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Restoring Legitimacy to the WTO - Part 7

- courtesy of http://simonworld.mu.nu/ 

 
In conclusion-

Albin describes five issues that are central to WTO procedure and that require jurisprudence. These are; the structures of negotiations, the negotiation process itself, procedures, outcomes/distributive justice, and the post-agreement phase. The 'structure of negotiations' refers to the overall environment in which they take place and aims to deal with the concerns of participation, representations, power relations and agenda-setting. Discouraged participation, insufficient representation, and power politics all de-legitimize the decision making process before it even begins.. The justice issue in the negotiation process refers to the way in which the various parties interact as they build consensus. I suspect that Albin is intimating about any coercive tactics used by nation-states to achieve their desired part of the agreement. This issue differs from the structural issue in that the structure of negotiations is an atmospherically state created by overlapping parties, while the issue of justice in the negotiation process is brought about by individual parties in their approach of others. Procedures in this case, and as before, refer to mechanisms of negotiation, and the justice issue arises when the succession of procedures has loopholes which can give one nation-state an unfair advantage over another.

Loopholes come in the form of non-existent regulation of information green room caucuses in which key decisions are made. The fourth issue of distributive justice refers to the "allocation of benefits and burdens in an agreement"(760). Neither Albin nor other scholars explicitly state that they expect developing countries to receive preferential treatment, so I deduce that this justice issue supports the consideration of relativity. What I mean is, a tariff that is affordable for one wealthy country may signal the halt of exports for another, and this should be considered in determining the numerical elements of trade agreements. After distributive justice is achieved, it must be maintained, otherwise justice issues arise in the post-agreement phase.  

The main concerns in this phase of WTO procedure are the  implementation of and compliance with agreements by member states. When a member state is non-compliant, the aggrieved party has the option of filing a complaint with the WTO's Dispute Settlement Board (DSB). DSB panelists are usually trade experts, economists and corporate lawyers who are either untrained or choose not to focus on the socioeconomic outcomes of the rulings they determine, NGOs , which typically represent social and environmental interests are not allowed access to DSB hearings to submit their proposals (534). It is imperative that economic, social and environmental concerns be incorporated into the ruling of disputes because these concerns are all intertwined. DSB decisions are legally binding, which means that the national laws of the respective parties must amend their laws in accordance with the rulings. In Deliberative Democracy and the WTO, Kapoor notes that this shifts the center of gravity of international trade rules from negative prescription to positive rule-making (528). What this means, is that the WTO essentially asserts itself at a higher position than the legislative bodies of the respective nation-state, and promises retaliation and charges of compensation in the case of non-compliance. The legal bind of the DSB rulings transform the WTO into a law-making body where the three-member DSB panel wields power, rather than a platform for trading nations where decisions are made by consensus.

After defining the measures of legitimacy and justice, and examining the procedures entailed in the WTO negotiations, I am convinced that the credibility of the WTO is in decline. All that is required to see that the WTO deviates from its democratic aspirations is objective analysis of the individual components that culminate in the trade agreements forged between member nations. The most glaring sources of de-legitimization are the undemocratic decision-making process, the inadequate deliberation of the DSB process, the structural inequities intrinsic to negotiation power, the deficient fulfillment of promises, and the hegemonic tendencies exemplified by the Quad. During the course of analysis of each of these delegitimizing concerns, this paper has suggested reforms which can remedy them with the goal of giving the WTO back its legitimacy.

Works Cited

Albin, Cecilia. "Using Negotiation to promote legitimacy; an assessment of proposals for reforming the WTO." International Affairs 84.4 (2008): 757-75. Print.

Restoring Legitimacy to the WTO - Part 6

As it were..

It would seem commonly sensible that the WTO would take it upon itself to educate its students {developing countries} with the lessons learned by the graduating class { developed countries} in order to legitimize the principles of liberal trade that it promotes. Rather than prescribing sweeping measures such as ' open up markets', it would be more worthwhile to educate {developing nations}in details such as efficient export processes and innovative enterprise management systems.

The differences described above are intended to be somewhat resolved with what the WTO calls technical assistance,. One of the conditions of the Uruguay Round of WTO negotiations was that developing countries would be offered increased technical assistance to make up for the differences between their technical capabilities and those of developed countries. While this sounded promising, the reality is that the budgeted amount is $7,000 per developed country. Just what this grossly insufficient amount can provide for is dependent on the respective state of course, but it can be agreed upon that this amount is not sufficient to close the technical gap between developed and developing countries. . Kapoor describes these technicalities as "structural inequalities that result in asymmetrical deliberative capacities: (530).They are structural, in that they are inherent features that are borne from the combination of social, economic and political facets of nations-states. Recently, the WTO decided to discontinue paper publication of a large portion of its information, in favor of publishing the information online. This is a commendable effort towards reducing the environmental impact of its operations, which nonetheless does not consider the accessibility of the internet.

