, the WTOs formal agenda-setting and decision-making rules based on large, unweighted majority

voting, would appear to favour the weak and the many developing country Membership. The burden is on

the strong and the few to co-opt, coerce and convince the majority to back any new initiative. The resulting

deadlock of non-decision can also be said to generally favour developing countries. Many developing

countries have argued that the institution needs to focus on administering and implementing existing WTO

rules, (particularly with regard to market access on agriculture and textiles) rather than advancing the built-in

agenda, or expanding the WTOs coverage to new disciplines.

Many developing countries have also expressed reluctance to tackle the long intractable issues related to the

interpretation of existing WTO rules, such as those related to process and production methods affecting

environmental and labour standards. Finally, it may favour developing countries to have blocked the decisions

that would have clarified the status of various grace periods and peace clauses that run through the WTO

Agreements. These non-decisions have, however, left a number of WTO Agreements in a state of uncertainty,which, as has been suggested, will likely be resolved only through the dispute settlement process, where the

developing countries strength in numbers has no purchase.

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Sketchy proposals for reform from Quad countries focus on supplementing the formal aspects of the institution.

Working from the assumption that efficiency in decision-making can best be achieved through a limited number

of key countries, it has been proposed that decision-making be placed under the direction of an Executive

Body. It is easy for wary developing countries to imagine that any such arrangement would include the main

trading economies. The traditionally underrepresented Members would likely find themselves either excluded

or herded into some form of constituency system. At its worse, such a mechanism could achieve little morethan the formalisation of the Green Room process.

Promoting constituencies need not, however, be rejected out of hand by those developing country Members

wishing to see progress in WTO agenda-setting and decision-making. Experience from other regimes suggests

that large numbers of small countries can often benefit from the discipline of speaking with a single or several

voices rather than speaking separately. This has, to some extent, already been happening within the GATT and

the WTO, as common interest groups have formed along either regional or substantive lines. Position papers

submitted prior to Seattle provide strong evidence of developing countries banding together on priority issues.

Thus, perhaps the most important strategic issue facing developing countries post-Seattle is whether to pursue

constituency building on a formal or on an informal basis. As has been suggested, this choice will also depend

on whether a Members basic strategy is to promote or to postpone decision-making at this time. It is worth

noting that, however frustrated the developing country Membership may have been in Seattle, the initial callsfor institutional reform of the WTOs agenda-setting and decision-making procedures have come from

industrialised countries.

If constituencies are pursued, account will need to be taken not only of the size and diversity of interests of the

WTOs membership, but also the shifting alliances that are likely to form across the WTOs diverse agenda. In

other words, it is possible that the same constellation of constituencies would not serve developing countries

equally well, for example, on services issues as it would in agriculture. Although trade interests vary

considerably among developing countries from the same geographical region, the emergence of regional trade

agreements may help developing countries to identify common regional trade interests (and differences) for

promotion at the WTO.

It is also important to note that around 30 developing country Members have no permanent representation inGeneva, and that many others are under-represented. There is a clear need for the provision of resources to

ensure that all developing countries have adequately-staffed missions in Geneva, to facilitate their participation

in the policy-making process.

3. The WTO Dispute Settlement System

3.1 Design

The WTO Dispute Settlement System (DSS) has been described as the jewel in the crown of the WTO

Agreements, providing, for the first time in the history of the GATT, a sound legal underpinning for the

enforcement of trading rules. The DSS resolves disputes between Members through the exercise of

compulsory jurisdiction over all Members (no Member can refuse to answer a complaint brought against it). Itis empowered to make rulings and recommendations, and to authorise sanctions that are widely viewed as

binding upon the defaulting Member.

The DSS is open to claims by any Member against any other Member. The formal rules of standing to bring a

complaint, or to participate as a third party to a complaint are liberal. Any Member that considers its WTO

benefits are being impaired by another Member may protect its interests by calling for the establishment of an

ad hoc panel, or by appealing the decision of such a panel to the WTOs standing Appellate Body. Panel and

Appellate Body reports become binding on the disputants when they are adopted, by a rule of negative

consensus (which requires all Members present to agree to block the report) by the WTO Membership sitting

as the Dispute Settlement Body (DSB).

