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Three Forces of the World Trading System

Cho_Sungjoon thumbBy Sungjoon Cho [originally posted on the International Economic Law and Policy Blog on November 29, 2021]

On November 26, the World Trade Organization (WTO) General Council decided to indefinitely postpone the 12th Ministerial Meeting (MC12), which was scheduled to convene from November 30 to December 3 this year, due to “an outbreak of a particularly transmissible strain of the COVID-19 virus.” The prospect of the MC12 now appears to be as uncertain as that of the current pandemic. The bigger question, however, is: Quo Vadis the WTO? Today, I would like to introduce one way to approach this complex question. To answer this question, one needs to understand what kinds of forces may exist around the WTO. Three forces may stand out: political, legal and sociological.

First, does the WTO exert any significant “political” force of its own? The answer may be in the negative. Yes, the General Council did indeed agree to postpone the MC12, yet it hardly evinces the WTO’s own political power. While the WTO Charter does have detailed provisions on the collective decision-making mechanism, including simple- and supermajority voting, its legal force has been muted due to the lack of political force behind it. It is this organizational power vacuum that allowed private force, in the name of “veto,” to dismantle the Appellate Body, despite its legally guaranteed place under the DSU.

Private political force has recently dominated trade narratives at the expenses of the WTO’s political power, as seen in the continuing trade war between the United States and China, the EU’s recent campaign for aggressive trade remedies, China’s Belt and Road Initiative (BRI) and the Russia-led Eurasian Economic Union. These manifestations of private political force, either unilateral or regional, tend to fragment the WTO’s own political power. Some argue for empowering the WTO, in a political sense, by boldly executing its never-invoked voting procedure, calling some members’ bluff. Vote or veto, that’s the question! It is no exaggeration that the future of the WTO’s political power depends on the sequence of these two vowels (e and o).

Second, the WTO’s legal force emerges from its legal texts. It is an official force that makes the WTO exist. Based on this force, WTO members pay their dues and fund the WTO Secretariat. Under this force, various meetings are held and members still sue each other. Admittedly, the WTO’s legal force is inextricably intertwined with its political and sociological force, as discussed below.

Finally, the WTO enjoys compliance pull not only from its members but also other non-state stakeholders, including businesses and academia. They take the WTO norm, especially its precedent, for granted, and act upon it in their everyday lives. It is tantamount to their “language” in the sense that both WTO members and individual economic players may make themselves understood to each other via the WTO norm. The WTO norm is a form of social knowledge that both WTO members and private businesses are eager to learn, as seen in impressive public-private partnerships in Brazil, India and China. This sociological force of the WTO exists with or without corresponding political and legal force.

For example, the WTO precedent still enjoys a normative force as WTO members and other stakeholders continue to cite and quote WTO case law, despite that it is mostly not “binding” in a technical legal sense. Often, the WTO’s sociological force may complement its weak political force. The WTO Multi-Party Interim Appeal Arrangement (MPIA) is a case in point. A substantial number of WTO members succeeded in creating a replica of the now defunct Appellate Body as they wished to continue their long-enduring ritual of trade adjudication. Note that this sociological force has been harnessed by a legal force emanating from DSU art. 25. Admittedly, how strong, or effective, this sociological force would eventuate remains an empirical question.

Finally, WTO scholars, as they continue to publish books and articles on the WTO norm in trade law and economics journals, retain and pursue what sociologists refer to “symbolic capital.” Academia plays an essential role in disseminating social knowledge of the WTO norm to a broader audience, including private business and policymakers. While WTO scholars observe and investigate actions of social actors, such as businesspeople and WTO members, the former can also influence the latter’s behaviors. This feedback loop (“double hermeneutic”) does not exist in natural science, as a biologist cannot persuade a virus into changing the course of its movement (“single hermeneutic”).

Indeed, our own IELP blog may contribute to harnessing the WTO’s sociological force. So, may the Force be with you!

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