Poor, developing countries have haphazard telecommunications infrastructure that makes consistent internet access difficult to attain Publication of important information on the internet means that those who have no access to it will be uninformed and thus become less effective in negotiation. All in all,nations have their unique educational systems and are economically developed to varying degrees, nonetheless if negotiation of trade agreements is to be fair these inequities must at least be considered. Ignoring them leads to an imbalance of negotiation power in procedure, and on the grand scale, to the infiltration of power politics into the WTO.

Those who do not recognize the inequities in WTO negotiation procedures, or simply do not believe that they need to be addressed might argue that the WTO is not commissioned with matters of justice, only those of trade negotiation. They might point out that the WTO is a platform for trade agreements and not primarily a judicial body purposed with settling moral or ethical injustices. Based on Thomas Franck's review of legitimacy in global institutions, Albin distinguishes between justice and legitimacy, saying that "justice is substantive fairness concerned with the distribution of benefits and burdens, and often with change" (759). As such, justice and legitimacy are two separate elements, albeit important ones, which must combine to create fairness. Franck intimates that the task of fairness is to integrate or balance both justice and legitimacy. Based on the global social, economic and environmental ramifications of outcomes, it is essential that an organization charged with facilitating international trade agreements be fair. Having established the meaning of legitimacy how it is built through procedural justice, we can examine justice in and of itself, so as to see how the pair are incorporated to create fairness.

TBC..

Works Cited

Albin, Cecilia. "Using Negotiation to promote legitimacy; an assessment of proposals for reforming the WTO." International Affairs 84.4 (2008): 757-75. Print.

Restoring Legitimacy to the WTO - Part 5

image courtesy of Anupam Chander 

Despite the repeated emphasis on equal representation and the WTO director-general's admission that reform is necessary, the Quad, a select group of four countries continue to command an ambiguous yet tangible authority over WTO affairs. For a long time, the Quad has consisted of The United States, the European Union, Japan and Canada. The Quad members often lead what are known as 'green room' caucus meetings, which regularly exclude developing countries.(Albin 761) There are no rules regulating the assembly of these meetings, which makes their outcome unfair, regardless of the parties affected. In addition, because these meetings are held almost surreptitiously, it is impossible to determine what effect they have on subsequent decisions. 

The combination of inadequate legitimating procedures and lack of qualitative deliberations makes it unlikely that WTO outcomes will be just in the middle of power politics, exclusion, bargaining, and uncritical knowledge. The consensus reached in this multilateral sphere is most likely to be coerced and one-sided- to the advantage of the western countries. Proponents for the Quad contest that other member states form alliances, however the latter are used to represent common socio-economic interests between geographically neighboring states, while the Quad is simply a coalition of the most economically developed member states, which for a  lack of transparency, lead us to believe that it is for the purpose of hegemony. The group should either state its primary purpose for formation and adhere to the highest standards of transparency, or be dissolved. 


In a lecture to the UN Audiovisual Library of International Law on 15 June 2008, Director-General Pascal Lamy stated that a decade ago, the Quad may have been a core group used for the purposed of testing new rules first, however, the major group today is the G-4, comprised of the US, EC, India and Brazil. Despite declaring the current membership of the major group, the director-general still does not shed light on what the designation means, rather he states that it is, "not possible to propose any new rule without testing the waters with countries like China , South Africa, and Indonesia, just to name a few" (Kapoor 530).

Fairness is of immense importance because of the diverse interests of nations-states and the various comparative advantages that they have in fields affected by the WTO such as technology, investment, and education .Developing countries, budgeted on extremely low appropriations often cannot afford to host as many representatives as other developed countries in Geneva or any other locations where WTO representatives may need to be permanently situated. This affects the representation of the respective nation-state at meetings and within the organization in general. The absence of any nation's representatives further reduces any chance that the interests of that nation are considered at the brainstorming or negotiation procedures.  Representatives from developing countries may also have less extensive education, yet have to collaborate with lawyers and other professionals from developing countries who have more extensive education. Professionals in developing countries, especially from the Quad also have the advantage of being trained and being familiar with the business lexicon and processes of meetings. While these differences may seem subtle, variances in education and a home court advantage can have a tremendous effect on the negotiation process and ultimately, the trade policies implemented by a state.