The quasi-judicial character of the DSS, which is limited to making objective assessments of facts, and

clarifications of law, was intended to strengthen the rule-based character of the WTO. In theory, the rule of law

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should strengthen and protect the interests of less economically powerful WTO Members which are less capable

of exercising informal, diplomatic means for advancing their causes.

The DSS has sought to further protect the interests of developing country Members by recognising that there

may be inherent biases in perspectives of industrialised country panellists, and that some developing countries

may not have sufficient human and technical resources to take full advantage of the DSS. The DSS thus

provides that a developing country Member, when it is involved in a dispute with a developed country Member,may request that at least one of the panellists is from a developing country. Special, but rather vague provision

is made to ensure that developing country Members involved in disputes are allowed sufficient time to prepare

and present argumentation, and that their interests are taken into account in the design and surveillance of

implementation of rulings and recommendations. Finally, the WTO Secretariat is instructed to make available

qualified legal experts to developing country Members that request such assistance.

3.2 Practice

From less than five years of operation of the DSS, it is difficult to conclude whether developing country

Members have had adequate access to and justice from these procedures. Generally, (and not surprisingly,

given the increase in WTO rules and the compulsory nature of the WTO DSS) developing countries have been

both complainants and respondents more frequently under the WTO than under the GATT. Generally,complainants tend to win WTO disputes, forcing changes in the trade policies of other Members. Of the 31

cases that have produced final rulings and recommendations as of this writing, the complaining party has been

successful in all but five. Twelve cases have involved industrialised country Members only. Nine cases have

been brought successfully by one or more developing countries against industrialised countries, and ten have

been brought successfully by one or more developed country against a developing country.

It is difficult to assess the extent to which any developing country Member may have felt excluded from the

process or hard done by the results. It is, however, clear from the sheer size and complexity of the Panel and

Appellate Body reports that participating in WTO delegation requires significant human and technical

resources. At the outset of 1999, the WTO Technical Co-operation and Training Division (TCTD) employed

only two full-time legal officers and two part-time external consultants, and brought in other part-time legal

consultants as necessary, in order to provide additional legal advice to developing countries. In practice, it

seems unlikely that this level of support provided from within the Secretariat will have the resources and theindependence to serve the wide range of developing countries in need of assistance.

With regard to the results of these cases, a number will have significant impacts on the trade and investment

policies in developing countries. Some of these policies have undoubtedly been put in place to achieve

development objectives. For example, India has been asked to revise its patent registration system and to

dismantle trade measures designed to guard against balance of payments difficulties. Indonesia has been

requested to dismantle a system of preferences aimed at promoting its domestic car industry. It is however,

difficult to systematically attribute these results to unfairness in the DSS rather than to the nature of the

substantive rules that the DSS is designed to enforce.

Two disputes that have raised controversy over the application of DSS procedures to developing countries are,

ironically, cases in which developing countries were successful in complaints against industrialised countries.

The recent Banana dispute exposed fundamental weaknesses in the system of sanctions under the DisputeSettlement Understanding (DSU)

4in providing adequate leverage to enforce successful claims against richer

countries. In that case, Ecuador was forced to rely upon US retaliatory sanctions to bring pressure on the EU.

Had Ecuador brought the case on its own, it could neither have mustered nor afforded to muster adequate

sanctions.5

Ecuador has since requested and received from the WTO authorisation to cross-retaliate against

the EC by targeting European intellectual property rights and services trade, as well as product-based tariffs.

However, the size and vulnerability of the Ecuadorian economy make it unlikely that such retaliation would

harm the EC or would be in the interests of Ecuadorian consumers. Allowing the Dispute Settlement Body,

under certain circumstances, to negotiate and impose multilateral sanctions could help level the playing field

between developed and developing country disputants.

4 The Agreement establishing the Dispute Settlement System.5

It should be noted that although the banana dispute was brought against the EU, the real losers have beensmall banana-producers in the Caribbean, whose livelihoods are threatened as a result of changes in the EU

banana import regime required by the WTO ruling.

