Governance Coherence and WTO Dispute Settlement Joel P

Governance, Coherence, and WTO Dispute Settlement Joel P. Trachtman The Fletcher School of Law and Diplomacy

Agenda • Role of Dispute Settlement in International Law Generally—Dispute Settlement as Governance • Role of Dispute Settlement at the WTO • Diagnose Incoherence • Diagnose Imbalance • Achieving Coherence and Balance • A Tale of Heroism

The Role of Dispute Settlement in International Law • Role of international law: – Allow states to cooperate—to overcome bargaining problems and transaction costs problems in market for authority in international relations • Role of dispute settlement in enhancing utility of international law – Incomplete Contracts – Enforcement

Incomplete Contracts • All treaties are incomplete • Under regime of auto-interpretation, they fail to resolve all disputes • Under regime of dispute settlement, all disputes are resolved by definitive interpretation • Optimal completeness and “rules versus standards” • Costs of specification, including political costs • Constructive ambiguity? Governance “gap” and heroic response

Enforcement • Informal: third party declaration of who is right – Law merchant (Milgrom, North, and Weingast) – Solving information problem in multilateral setting – Facilitating multilateral punishment of violation • Formal – No police force – Authorizes self-help – Restrains self-help

The Role of Dispute Settlement in WTO Law • Mandate in terms of incomplete contracts: – To clarify (interpret) – Preserve rights and obligations – Provide security and predictability • Mandate in terms of enforcement: – Gatekeeper to authorized self-help – Penalties? – Remedies are insufficient—add on continuing informal sanctions

Incoherence, Incompleteness, Imbalance, and Enforcement • Where does incoherence come from? – Normative incompleteness – Procedural incompleteness or imbalance in terms of the institutional backing for different norms: variable institutionalization – Institutional imbalance within the WTO

Normative Incompleteness • Failure of treaty negotiators to specify how different international law norms relate to one another – National bureaucratic incoherence – Unwillingness to bear political costs of determining hierarchy of values – Superiority of case-based determination? • Failure of Vienna Convention on Law of Treaties to provide a normatively satisfactory or predictable response to treaty conflict

Procedural Incompleteness • Only selected norms have mandatory dispute settlement • Only selected norms have potential remedies • Dispute settlement bodies have specialized mandates • Result: variable enforcement and variable compliance

Imbalance • Strengthened dispute settlement in 1994 • Increasingly difficult treaty-making • Leaves excessive responsibility to dispute settlement

Are Normative Incompleteness and Procedural Incompleteness Bad? • WTO Dispute Settlement has limited mandate to resolve normative incompleteness (reducing concerns regarding procedural incompleteness) – WTO Dispute Settlement makes tough decisions that treaty negotiators failed to make – WTO Dispute Settlement bears the criticism that treaty negotiators avoid

Resolving Incoherence, Incompleteness and Imbalance • Protect WTO Dispute Settlement from criticism by avoiding excessive responsibility • Where WTO Dispute Settlement mandate is inadequate to resolve normative incompleteness, then diplomats must complete the contract ex post • Diplomats can also resolve normative conflicts ex ante, but this is not always possible or desirable

Conclusion • Muddling through and constitutional moments in international governance • Normative incompleteness • Procedural incompleteness • Imbalance • The heroism of the Appellate Body