TBC.. 

Works Cited

Albin, Cecilia. "Using Negotiation to promote legitimacy; an assessment of proposals for reforming the WTO." International Affairs 84.4 (2008): 757-75. Print.

Restoring Legitimacy to the WTO - Part 4

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NO DEMOCRACY WITHOUT TRANSPARENCY

Albin and other trade experts such as current and former WTO-affiliated officials have pointed to the "lack of transparency and insufficient representation of parties in negotiations as key contributors to the erosion of legitimacy"(757). The procedures currently in place contain features that are eroding the legitimacy of the organization, leading to the consideration of how to build legitimacy.. Many scholars use the term 'procedural justice' to describe the constitution of legitimacy in the procedure of making a decision. To determine when procedural justice has been achieved, Albin points to G.S. Levanthal's six criteria; consistency (across persons and over time); bias suppression; accuracy; correct ability ( of decisions made in error); representativeness (of parties affected by the respective decisions), and ethicality(763). In legal studies, procedural justice is determined by: accuracy, consistency, impartiality, reversibility, transparency and voice. The latter are presented in order to show the commonly accepted characteristics across different studies. The prevailing fundamental principle of procedural justice in either field of study is the participation in decision-making by the affected party (Albin 763).

The only way to hold to the WTO and its procedures accountable for equal and fair representation is for the organization to assert a standard of 100% transparency in all affairs. In the new millennium and recent years especially, this issue has been recognized by WTO officials. Director-general Pascal Lamy has publicly admitted that the decision making procedures need to be re-modeled, stating that "the procedures and rules of this organization have not supported the weight of the task" (Albin 758).National economies and the socio-economic well being of their citizens are at stake, which is why lesser standards are unacceptable.

Despite the repeated emphasis on equal representation and the WTO director-general's admission that reform is necessary, the Quad, a select group of four countries continue to command an ambiguous yet tangible authority over WTO affairs. For a long time, the Quad has consisted of The United States, the European Union, Japan and Canada. The Quad members often lead what are known as 'green room' caucus meetings, which regularly exclude developing countries.(Albin 761) There are no rules regulating the assembly of these meetings, which makes their outcome unfair, regardless of the parties affected. In addition, because these meetings are held almost surreptitiously, it is impossible to determine what effect they have on subsequent decisions. The combination of inadequate legitimating procedures and lack of qualitative deliberations makes it unlikely that WTO outcomes will be just in the middle of power politics, exclusion, bargaining, and uncritical knowledge. The consensus reached in this multilateral sphere is most likely to be coerced and one-sided- to the advantage of the western countries. Proponents for the Quad contest that other member states form alliances, however the latter are used to represent common socio-economic interests between geographically neighboring states, while the Quad is simply a coalition of the most economically developed member states, which for a lack of transparency, lead us to believe that it is for the purpose of hegemony. The group should either state its primary purpose for formation and adhere to the highest standards of transparency, or be dissolved.

TBC..

Works Cited

Albin, Cecilia. "Using Negotiation to promote legitimacy; an assessment of proposals for reforming the WTO." International Affairs 84.4 (2008): 757-75. Print.

Restoring Legitimacy to the WTO - Part 3

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WHICH CAME FIRST, CREDIBILITY OR LEGITIMACY?

The credibility of the WTO has regressed since the days of GATT, its predecessor, for today its affairs are plagued with contentions of legitimacy and hegemonic tendency. It is not easy to pinpoint where matters went wrong, although it may help to start with what is wrong. Unless an organization conducts affairs in a legitimate way, it cannot build, nor sustain credibility, in which case its purpose for existence is void. Cecilia Albin has condensed the issue of WTO legitimacy to two questions; does the WTO actually attain legitimacy from its decision making and negotiation procedures, and how have these same procedures contributed to setbacks in the organization? (757). 

First, we must define legitimacy, in order to analyze the issue in a uniform fashion. The final outcome of WTO operation is the trade agreements made between nations, and since these agreements are forged through a series of processes, we can review each individual component. The main building block of legitimacy for the WTO is the series procedures taken to build consensus. "Procedures refer broadly to mechanisms used in the negotiation process to come to an agreement. They encompass formal, explicit rules and practices as well as more diffuse or informal ones"(Albin 758). The WTO website proclaims that the format for operation is a rules-based system, where the rules are borne from the agreements that nation-states reach after negotiation..Formal, explicit rules are in correlation with this system, but the diffuse, informal rules leave opportunity for faction and bias.                                   