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In a second dispute, a group of Asian countries brought a complaint against the US when it banned the import

of shrimp and shrimp products from countries that had failed to put in place certain measures to prevent sea

turtles from being killed by shrimping nets. Although successful in striking down the US measures, many

developing countries objected to the reasoning upon which the Appellate Body based its decision, which

implied that unilateral trade bans were justified in some circumstances. These countries expressed their

concerns at the meeting of the Dispute Settlement Body convened to discuss the Appellate Bodys report. TheDSS rule of negative consensus led to its adoption.

3.3 Options for Reform

When the Dispute Settlement Understanding was adopted, Ministers agreed to undertake a review of its

operation within four years of entry into force. This review was scheduled to be completed in 1999, but fell

victim to Seattle. The Chairman of the Dispute Settlement Body summarised the positions of those Members

he had consulted:

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the broad, general opinion that the DSU is central to the successful operation of the WTO; that, as

Ministers stated in Singapore, it is working effectively; that its attributes, such as automaticity and

predictability, are positive features as is its two-track approach allowing either the resolution of disputes

by panel (and Appellate Body) recommendations and rulings, or the opportunity to pursue mutually

agreed solutions.6

Contributions by developing countries to the review process reveal two types of concerns: 1) that the provisionsin the DSU referring to the need to take into account developing country concerns are weakly worded and

vague, and 2) developing countries have insufficient resources to defend their interests through the DSS.

Proposals for reform include the adoption of more specific special and differential treatment with regard to the

timing of filings and the implementation of rulings; and that the application of these concessions by the DSS

should be systematically monitored and assessed.

Many developing country Members, and in particular least-developed country Members, have called for a

higher level of technical assistance in bringing and defending WTO disputes than currently provided by the

WTO Secretariat. A group of donor and potential recipient countries initiated, at Seattle, an Advisory Centre on

WTO Law that will be positioned to provide such advice and assistance independently from the Secretariat.

Many questions about how such a Centre will operate need to be resolved. It is not clear, for example, what

kind of criteria will be used by the Centre to allocate what are likely to be scarce resources on the basis of the

needs of the complainant or the merits of its claims.

Furthermore, Oxfam believes that the lack of clarity about the relationship between WTO rules and

international human rights and environmental law means that the WTO dispute settlement system is de facto

being left to reconcile the complex relationship between these areas on a case-by-case basis. Yet the WTO

panels do not have the competence or expertise to adjudicate in these areas. Allowing joint panels, involving the

WTO and other specialised UN bodies, to adjudicate in trade disputes relating to concerns about human rights

and the environment may be more effective in achieving an appropriate balance between the different interests

in any dispute. In any event, as the UN continues to strengthen its mechanism set up to monitor the

implementation of economic and social rights, WTO regulations and their impact on the relevant standards will

inevitably come under closer international scrutiny.

4. External TransparencyAlthough the lack of transparency of internal policy-making processes for some WTO Members must be

addressed as a priority, there are a number of issues relating to the WTOs external transparency and

accountability that require consideration at the national and international levels. Decisions taken at the WTO

affect the livelihoods of billions of people and their environments. Yet the vast majority of people know very

little about this important international institution, or the decisions taken there by governments on their behalf.

This low level of knowledge and understanding is exacerbated by the way in which the WTO currently

operates, and there is increasing pressure from representatives of civil society to make WTO policy-making

processes more open.

6 Procedures for the Review of the Dispute Settlement Understanding. WT/DSB/W/74 26 February 1998, p.1.

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WTO member governments are supposed to represent the interests of the whole of their countrys population, or

the national interest. In contrast, civil society groups organise around issues that may affect particular groups

within countries, or that transcend national boundaries altogether. As the scope of its agreements expands and

increasingly impinge on domestic policies and transboundary issues such as environmental protection, the

WTO is evolving from a technical negotiation forum driven by trade ministries towards a more politically-

relevant organisation concerned with overall governance in global economic policy.7

Experience from the GATT and other international organisations show that constructive and open debates are

essential to achieve successful negotiating outcomes. The 1992 Rio Declaration and Agenda 21 recognised that

public access to information and participation in decision-making is a cornerstone for achieving the inter-linked

social, economic and environmental goals of sustainable development.8

As such, there is a strong case for the

WTO to consider how to improve the transparency and accountability of its decision-making processes for all

relevant stakeholders, including civil society groups.

