The Common Law of International Trade and the Future of the World

Trade Organization

Thomas Cottier CIGI Campus Auditorium, Waterloo Canada

February 3, 2016

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Perceptions and Realities • Doha Development

Agenda stalling with minor results in December 2015 (Nairobi)

• Forum Shifting to PTA in particular TTIP, TTP, RCEP

• Multipolar World • WTO and multilateralism

increasingly perceived irrelevant

• No major protectionism during and after Financial and Debt Crisis 2007-2014)

• New WTO Members (128 to 162)

• Central Role of WTO Dispute Settlement (more than 500 disputes registered since 1995)

• WTO Law is the Foundation of all modern RTAs

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The Common Law of International Trade

• RTAs all structured on the basis of WTO law disciplines

• Shared values and principles • Core legal concepts of tariffs, QRs, non-discrimination

(national treatment) and exceptions • Structure of agreements follow WTO law • WTO-plus and sometimes WTO-minus• Introduction of new areas (e.g. labour, environment,

competition, investment, TK protection)

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Dialectical Relationship

• Multilateralism and Preferentialism mutually supportive over time: – 1883 and 1886 IPR Conventions (Paris and Berne)

based upon set of bilateral agreements – GATT 1947 based upon US Reciprocal Trade

Agreements – Preferential Trade in Services based upon 1995

GATS Agreement – TTIP /TTP/RCEP: Future Multilateralization in

WTO to be expected (2020-2030) 6/22/2015 World Trade Institute Berne 5

A Comparative Approach

• The experience of Roman Law and the Glossatores • The formation of the Common Law • The process of modern codification in Civil Law • Modern federalism• The evolution of EU Law • All depending on strong central legal institutions,

scholarship and civil society support

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PTA Institutions• With the exception of the European Union,

CU and PTAs show weak institutional frameworks

• Lack of central bodies and secretariats• Lack of dispute settlement experience and

experienced infrastructure • Mainly model of ad hoc arbitration (e.g. TTP

chapter 28)

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Splendid Isolation

• PTAs not well connected and concerted• Jurisdiction limited to specific agreement,

subject to Article 31 VCLT interpretation• Conflicting rules create difficulties for

regulating “behind the border issues” • For example: GI protection in Canada in the

quadrangle of TRIPs, NAFTA, CETA and TTP)

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Towards a World Trade Court

• From Fragmentation to Coherence – Art. 3.2 DSU and the status of non-WTO law in

dispute settlement – Potential of Article 25 DSU (Arbitration)– Expanding the jurisdiction of the WTO to

Preferential Trade Agreements – Institutional implications and cost structures

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Monitoring Existing Agreements in the WTO

• The evolution of the common law of international trade calls for stronger institutions beyond dispute settlement:

• Proactive role of the WTO Secretariat in monitoring existing agreements – TPRM – Dispute Settlement: A voice for the Secretariat and

enhanced transparency – Guardian of the system: right to lodge consultations

and complaints against failing members

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Future Negotiations

• Due to decline of traditional MFN, market access negotiations will continue to take place in preferential fora and settings

• Negotiations on non-tariff barriers depend upon market size and spill-over effects

• CETA, TTP, TTIP• Preferential negotiations excluded areas which would

deploy free rider effects (e.g. disciplines on domestic support)

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Unique Selling Propositions

• WTO member need to focus on USPs of multilateralism and related Organisations: – Multilateral Know-how and expertise of the WTO – Trade Community in Geneva and NGOs– Areas with MFN and strong spill-over effects:

• Conditions of competition (subsidies, IPRs, competition policy)

• Technical regulations, food standards, domestic regulation of services

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Farewell to Trade Rounds• With market access (tariffs, QRs) and services dealt

with mainly preferentially, the rationale for trade rounds no longer exist

• Instead: Sectorial negotiations and on-going quasi legislative processes (building upon past experience: Financial Services, Telecom, GPA, Access to Essential Drugs)

• Integrated approach covering goods, services, investment, competition, government procurement (e.g. climate change mitigation and adaption)

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Potential Sectors• Energy:

– Agreement on Electricity – Agreement on Fossil Fuels

• Agreement on Extracted Minerals • Agreement on Specific Services, e.g:

– Civil Aviation (Airlines) – Maritime Transports– Disciplines on Economic Migration beyond GATS

• Need to develop close working relationship with specialised international organizations

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Horizontal Issues

• Trade Remedies for goods and services (unfair competition approach) for dumping and subsidization

• Trade and Investment • Trade and Competition Policy (Anti-trust)• Institutional issues: role of secretariat,

extending jurisdiction to RTAs, cooperation with other IOs

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Modifying Consensus Diplomacy

• The shift to PTAs is partly caused by rigidity within WTO talks

• Return to WTO talks requires more flexible attitudes

• Diplomacy should adopt consensus-minus as established under DSU and/or weighted voting

• Formally blocking consensus should be subject to vital interests, reasoned statements and need to confirmation upon cooling-off

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Conclusions

• Integrated approach to trade regulation: towards a common law and the role of academic research and teaching

• Need to strengthen central institutions, in particular WTO monitoring and dispute settlement: extending jurisdiction to RTAs

• Sectorial negotiations • Qualified consensus

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Thank you for your attentionthomas.cottier@wti.org

18 Journal of International Economic Law 3-20 (2015)

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