Albin supports the claim that brainstorming of new ideas and bargaining actually takes place at the exclusive green room caucuses which are usually convened by either the director-general or a committee chairperson. Inter-mixed with these caucuses are other informal meetings where "key players" meet as well as other "off the record plenary meetings open to all members" (761). Nevertheless, Why does the WTO need to any have any off the record meetings? For an organization of its size and far-reaching influence, any off the record affairs bring into question the transparency of its processes. Albin notes that all organizations, need the flexibility of some informal discussions, but it becomes troublesome if informality plays too large a role, as is the case at the WTO. The WTO website even points out, that informal meetings have a more decisive role than formal ones.

Informality in itself means that there are no set guidelines to which an affair must adhere to and the parties involved are responsible for drawing their own boundaries, or not. Throughout this analysis, one must not forget that nation-states have diverse interests and often use the equivalent retaliation strategy in dealing with one another. This results in only friendly nations being invited to informal meetings which may or may not affect them, and thus a total loss of the quality of fairness in the procedures. "The wide scope for informal and ad hoc procedures clearly favors the more powerful and influential members in the developed world" (Albin 762). 

Informality essentially creates an atmosphere where fair practices such as  equal representation are disregarded, and thus representation is based on superficial values like national wealth and commanding leaders. It is not that these values are superficial generally, rather that that they should not qualify any single nation for preferential treatment from an organization that claims to be democratic. As soon as superficial values replace democratic principles, illicit activities such as coercion and bribery can become rampant and even commonplace. For example, towards the end of the Uruguay Round, the US threatened to withdraw from the round table when developing countries hesitated to sign agreements on intellectual property rights and investments and services.

TBC..

Works Cited

Albin, Cecilia. "Using Negotiation to promote legitimacy; an assessment of proposals for reforming the WTO." International Affairs 84.4 (2008): 757-75. Print.

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Restoring Legitimacy to the WTO - Part 2

- by of Steve Greenberg

WTO FREE TRADE AGREEMENTS ≥ FALSE ADVERTISING

Negotiation of trade agreements is a key purpose of the WTO but the appropriate implementation of the agreements also falls under its umbrella of responsibility. Trade agreements which pass the test for consensual decision-making have still drawn criticism for the way in which they have been carried out. Thompson states, "As the African continent has increased its exports, the industrialized countries importing these goods have maintained or increased their trade barriers. The World Bank estimates that if the North America, Europe and Japan eliminated all barriers to imports from sub-Saharan Africa, the continents exports would rise by 14%, an annual increase in revenue of $2.5 billion" (322). Sub-Saharan Africa is the poorest region in the world, being comprised of 50 countries with a collective GDP of $774 billion in 2008. The numerical figure sounds adequate at first,, but in perspective, it is only 28% of China's GDP and yet has to be divided among 50 nations, rather than one. If the WTO aims for trade liberalization, then it must work towards eliminating all trade barriers, especially if they can have such a profound effect on poor countries.


A key factor as to why industrialized countries have been able to increase trade barriers without drawing the attention of the WTO is the use of non-tariff trade barriers. NTBs such as anti-dumping policy, safeguards, and surveillance have been used for long by developed nations, but in recent years, developing nations have learned from the example set for them. According to Drope, two decades years ago, the most popular NTB, anti-dumping(AD), was used exclusively by only three developed nations, and fifteen years later was being used by about forty developing nations (402). South Africa and Mexico have made A.D policy a regular part of their trade policies to the detriment of the trade relationships they have with other nations. A.D policy was first developed as a protective measure against foreign firms who 'dumped' their product in a country's markets at costs lower than manufacturing costs or lower than the domestic price. Foreign firms use dumping to either establish themselves in a new market, or eliminate the domestic firms as competition. While GATT originally allowed the use of AD policy to buffer markets for these reasons, Drope has found that many nations continue to use the policy out of habit, and as a last resort of barring trade(402.


The decision by South Africa and Mexico to use AD policy as an NTB is detrimental because throughout history, nation-states have been shown to use the equivalent retaliation strategy of game theory. This means, that inter-state relationships are conducted similarly to a game, in which the main strategy is tit for tat. Nation-states react to other nation-states in similar manner, and so by using AD policy, developed nations provoked retaliation by developing nations, and the strategy became cyclical in the game of international relations. Unfortunately, developing nations have more to lose by over- protecting their markets from foreign competition. The WTO must address the use of NTBs in present day trade relations, by looking back at the GATT policies which were never revised after WTO formed in 1995. The policies which may have worked three decades ago when globalization had not yet entered its current cycle have vastly different ramifications today. Globalization undoubtedly adds to the interconnectedness of global markets, and policies which generate destructive cycles of negative retaliation must be eliminated.

