Backwardness

This arrangement is a unique advance on the backwardness that prevailed in earlier international trading arrangements including the GATT Agreement, which the WTO replaced in 1995. Then, the doctrines of necessity, protection of national interests, and the pursuit of efficiency and progress were extolled as justifying the overriding of rules and due process with impunity. This resulted in many abuses, as national and personal judgments replaced the very rules that had established the framework in which trade was taking place.

As market economies have developed (and I might add democracy) rules have replaced discretion as the norm for ensuring efficiency. It is only in backward capitalist and political environments that such throw-back views are still held, and worse, publicly flaunted.

To the surprise of many market sceptics, including myself, the world has moved a long way forward in this regard. Those who would break rules under various pretexts, and worse, flaunt this as a virtue, no longer find public resonance for such views. If rules are not working, the correct approach is to modify them not degenerate into personal whimsy, for there lies the source of many of the great abuses of our age.

Last week we also discussed the four objectives of the WTO dispute settlement mechanism, namely, equity, speedy deliberation, effectiveness, and mutual acceptance. After that we had started a brief description of how the mechanism works, concluding the first and second stage of the process. As we saw the first stage begins with consultations, followed by the formation of a panel of experts to the dispute within a 45-day time limit, with the panel having up to six months to conclude its deliberations.

These panels have been described as 'tribunals,' but differ from these in that panellists are usually chosen in consultation with the member countries that are parties to the disputes. It is only if the parties cannot agree on the panellists and the process breaks down that the Director General of the WTO appoints them. This type of breakdown has been a rare occurrence. Panels usually have three to five persons on them chosen from different countries, but the usual number is three. There is a list of more or less permanent candidates from which panellists are chosen and they are expected to sit in their individual capacities and not receive any instructions from governments. Panels consider the evidence and then rule on the merits of the case. This ruling is passed on to the Dispute Settlement Body, which can only reject the Report by consensus. The procedures of the panels roughly follow that of the typical arbitration process in Guyana, except for its later stages.

Procedures

Prior to the first hearing, each side to the dispute presents its case in writing to the panel. At the first hearing all parties to the dispute (including those who have declared an interest in the dispute) present their case to the panel. Written rebuttals and oral arguments are presented at the second meeting. If scientific or other technical matters are raised the panel may consult experts or appoint an expert review group to prepare an advisory report for it. Following these procedures, the panel submits an 'Interim Report,' which contains its findings and conclusions to the parties to the dispute, giving them one week to ask for a 'Review.' If granted, the review process cannot last longer than two weeks and during that time additional meetings may be held with the parties concerned.

The 'Final Report' decides whether a WTO rule, obligation or agreement has been broken and recommends the measures to ensure conformity with the WTO rules. This report is first submitted to the parties to the dispute and three weeks after it is circulated to all WTO members. This report becomes the Dispute Settlement Body's ruling or recommendation within 60 days, unless it is rejected by consensus. As in all quasi-juridical processes, both sides can appeal the Final Report.

It is important to recognise that appeals can only be made on points of law or legal interpretation. The evidence cannot be re-examined, nor can new evidence be examined. The appeal is made to an Appellate Body that consists of three members of a permanent seven-member group appointed for four-year terms. These members have no affiliation to governments and are internationally acclaimed experts. Like all appeals, the Final Report can be upheld, modified or reversed. Appeals have to be completed within 90 days, but preferably 60 days.

The Dispute Settlement Body, which is the final authority, has to accept or reject the appeal within 30 days. Again, rejection is only possible by consensus.

Conclusion

This article contains more procedural detail than is normal in this series because of the importance attributed to the Dispute Settlement Mechanism of the WTO. It is impossible to get a grasp of globalisation and how it functions and is regulated without having some familiarity with details such as these. As the series has emphasised, globalisation is a human constructed process. It is led by policy and its overacting policy/institutional framework resides in the Bretton Woods Twins (the IMF and World Bank), the WTO, and the United Nations.

The governments of the rich countries 'lead' these institutions and their national policies support their continuous elaboration. As these bodies grow, however, the scope for national policy and national direction of development is being reduced. This reduction is unequal across countries, with the richer ones better able to promote their national interests than the poorer ones. This, above all else, has generated the unequal economic outcomes and growing global inequality, which have characterized globalisation.



Trade and the environment: How useful is the WTO?

This week we turn to the environment and trade, one of the few remaining topics related to our examination of the WTO. News about environmental disasters and 'green' protests against the continued rapacious destruction of the environment have been making world headlines with alarming regularity. Right now there is the huge oil spill off the coast of Spain, which threatens yet another major environmental disaster. With such news there can be little doubt about the importance of the environment to any consideration of globalisation and its effects.

The fraying web of life

Nearly a year-and-a-half ago (June 2001) this series celebrated World Environment Day with several articles that examined what was then described as the "fraying web of life," or the impact of globalisation on the world's ecosystems. This phrase was taken from the title of the Guide to World Resources 2000-2001, which highlighted the dangers faced by life on earth if the world's ecosystems continued to be exploited and plundered without any reference to their sustainability. As reported in those articles, the statistics gathered for that report were staggering. Thus we noted that during the past century, one half of the world's wetlands had been lost. Further, as a result of uncontrolled logging and conversion, the world's forests had also shrunk by as much as one half. Almost one tenth of all tree species had been extinguished or was facing the risk of extinction. And, in the world's oceans we also noted that fishing fleets were estimated to be 40 per cent larger than what the ocean could sustain. Indeed, nearly 70 per cent of the world's marine fish resources had either already been over-fished or were being fished at their biological limits.

This situation constitutes perhaps the most basic and elemental challenge facing humanity, as it could spell disaster for life as we know it on planet earth. This challenge is also a development challenge, as it is the exploitation for self-enrichment that has led this process of environmental destruction, which is now deeply ingrained in the structures of global production and trade.

The WTO's role

Surprisingly, the WTO does not have a specific agreement that deals with the environment, although so much of global trade directly and indirectly impacts on it. What does exist within the WTO framework are a number of provisions that address environmental concerns. Further, at the end of the Uruguay Round in 1994, which preceded the formation of the WTO, member countries had created a WTO Committee on Trade and Environment to serve as the vehicle for bringing environmental and sustainable development issues to the mainstream of WTO's future work.

The committee's mandate is very wide and covers all areas of the WTO, including trade in goods, services, and intellectual property rights. The task of the committee, however, is not to substitute itself for any environmental agency already existing, but to direct its attention to matters where the relationship between trade and environment is central. Based on this, the committee can make recommendations or suggest desired changes to existing trade agreements. It is, of course, expected that its recommendations will uphold the open multilateral trading principles of the WTO.

MEAs

There are at least 200 multilateral environment agreements (MEAs) that deal with environmental issues, which fall outside the direct purview of the WTO. About 20 of these affect trade, partly because they contain bans and prohibitions on certain products or they give countries the right to restrict trade in them. Prominent ones include the Montreal Protocol for the protection of the ozone layer, the Basel Convention on trade and transportation of hazardous waste across borders, and the Convention on International Trade in Endangered Species.

To date, however, this situation has not encountered major difficulties within the WTO. The working premise appears to be that WTO principles should not normally conflict with trade measures that are required to protect the environment under the various MEAs. As a consequence the WTO coexists peacefully with the MEAs.

This does not of course mean that all disputes are permanently ruled out among countries in relation to trade and the environment. Where these occur, the WTO works on the principle that if the parties to the dispute have all signed an MEA then the matter should be settled within the framework of the particular MEA. If, however, one or more parties are not signatories to the MEA in question, then the WTO could provide a forum for possible settling of the dispute.