Don’t waste your energy tweaking at the margins.
This was the crux of Hunter Nottage’s presentation at GEG on 24 October, on the integration of developing countries in the WTO legal regime.
Nottage is Counsel at the Advisory Centre on WTO Law, a Geneva-based non-profit organisation tasked with offering litigation, legal advice, and legal training services to developing countries. Established in 2001, the ACWL aims to reduce the asymmetry of access to the WTO’s Dispute Settlement Mechanism by responding to financial constraints and lack of legal expertise that many developing countries face. It has participated in 20 per cent of all DSM activity and lost only one case to date.
But the core of Nottage’s presentation was to challenge some of the received wisdom, arguing that in order to improve access to the DSM, it was necessary to reform trade rules rather than focus on procedural changes for disputes.
Nottage argues that compliance with DSM rulings occurs 83 per cent of the time, so the inability of countries to retaliate against larger powers is not a key obstacle. Similarly, he believes that the fear of counter-retaliation on other issues, such as threats to reduce development assistance, is perhaps not as large as it seems. Nottage advises, ‘Do it [retaliate] and then let’s see.’ Political scientists, however, would argue that there is a problem of selection bias here. Without knowledge of the counterfactuals, we cannot determine how many developing countries are holding back from taking cases to disputes.
Yet, Nottage’s main point is a valid one. He rightly notes that access to export markets are often determined by preferential arrangements – half of all exports from developing countries to Australia and the EU; one-third of exports to Canada, Japan and the US. Unbound commitments under preferential arrangements cannot be litigated under the WTO, so the main barrier to accessing the DSM is the nature of trade rules. Unless the system of preferences cannot be reformed, say by binding the duty-free-quota-free offer to LDCs into treaty terms, the WTO’s judicial arm will not be able to offer the promise of the rule of law to developing countries.
Two other concerns loom on the horizon. First, Nottage points out that the patterns of international trade are increasingly being determined by the policies of a few large retailers but there is no international regulation to govern their decisions. Secondly, small exporters facing sudden trade barriers tend to shift to alternative markets, rather than engage in a long litigation process. Much needed is an increase in domestic capacity to collect commercial intelligence in time and the ability to analyse the legal and economic implications of trade policy changes abroad. The links between compliance, monitoring and legal enforcement deserve closer analysis.
- Arunabha Ghosh
Oxford-Princeton Global Leaders Fellow
