Skip to main content
SpringerLink
Log in

If the WTO Were to Break Down Completely, Would We Stoop and Build It Up with Worn-Out Tools?

  • Chapter
  • First Online:
A Post-WTO International Legal Order

  • 690 Accesses

Abstract

This chapter uses existing tools of public choice theory to predict how governments would behave in the absence of the set of constraints and incentives provided by WTO obligations. It argues that any attempt to overcome protectionist behaviour would need to incorporate the interest of exporters and the interest of other constituents pursuing non-protectionist regulatory goals. It shows how the existing WTO rules and its dispute settlement mechanism have largely incorporated such diverse interests and that the key to doing so has been the incorporation of the principles of the Generalized Theory of Distortions and Welfare into WTO rules. It concludes that if the WTO breaks down completely, there will be a need to construct a new regime for international trade regulation which would require similar sets of rules to restrain protectionist behaviour and strike a balance between liberalizing trade and preserving policy space, and that it would be of critical importance that such rules incorporate the guidance provided by the Generalized Theory of Distortions and Welfare, just as well or even better than the existing WTO rules do.

Respectively, Principal of Williams Trade Law; and Senior Lecturer and Member of the Herbert Smith Freehills China International Business and Economic Law (CIBEL) Centre, Faculty of Law, UNSW Sydney.

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Log in via an institution
Chapter
USD 29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD 149.00
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD 199.99
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info
Hardcover Book
USD 199.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

Notes

  1. 1.

    We use government decision makers, government officials or politicians interchangeable in this chapter. This section is partly based on Zhou (2020), p. 9.

  2. 2.

    The seminal work on public choice theory includes Downs (1957), Buchanan and Tullock (1962) and Olson (1965). These three pieces of work form the foundation of subsequent development of modern political economy theories. See, e.g., Baldwin (1982), pp. 263–286; Grossman and Helpman (1994), pp. 833–850; Grossman and Helpman (1995), pp. 675–708.

  3. 3.

    There have been some important empirical tests of particular models based on public choice methodology, including, for example, Koujianou Goldberg and Maggi (1999), pp. 1135–1155.

  4. 4.

    The same can also happen when domestic producers respond to changes in the domestic market knowing their behaviour cannot be constrained by any increase in the volume of imports.

  5. 5.

    Roessler (1993), pp. 53–62.

  6. 6.

    See generally Abbott (1985), pp. 501–532.

  7. 7.

    See Zhou (2020), p. 17.

  8. 8.

    See generally Ethier (2004), pp. 303–320 (treating reciprocity as one of the necessary elements of a feasible trade agreement); Kyle Bagwell and Staiger (1999), pp. 215–248 (using a different model but also conclude that reciprocity is a necessary element of a trade agreement).

  9. 9.

    Bhagwati (1971), pp. 69–90. For a review of the historical development of the theory and its applications, see Bhagwati (2002).

  10. 10.

    As Corden put it: “[by the theory of distortions and welfare] the link between the case for free trade and the case for laissez-faire has been broken.” See Corden (1997), p. 4.

  11. 11.

    This section is partly based on Zhou (2020), pp. 19–21.

  12. 12.

    Deardorff and Stern (1987), p. 39 (observing that “Trade policy is like doing acupuncture with a fork: no matter how carefully you insert one prong, the other is likely to do damage.”).

  13. 13.

    See generally Bhagwati (1971).

  14. 14.

    Corden (1997), pp. 33–44.

  15. 15.

    See e.g., Tumlir (1980), pp. 1–15; Roessler (1985), pp. 287–298; Petersmann (1991), pp. 95–138.

  16. 16.

    See e.g., Hudec (1993), p. 316; Dam (2005), p. 96.

  17. 17.

    Petersmann (1993), pp. 47–48.

  18. 18.

    See e.g., Roessler (1985), p. 294; Petersmann (1991), p. 230; Sykes (1999), pp. 6–7, 23.

  19. 19.

    It is beyond the scope of this chapter to identify and explain all of the elements of the various WTO agreements which allow for Members to choose objectives but limit the choice of policy instrument.

  20. 20.

    Appellate Body Report, Australia – Measures Affecting Importation of Salmon, 199-200, WTO Doc. WT/DS18/AB/R (adopted Nov. 6, 1998).

  21. 21.

    Disciplines on Domestic Regulation in the Accountancy Sector, Adopted by the Council for Trade in Services on 14 December 1998; S/L/64, 17 December 1998.

  22. 22.

    WTO, Appellate Body, Farewell Speech of Appellate Body Member Peter Van den Bossche, (May 28, 2019), available at: https://www.wto.org/english/tratop_e/dispu_e/farwellspeech_peter_van_den_bossche_e.htm.

  23. 23.

