Seeing Like the WTO: Numbers, Frames and Trade Law

Abstract

A stark contrast exists between the popular image of the World Trade Organisation (WTO) as a uniquely powerful international organisation (IO) and its actual capacity to monitor national policies and to enforce compliance with WTO rules among its member states. Rather than overseeing policy implementation itself like the International Monetary Fund or the World Bank, the WTO relies much more heavily than other high-profile IOs on a legalist method of surveillance. This article suggests that the notion of a ‘member-driven legalism’ is central to how the WTO ‘sees’ the world. In particular, the WTO's processes reflect a strong institutional belief that neo-liberal policies can be implemented by a consensus- and member-driven legalistic WTO system. To illustrate the importance of understanding how the ways in which the WTO ‘sees’ the world of trade both enable and constrain its influence over trade relations, the article examines how the WTO constructs and classifies the world economy into enforceable trade issues, despite political impasse in the Doha Round. Examining the cases of trade in biofuels and trade in electronic ‘cultural products’, the article puts forward the argument that the WTO exercises cognitive authority in the world economy via the organisation's distinctive classification and framing activities.

Keywords:

• World Trade Organisation
• trade politics
• the Doha Round
• legalisation
• policy surveillance

Notes

For instance, the WTO is seen as ‘… a restricting discursive space, where intergovernmental meetings occur, experts congregate, expertise is employed, and decisions are made within a common understanding expressed in a specific, political-economic language’ (Peet et al. 2003: 198).

For instance, Linda Weiss suggests that the WTO opens up for new forms of ‘strategic activism’ in the global economy while closing down the window of growth by traditional strategies (see also Wade 2003): ‘… the tighter rules of the WTO era, rather than constraining or limiting the scope for state activism, have made it more technologically focused, hence unintentionally stimulating a more strategic or proactive approach to industrial governance, even in contexts not noted for industrial strategy’ (Weiss 2005: 724).

For instance, negotiation theory points to monitoring and compliance mechanisms as ‘focal points’ for complex negotiations (Odell 2006), and see WTO dispute settlement as an additional game (Davis 2006).

These are not necessarily domestic. Transnational corporate actors also use discourses, classifications and expertise as strategic persuasion of governments, especially when preferences on new issues are unsettled. For instance, the redefinition of intellectual property rights as a ‘trade issue’ to be treaty based as the TRIPS agreement (Sell 2003; Odell and Sell 2006).

Whereas the OECD has about 2,500 regular staff to carry out research and analysis upon request (OECD 2007: 100), the two analytical divisions of the WTO amounts to a total of 84 staff positions (WTO 2008: 1045). See Blackhurst (1998) and Mortensen (2000). Also see Nordstrom (2005) for discussion of the insufficient resources of the WTO secretariat.

Reflected, for instance, in Davis' definition of ‘legal framings’ as ‘the degree to which negotiations occurs within the bounds of formal rules and appeals to third party mediations’ (Davis 2006: 222). Former US Trade Representative, Charlene Barshefsky, provides a good illustration when she once explained that ‘… the WTO dispute settlement mechanism was explicitly designed to ensure that rights acquired through litigation could be firmly enforced’ (Barshefsky 1998).

The WCO was established in 1952, a few years after the GATT and it decided to rename itself, also like the GATT/WTO, in 1994. It presents itself as ‘voice of 173 Customs administrations’ on its website. It has a secretariat of about 100 staff. The WCO is engaged in the harmonizing customs standards and procedures, delivering technical assistance and training (‘trade facilitation’), ensuring effective enforcement. The WCO maintains HS system, and it also administers the technical aspects of the WTO Agreements on Customs Valuation and Rules of Origin.

Cases include a successful Brazilian complaint against the EU on a reclassification of frozen chicken imports, based on different salt content requirement, meant higher imports tariffs (DS/269). Mexico forced Panama to make a diplomatic settlement on tariff reclassification of milk powder (DS 329). Finally, the US won an important case against EU its failed harmonisation of classification and valuation of imports in various member state customs authorities, including failure to provide uniform procedures for review and corrections (DS 315). See Erskine (2006) for legal review. Case summaries can be found at http://www.wto.org/english/tratop_e/dispu_e/dispu_status_e.htm.

As Bioenergytrade (2010) explains: ‘Import standards vary from country to country and it is not even known whether biomass fuels should be considered as an agricultural or industrial good. Trade classification has important implications for countries' tariff reduction commitments as well as the national support schemes they can apply’.

Reports of a ‘biofuel scam’ (or ‘splash and dash’ scam) have surfaced in the media in 2008. Biofuel traders exploited US agricultural subsidies by shipping European biodiesel to the USA, adding a drop of US-produced biofuel and so legally entitled to claim a 20 cents per litre subsidy for the shipment, then shipping it back to the EU again and selling it at lower prices than what European producers can afford (Carbonpositive 2008).

Bill Gates' Cascade Investment paid $84m for 27% stake in Pacific Ethanol in November 2005. A year later, ethanol prices and the higher cost of corn had squeezed the industry, and by 2008, Pacific Ethanol shares sold for less than $4, down from a $42 at the peak of the boom. Financial Times estimated that Bill Gates lost $37.9 million on the bioethanol frenzy of 2005 (Financial Times 2008).

Although no record of the document can be provided here, the threat is reported by several independent sources (Corporate Europe 2009; Actionaid 2010). A draft letter obtained by Reuters names Argentina, Brazil, Colombia, Malawi, Mozambique, Sierra Leone, Indonesia and Malaysia behind the initiative, calling proposal ‘unjustifiably complex’, and politely concluding that ‘[s]ome of our countries don't exclude the possibility of defending their rights in the World Trade Organization, as a last resort’.

‘Regulations governing the taking of dolphins incidental to the taking could not possible affect tuna as a product. Article III: 4 therefore obliges the [US] to accord treatment to Mexican tuna no less favourable that accorded to [US] tuna, whether or not the accidental taking of dolphins by Mexican vessels corresponds to that of [US] vessels’ (Tuna Dolphin panel report I, para. 5.15).

Japan made (as a third party submission) the point clear: ‘To automatically assume that any new service is outside existing commitments would destroy much of the value of the GATS in providing a stable environment for innovation and growth in trade in services. It should not be necessary to negotiate a new commitment every time a service business invents a new variation on a service’.

Summed up by the Appellate Body itself in ‘Brazil – Retreaded Tyres’ (Retreaded Tyres 2007, para. 178).