The term civil society is generally used to embrace not-for-profit NGOs, business associations, labour unions,

academia and the media. The WTO, however, uses the term NGOs to describe all organisations other than

government, including business associations, labour unions, academia and the media. Article V:2 of the

Agreement Establishing the WTO specifies that [t]he General Council may make appropriate arrangements for

consultation and cooperation with non-governmental organisations concerned with matters related to those of

the WTO. Guidelines established in July 1996 recognise the role NGOs can play to increase the awareness ofthe public in respect of WTO activities and [the General Council] agree[s] in this regard to improve

transparency and develop communication with NGOs.

The WTOs relations with civil society are managed in an ad hoc way, however, without reference to any long-

term strategy for increasing openness and transparency. Some developing countries fear that increasing access

for well-resourced Northern NGOs to WTO policy-making processes, particularly the dispute settlement

system, may further reduce their own ability to influence WTO outcomes, especially on sensitive environmental

and labour issues. The following section considers two forms of access to the WTO that are relevant for civil

society - access to and input of information, and access to policy-making processes and sets out some options

for reform.

4.1 Access to Information/Input of Information

At present, most WTO documents can, as a matter of course, be kept from public view for up to six months

after they have been circulated among the Members, and any Member may block their de-restriction by simply

indicating its opposition. The delay in derestricting WTO documents seriously limits their value for public

information, for example via accurate and timely media coverage.

7ICTSD (1999), Accreditation Schemes and Other Arrangements for Public Participation in International

Fora, Geneva.8

Cameron, J., Z. Makuch, and H. Ward (1995), Sustainable Development and Integrated Dispute Settlement inGATT 1994, WWF International Discussion Paper, cited in WWF (1999), Reform of the WTOs Dispute

Settlement Mechanism for Sustainable Development, WWF International Discussion Paper.

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The July 1996 WTO guidelines on NGO relations limit the WTO Secretariat to developing an informaldialogue

with NGOs, which has so far taken the form of NGO briefings by Secretariat staff and the organisation of NGO

symposia. In addition, there are informal day-to-day contacts between the WTO Secretariat, Member

governments and civil society groups. Informal monitoring services, such as those provided by the International

Centre for Trade and Sustainable Development (ICTSD) and the South-North Development Monitor (SUNS),

also provide civil society groups with additional insight into policy developments in Geneva.

The WTO has established an NGO section on the WTO website with specific information for civil society. In

addition, a monthly list of NGO position papers received by the Secretariat is compiled and circulated for the

information of Members.

Following the 1996 General Council decision on Procedures for the Circulation and De-restriction of WTO

documents, the WTO Secretariat has made remarkable strides in providing, over the Internet, access to de-

classified documents. Access to de-restricted documentation rivals, and in some circumstances surpasses,

comparable UN and regional organisations. This is particularly the case with regard to dispute settlement

documents.

However, working documents, meeting timetables and agendas and background notes by the Secretariat, which

are key to following and influencing the day-to-day operations of the WTO, are generally restricted.

Furthermore, there is a continued culture amongst WTO Members of secrecy surrounding negotiating text, aswas demonstrated by the extremely short and non-substantive submissions by Members in the run-up to the

Seattle Ministerial Conference.

There does appear to be increasing acknowledgement among developing country Members, who have been

blamed for blocking proposals to relax rules on document restriction in the past, that this may have to change. A

senior ACP official recently stated to the European Parliaments Development and Cooperation Committee that

[t]here should be greater de-restriction of [WTO] documents since it is assumed [that] proposals are well-

intentioned, then there should be no fear to make them public.9

Within UN processes, such as the negotiation of the Kyoto Protocol and Biosafety Protocol, countries positions

and draft negotiating texts are made widely available to the public in real-time. While the WTOs current rules

may allow observers to reconstruct negotiations after the fact, they provide little opportunity for civil societygroups to influence the outcome. Only with real-time access to working documents can civil society contribute

meaningfully to the work of the WTO.

