Legal Framework for International Business

The WTO, as an international institution, is characterized by a ‘legalism’ that had evaded the GATT because of its provisional nature. But as we shall find in this lecture, alongside the powerful legalism of its agreements, structures, and enforcement capacity sit informal and ad hoc GATT-derived decision-making and negotiation processes. These processes may have worked for the GATT, whose legal standing, mandate, and active membership were limited, and which could function as an exclusive club.

But the use of those same processes by the significantly more powerful WTO is highly problematic. At the heart of the WTO lies a major and unsustainable discrepancy: extreme legalization, particularly in the enforcement of its rules through the dispute settlement mechanism, on the one hand, and an inordinate reliance on de facto improvisation in the making of those rules, on the other. This incongruity is important in terms of the coherence (or the lack thereof) of the WTO as an international institution. But it also has some far-reaching implications for the existing power asymmetries within the WTO.

In this lecture, we will explore the principal features of these processes, and illustrate ways in which rules and procedures make a difference. The point is that the standard operating procedures of the WTO are a reflection of power imbalances between the developed and developing countries, and they further exacerbate these inequalities. This lecture focuses on decision-making processes in the WTO, while next lecture highlights its negotiation rules and formulae.

I. Decision-making processes in the WTO

In terms of its everyday workings, the WTO codifies many of the processes that had evolved in the GATT regime. Three features are central to all its decision-making processes; voting rules, the norm of consensus-based decision-making, and the importance of informal procedures that underlie all the stated formalities.