    Panel Report, China — Measures Affecting Trading Rights and Distribution Services for Certain Publications and Audiovisual Entertainment Products (China – Publications and Audiovisual Products), 7.713, WTO Doc. WT/DS363/R (adopted Jan. 19, 2010).

  24. 24.

    Ibid., 7.824-911; Appellate Body Report, China — Measures Affecting Trading Rights and Distribution Services for Certain Publications and Audiovisual Entertainment Products, 269-337, WTO Doc. WT/DS363/AB/R (adopted Jan. 19, 2010).

  25. 25.

    For a detailed discussion of China’s implementation, see Zhou (2019), pp. 52–65.

  26. 26.

    Delimatsis (2011), p. 287.

  27. 27.

    Conconi and Pauwelyn (2011), p. 108.

  28. 28.

    For more details of the EU regime, see Panel Report, European Communities – Measures Prohibiting the Importation and Marketing of Seal Products (EC – Seal Products), 2.1-7, 7.1, 7.7-56, WTO Doc. WT/DS400/R, WT/DS401/R (adopted June 18, 2014). The other two exceptions included the MRM exception relating to seal products obtained from seals hunted for the sustainable management of marine resources, and the Travellers exception which allowed travellers to bring seal products into the EU for personal/family use.

  29. 29.

    Ibid., 7.290-319.

  30. 30.

    Ibid., 7.618-651.

  31. 31.

    Appellate Body Report, European Communities – Measures Prohibiting the Importation and Marketing of Seal Products (EC – Seal Products), 5.8-70, 5.78-130, 5.184-290., WTO Doc. WT/DS400/AB/R, WT/DS401/AB/R (adopted June 18, 2014).

  32. 32.

    Regulation (EU) 2015/1775 amending Regulation (EC) No 1007/2009 on trade in seal products and repealing Commission Regulation (EU) No 737/2010, OJ L 262/2 (October 6, 2015).

  33. 33.

    Howse et al. (2014).

  34. 34.

    Panel Report, European Communities – Measures Prohibiting the Importation and Marketing of Seal Products (EC – Seal Products), WTO Doc. WT/DS400/R, WT/DS401/R (adopted June 18, 2014) 7.441-461.

  35. 35.

    Mavroidis (2015), pp. 391–392.

  36. 36.

    Regan (2014), p. 321.

  37. 37.

    Howse et al. (2014).

  38. 38.

    See generally European Commission, International Cooperation and Development: Greenland, available at: https://ec.europa.eu/europeaid/countries/greenland_en.

References

  • Abbott KW (1985) The trading nation’s dilemma: the functions of the law of international trade. Harv Int Law J 26(2):501–532

    Google Scholar 

  • Baldwin RE (1982) The political economy of protectionism. In: Bhagwati JN (ed) Import competition and response. University of Chicago Press, Chicago, pp 263–286

    Google Scholar 

  • Bhagwati JN (1971) The generalized theory of distortions and welfare. In: Bhagwati JN et al (eds) Trade balance of payments and growth: papers in International Economics in Honor of Charles P. Kindleberger. North-Holland Publishing Co., Amsterdam and London, pp 69–90

    Google Scholar 

  • Bhagwati JN (2002) Free trade today. Princeton University Press, Princeton and Oxford

    Book  Google Scholar 

  • Buchanan JM, Tullock G (1962) The calculus of consent: logical foundations of constitutional democracy. University of Michigan Press, Ann Arbor

    Google Scholar 

  • Conconi P, Pauwelyn J (2011) Trading cultures: appellate body report on China-Audiovisuals. World Trade Rev 10(1):95–118

    Article  Google Scholar 

  • Corden MW (1997) Trade policy and economic welfare, 2nd edn. Clarendon Press, Oxford, p 4

    Book  Google Scholar 

  • Dam KW (2005) Cordell Hull, the Reciprocal Trade Agreement Act, and the WTO. In: Petersmann EU (ed) Reforming the world trading system: legitimacy, efficiency, and democratic governance. Oxford University Press, Oxford and New York, pp 83–96

    Chapter  Google Scholar 

  • Deardorff AV, Stern RM (1987) Current issues in trade policy: an overview. In: Stern RM (ed) U.S. trade policies in a changing world economy. MIT Press, Cambridge and London, pp 15–72

    Google Scholar 

  • Delimatsis P (2011) Protecting public morals in a digital age: revisiting the WTO rulings on US – Gambling and China – publications and audiovisual products. J Int Econ Law 14(2):257–293

    Article  Google Scholar 

  • Downs A (1957) An economic theory of democracy. Harper & Brothers, New York

    Google Scholar 

  • Ethier WJ (2004) Political externalities, nondiscrimination, and a multilateral world. Rev Int Econ 12(3):303–320