4.2 Access to Policy-Making Processes

Since 1996, NGOs that are able to demonstrate links to trade issues, have been able to gain accreditation to

Ministerial Conferences. This accreditation, however, provides only for very limited access to plenary sessions.

Outside of Ministerial Conferences, civil society groups have no access to the day-to-day WTO administrative

committees, either as observers or for the purpose of distributing information. The symposia organised by the

WTO Secretariat and side events at Ministerial Conferences are the only formal channels of communication

between civil society groups and trade diplomats.

The GATT/WTO system has been most hostile to NGOs among the broader range of civil society organisations.Although business groups have no formal rights of access to or participation in WTO institutions or procedures,

governments have readily recognised that in defending national trade interests, they are in effect acting as

spokesmen for the collective interests of the private commercial sectors of their economies. Large companies

and trade associations drive domestic trade agendas and, formally or informally, trigger and shape trade

disputes.

The arcane and complex nature of GATT law and economics has long attracted the attention of the academic

community, and has required the GATT to engage academics. Some of the most powerful and influential

individuals in the GATT/WTO system regularly move back and forth between the WTO and academia.

Although often shy of public attention, the WTO has courted media attention. All the NGOs attending the close

of the Uruguay Round negotiations gained access by securing press credentials.

9Speech to the Development Committee of the European Parliament by Peter Gakunu, Head of the Trade and

Customs Cooperation Division of the Brussels-based ACP Secretariat, 18 February 2000.

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The continued exclusion of NGO observers from all the working meetings of the WTO places the organisation

decades behind the practice of most international organisations. 10 Models that bridge the gap between full and

no access include the constituency system developed for NGOs at the GEF Council and the Business and

Industry Advisory Committee (BIAC) and Trade Union Advisory Committee (TUAC) within the OECD.

Advisory committees of NGOs, such as the European Economic and Social Committee, provide a structured

means for civil society to have formal input to inter-governmental processes. Views vary on how effective thesemechanisms have been in providing civil society groups with a genuine voice in policy-making processes, but

their formal nature ensures transparency and predictability, unlike the WTOs informal interaction with civil

society groups, which is insecure and potentially reversible.

UN treaty bodies are examples of institutional arrangements that have emerged since the UN Conference on

Environment and Development (UNCED) and that have provided extensive access to their proceedings even

when dealing with issues as politically sensitive as those before the WTO. The Kyoto Protocol negotiations, the

Biosafety Protocol negotiations, and the negotiations on the Convention on Prior Informed Consent (PIC)

Procedure for Certain Hazardous Chemicals and Pesticides in International Trade, have agendas that overlap

significantly with the WTO Sanitary and Phyto-Sanitary (SPS) and Technical Barriers to Trade (TBT)

Committees. The Council of GEF, which deals with sensitive issues of domestic policy and finance, has allowed

NGOs to observe all but the most sensitive of negotiations.

In addition, several international bodies involve civil society groups in policy review and reporting procedures

similar to the WTO Trade Policy Review process. The UN Committee on Economic, Social and Cultural

Rights, the Organisation for Economic Cooperation and Development (OECD) Development Assistance

Committee, and the IMF have some kind of provision for receiving either written or oral submissions from

NGOs during policy reviews and consultations.

10See ICTSD (1999) for a comprehensive overview of NGO accreditation schemes in other international

organisations.