TBC..

Restoring Legitimacy to the WTO - Part 1

-courtesy of Lalo Alcaraz

CORPORATE INTEREST → GATT → WTO → CORPORATE INTEREST

The WTO was formed in 1995 as the successor of the GATT and it its nineteen years of existence has built itself to be a global institution to be reckoned with. Nation-states developed and developing, big and small, all know the importance of belonging to the WTO, for the benefits of forming trade agreements that can help nations grow out of poverty, expand their economies, and better the standards of well being for their citizens. Trade agreements are supposedly forged in the WTO through a democratic, consensus decision-making process. On its website, the organization names among 4 qualities that a trading system should have, two of which I will address in this paper; the lack of discrimination, and more beneficial provisions for less developed countries. Despite the rapid growth in size of the organization, the WTO has been increasingly questioned in recent years on issues such the legitimacy of its affairs, the fairness of its central processes, and its overall credibility as affected by the former two factors.

One of the criticisms of the WTO is that it is a platform for hegemonic trade manipulation in favor of the large, developed, western nation-states and ignorant of the less developed ones. In proving this, my research will first establish the importance of reviewing this organization and the criticism it faces, and then define the meaning of legitimacy and fairness as they apply. Subsequently, this paper will stipulate the specific areas in which the WTO is lacking by reviewing recent and current developments as well as permanent characteristics of the organization..The thesis of this paper is that international trade agreements are skewed in favor of western nation-states and the WTO, the organization charged with multilateral, democratic negotiation falls short of accomplishing the purpose for which it was created. The ultimate goal is to propose reforms that can restore credibility to the organization in hopes of better reaching the goals for which it was created.

The self-stated purpose of the WTO is to liberalize trade, facilitate the negotiation of trade agreements, and help settle trade disputes between member countries. Based on this, a comparison can be made between the expected and realized outcomes of membership. Developing countries especially have much to gain from the WTO, and after gaining membership, have visibly attempted to implement the advice given them by the WTO. African countries for example, have heeded the advice of others to increase production of horticulture and to increase exports, but at the same time, as other developing countries have done the same, the result has been a backfire. Carol Thompson states that the simultaneous expansion of exports has led to increased quantities in the world economy and thus reduced prices for the products of developing countries, culminating in reduces revenues. This is an example of generalized advice that has been successful for developed nations and that is being given to developing nations without regard for the intricate variances respective to their economies.

A wealthier nation with a developed economy can handle a decrease in export revenues due to an influx of product on the global market, much more effectively than a poor, developing nation. The economy of a developed nation is already integrated with the global economy and has the flexibility to counter a loss of export revenues with foreign investments or the export of services, Kapoor points that that the TRIP (Trade Related aspects of Intellectual Property Rights) and TRIM (Trade Related Investment Measures) programs which are endorsed by the WTO for global investments, assume that developing countries are on the same playing field as western developed countries. It is common knowledge that western developed nations dominate the global finance and technology arena's, so there should be provisions that level the field for developing countries(535).Developing countries do not have diverse economies, so if significant efforts are directed toward manufacture and agriculture for export,, a loss of export revenue is a disastrous blow. These are the kinds of variances between WTO member nations that must be considered, before guidance is issued.

TBC..

Works Cited

Albin, Cecilia. "Using Negotiation to promote legitimacy; an assessment of proposals for reforming the WTO." International Affairs 84.4 (2008): 757-75. Print.

Drope, Jeffrey M. "The Political Econmy of Nontariff Barriers in Emerging Economies." Political Research Quarterly 60.3 (2007): 401-14. Print.

Kapoor, Ilan. "Deliberative Democracy and the WTO." Review of International Political Economy 11.3 (2004): 522-41. Print.

Rose, Andrew K. "Do we Really Know that the WTO Increases Trade?" The American Economic Review 94.1 (2004): 98-114. Print.

Satapathy, C. "Trade Sanctions and Other Barriers to Free Trade." Economic and Political Weekly 34.51 (1999): 3583-585. Print.

Thompson, Carol. "Decade of "Trade Not Aid"" Review of African Political Econonomy 30.96 (2003): 321-23. Print.