    Article  Google Scholar 

  • Grossman GN, Helpman E (1994) Protection for sale. Am Econ Rev 84(4):833–850

    Google Scholar 

  • Grossman GN, Helpman E (1995) Trade wars and trade talks. J Polit Econ 4:675–708

    Article  Google Scholar 

  • Howse R, Langille J, Sykes K (2014) Sealing the deal: the WTO’s Appellate Body Report in EC – Seal Products. ASIL Insights 18(12) (4 June 2014) available at: https://www.asil.org/insights/volume/18/issue/12/sealing-deal-wto%E2%80%99s-appellate-body-report-ec-%E2%80%93-seal-products

  • Hudec RE (1993) Circumventing democracy: the political morality of trade negotiations. N Y Univ J Int Law Polit 25(2):311–322

    Google Scholar 

  • Koujianou Goldberg P, Maggi G (1999) Protection for sale: an empirical investigation. Am Econ Rev 89(5):1135–1155

    Article  Google Scholar 

  • Kyle Bagwell K, Staiger RW (1999) An economic theory of GATT. Am Econ Rev 89(1):215–248

    Article  Google Scholar 

  • Mavroidis PC (2015) Sealed with a doubt: EU, Seals, and the WTO. Eur J Risk Regul 6(3):388–395

    Article  Google Scholar 

  • Olson M (1965) The logic of collective action: public goods and the theory of groups. Harvard University Press, Cambridge

    Google Scholar 

  • Petersmann EU (1991) Constitutional functions and constitutional problems of international economic law. Westview Press, Fribourg, pp 95–138

    Google Scholar 

  • Petersmann EU (1993) National constitutions and international economic law. In: Hilf M, Petersmann EU (eds) National constitutions and international economic law. Kluwer, Deventer, pp 3–52

    Google Scholar 

  • Regan DH (2014) Measures with multiple purposes: puzzles from EC – Seal Products. AJIL Unbound 217:315

    Article  Google Scholar 

  • Roessler F (1985) The scope, limits and function of the GATT legal system. World Econ 8(3):287–298

    Article  Google Scholar 

  • Roessler F (1993) The constitutional function of the multilateral trade order. In: Hilf M, Petersmann EU (eds) National constitutions and international economic law. Kluwer, Deventer, pp 53–62

    Google Scholar 

  • Sykes AO (1999) Regulatory protectionism and the law of international trade. Univ Chic Law Rev 66(1):1–46

    Article  Google Scholar 

  • Tumlir J (1980) International economic order: rules, co-operation and sovereignty. In: Oppenheimer P (ed) Issues in international economics. Oriel Press Ltd., Stocksfield, pp 1–15

    Google Scholar 

  • Zhou W (2019) China’s implementation of the rulings of the World Trade Organization. Hart Publishing, Oxford and Portland, pp 52–65

    Book  Google Scholar 

  • Zhou W (2020) In defence of the WTO: why do we need a multilateral trading system. Leg Issues Econ Integr 47(1):9–42

    Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Williams Trade Law, Sydney, NSW, Australia

    Brett G. Williams

  2. The University of New South Wales, Sydney, NSW, Australia

    Weihuan Zhou

Authors
  1. Brett G. Williams
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Weihuan Zhou
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Weihuan Zhou .

Editor information

Editors and Affiliations

  1. University at Buffalo School of Law, The State University of New York, Buffalo, NY, USA

    Meredith Kolsky Lewis

  2. Faculty of Liberal Arts, Chuo Gakuin University, Chiba, Japan

    Junji Nakagawa

  3. Faculty of Law, University of Macau, Taipa, Macao

    Rostam J. Neuwirth

  4. University of Wollongong, Wollongong, NSW, Australia

    Colin B. Picker

  5. Jean Monnet Chair, Institute for International Law and European Law, Georg August University of Göttingen, Göttingen, Germany

    Peter-Tobias Stoll

Rights and permissions

Reprints and permissions

Copyright information

© 2020 The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG

About this chapter

Check for updates. Verify currency and authenticity via CrossMark

Cite this chapter

Williams, B.G., Zhou, W. (2020). If the WTO Were to Break Down Completely, Would We Stoop and Build It Up with Worn-Out Tools?. In: Lewis, M.K., Nakagawa, J., Neuwirth, R.J., Picker, C.B., Stoll, PT. (eds) A Post-WTO International Legal Order. Springer, Cham. https://doi.org/10.1007/978-3-030-45428-9_6

Download citation

  • DOI: https://doi.org/10.1007/978-3-030-45428-9_6

  • Published:

  • Publisher Name: Springer, Cham

  • Print ISBN: 978-3-030-45427-2

  • Online ISBN: 978-3-030-45428-9

  • eBook Packages: Law and CriminologyLaw and Criminology (R0)

Publish with us

Policies and ethics

Search

Navigation