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While the Secretariats efforts to provide opportunities for dialogue between trade diplomats and NGOs through

symposia and Conference side events are a welcomed development, they do little to dispel perceptions of a

closed and secretive institution. Greater openness in policy-making processes would help to reassure the public

that the decisions taken do not reflect the exercise of special interests.11

4.3 Access to the Dispute Settlement Process

NGOs have no access to WTO Dispute Panel or Appellate Body hearings or the meetings of the Dispute

Settlement Body. Article 13.3 of the Dispute Settlement Understanding allows for technical contributions from

any relevant source and states that panels may consult experts to obtain their opinion on certain aspects of

the matter. In practice, NGO contributions have been considered in very few instances, for example, during

the shrimp-turtle case.

Many precedents from international dispute settlement provide representatives of civil society the opportunity to

observe the process of decision-making and to contribute arguments relevant to the cases at hand. The

underlying rationale for this is that panels should be able to consider a wide range of information and arguments

in order to make the best decision possible. Other international tribunals, such as the International Court of

Justice, and human rights tribunals, hold their sessions in public without invading sovereign privilege or

interfering with the course of justice.

Other international economic institutions, such as the World Bank and the International Finance Corporation,

have provided for formal channels whereby citizens affected by implementation of policy can bring their

concerns to officials and can exercise a right to be heard.

The rulings of the Appellate Body on amicus curiae (friend of the court)12 briefs have left panels with little

guidance as to how to deal with such submissions. Further guidance must be provided by Members to the panels

and the Appellate Body on how to filter and respond to arguments presented by representatives of civil society

affected by the outcome of WTO disputes.

4.4 Options for Reform

The WTO can increase the external transparency and openness of its decision-making processes withoutimpinging on its nature as an inter-governmental organisation. In so doing, it will help to ensure that WTO

agreements reflect the widest possible range of affected interests and to increase the legitimacy of WTO

institutions and rules in the public eye.

There are strong arguments in favour of more open and transparent trade policy-making in all WTO Member

countries, North and South, in order to involve all sections of the community that have a stake. The existing

informal and ad hoc way in which the WTO manages relations with civil society means that NGOs wishing to

learn about or influence international trade policy must turn to their governments. Official NGO consultation

mechanisms are costly, so will most likely be undertaken by the countries that can afford them. This exacerbates

the chances that the NGOs most likely to make their concerns regarding international trade policy heard are

those based in industrialised countries, or with good access to industrialised country decision-makers.

There is currently relatively little parliamentary scrutiny of WTO matters, including the preparation of

negotiating positions. Regular debates on the WTO in national parliaments would help to increase the

accountability of international trade policy-making. In addition, civil society organisations working on trade-

related subjects have a responsibility to increase public awareness of the relevance of international trade policy

to their constituencies, thereby raising the level of national debate.

11Stiglitz, J (1999), On Liberty, the Right to Know, and Public Discourse: The Role of Transparency in Public

Life, Oxford Amnesty Lecture, January.12 The friend of the court, oramicus curiae brief enables non-parties to a dispute to submit relevant factual and

legal arguments to a court when matters of significant public interest are at stake. NGOs have used thesepleadings, for example, within the United States and South African court systems, and at the regional and

international level in human rights disputes.

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At the international level, there is a strong case for the WTO to reduce restrictions on access to documents, to

consider establishing an accreditation scheme for civil society organisations and allowing citizens groups with

a relevant interest or expertise to be able to submit evidence to dispute settlement panels, and to increase the

level of informal dialogue with civil society, for example, through organising more symposia. It should be noted

that financial support is needed to assist developing country civil society groups to participate in such events

and to follow the WTO process more generally.

5. Global Governance

The Seattle talks re-emphasised tensions between WTO rules and other international conventions, treaties and

commitments on human rights, poverty reduction and the environment. This section aims to identify a number

of key questions relating to the role of the WTO within the wider framework of global governance, which must

be addressed by the international community:

What changes are required to ensure that WTO negotiations take adequate account of critical global

challenges, rather than being driven by a relatively narrow definition of national interests?

What WTO mechanisms could be established to review the impact of trade policy reform on human

development and environmental sustainability objectives, and to use these findings to inform the directionof future WTO negotiations?

What changes are required to redress the existing imbalance of power between the WTO and international

institutions with responsibility for such important objectives as human rights, environmental sustainability

and poverty reduction?

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5.1 Meeting Global Challenges

As an increasing number of challenges require collective action at the global level, the capacity of our existing

institutions of global governance, including the WTO, are coming under increasing scrutiny. The challenges

facing the international community today require policy-makers to broaden the concept of national interest to

induce states to find greater unity in the pursuit of common goals and values. In the context of many of the

challenges facing humanity today, the collective interest is the national interest, notes Kofi Annan, UNSecretary-General.

13This is far from the way in which the WTO currently operates where Members adopt a

mercantalist approach in pursuing narrow national commercial interests.

While the WTO cannot reduce poverty alone, it has an important role to play alongside other international

institutions in contributing to the achievement of the human development targets agreed by world leaders in

1995. These include halving extreme poverty, achieving universal primary education and reducing by two-

thirds the numberof child deaths by 2015. Although these targets are achievable, they will be missed if current

trends continue.14 Changing this picture will require new relationships between rich and poor countries,

including in international trade negotiations. Members need to consider ways of ensuring that the objectives of

environmental sustainability and poverty eradication are integrated as guiding principles in all trade policy-

making so that the benefits of international trade are distributed more equitably.

5.2 Review and Enforcement Mechanisms

The preamble establishing the WTO includes a number of non-trade objectives, such as raising living

standards and achieving full employment. However, the WTOs efforts are currently judged on the basis of

reductions in trade barriers and growth in international trade flows, rather than in terms of their contribution

towards the economic and human development of poor countries and people.

If it is accepted that the WTOs institutional objectives and indicators for success should make explicit that

trade is a means to an end, rather than an end in itself, systematic mechanisms could be established to assess

the broader developmental impact of WTO rules. These findings could then feed back into the trade policy-

making process. Expanding the scope of the Trade Policy Review Mechanism (TPRM) is one possible way in

which this could be achieved. The TPRM is essentially a WTO audit of a countrys trade regime, which is

undertaken by WTO Secretariat staff who visit the county under review in order to examine the impact of aMembers trade policies and practices on the multilateral trading system. However, the TPRM could be used to

increase understanding of the impact of trade policy reform on poverty reduction and environmental

sustainability, especially through the involvement of specialised UN agencies and civil society organisations.

The strength of the WTOs enforcement mechanisms, which empower it to impose trade sanctions, set it apart

from most other international organisations. Only the UN Security Council has comparable power. In the latter

case trade sanctions can be imposed against a government that transgresses international law, thereby

endangering global peace and security. Draconian WTO sanctions can be imposed for much less serious

offences but paradoxically if they are applied without proper regard for their impacts on fragile economies and

already vulnerable people, they could have a profoundly destabilising effect on regional or even global security.

The negative impact of trade sanctions on poor workers or producers, resulting from a dispute in which they

had no involvement, may be substantial. There is therefore a strong case for considering the establishment of

mechanisms to monitor the poverty impact of any WTO sanctions in order to ensure that vulnerable producers

and workers in developing countries do not bear the costs of infringements of WTO rules by third parties.

5.3 Global Policy Coherence

13Kofi Annan (1999), Two concepts of sovereignty, The Economist, pp. 81-82, September 18

th.

14 World Bank (1999), Poverty Trends andVoices of the Poor, Washington.

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6. Conclusion

The failure of the Seattle talks has brought to the fore the need for WTO institutional reform and a more

informed public debate about the role and limitations of the WTO in making an effective contribution to

poverty eradication and sustainable development. There are those who doubt whether the WTO should, or iscapable of, reform. At a minimum though, the WTOs crisis of confidence and legitimacy is now widely

acknowledged and a debate has begun on the underlying issues.

As the Director-General of UNCTAD noted in his address in Seattle, For any international organisation,

legitimacy depends on three main components: universal membership, participatory and effective decision-

making, and fair sharing in the benefits of the system. To this can be added consensus on the objectives of the

organisation and the means of pursuing those ends. The aims of this paper are modest: to make a useful

contribution to the debate and to provide a framework for discussion.

Institutional Reform of the WTO

Documents

Transcript of Institutional Reform of the WTO