Abstract
The circumstances of discourse concern many semiotic systems (not necessarily linguistic) that are outside the text and that surround the sender at the moment the discourse is produced. These circumstances are relevant insofar as they supply the information that supports the interpreter in the when interpreting. From this perspective, examining the circumstances of the utterance in the WTO decision-making discourse, this chapter begins by analyzing the historical factors that gave rise to the current multilateral system of commerce, and, in goes on to demonstrating that the excessive political control at the time of the General Agreement on Tariffs and Trade (GATT) of 1947 was considerably reduced with the advent of the WTO – which, in turn, strengthened the diplomatic discourse.
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- 1.
Hobsbawm (1995), at. 43.
- 2.
World trade decreased by 60% in 4 years (1929–1932); between 1927 and 1933, international loans dropped by 90% (Ibid., at 98 and 93, respectively).
- 3.
Jouanneau (1996), at. 6. (Que sais-je?).
- 4.
One example was the Smoot-Hawley Tariff act of 1930 in the US. The “customized” tariffs for American companies (which actually meant restricting imports) were followed by foreign retaliation; thus contributing to the severity of the Great Depression.
- 5.
To Bhagwati, “It is plausible, therefore, that the United States’ embrace of postwar trade liberalization, even if actuated by the aforementioned considerations of sectional interests and national interest, was reinforced by the essential confidence in the country’s likelihood of surviving – and, hence, its national interest in – the Darwinian struggle that freer trader entails”. Bhagwati (2000), at. 38.
- 6.
At the beginning of the twentieth century, there was a more receptive atmosphere to the re-establishment of international law for cooperation. Note the Charter of the United Nations (1945), Article 13, mentioning the promotion of international cooperation in the political sphere and incentive for “progressive development of international law and its codification.” According to Bhagwati, “where the nationalist theory of free trade glosses over the use of tariffs, quotas, and subsidies, by other countries, urging free trade for a nation regardless of what others do, the cosmopolitan theory requires adherence to free trade everywhere. The trade regime that one constructs must then rule out artificial comparative advantage arising from interventions such as subsidies and protection. It must equally frown upon dumping, insofar as it is a technique used successfully to secure an otherwise untenable foothold in world markets. The two theories of free trade therefore stand in somewhat striking contrast to one another in terms of what they imply about unilateral and universal free trade”. J. Bhagwati, Protectionism, op. cit., at. 34.
- 7.
The Marshall Plan, for example, in allocating financial resources for rebuilding Europe, not only favored free trade between this continent and the US, but also served as an instrument to contain the advance of communist political parties in Europe.
- 8.
The IMF was created to regulate and manage an international financial system, which was indispensable for promoting international trade. Thus, nations could no longer freely manipulate the price of their currencies. The World Bank, in turn, appeared to play the role of financially aiding Member states in regard to their short- and long-term development goals.
- 9.
These exceptions to free market resulted from the efforts of European and developing nations. To the former, the re-organization of their economies in the post-war period implied the protection of certain industry segments of their economy until they could become competitive; and, to the latter, accepting the obligations on equal par with industrialized nations would prevent their economies from growing. Thus, developing nations criticized the most-favored nation clause and defended the possibility of signing preferential agreements.
- 10.
The 23 nations were: Australia, Belgium, Brazil, Burma, Canada, Ceylon (current Sri Lanka), Chile, China, Cuba, the US, France, India, Lebanon, Luxemburg, Norway, New Zealand, Pakistan, the Netherlands, South Rhodesia (current Zimbabwe), the UK, Syria, former Czechoslovakia, and South Africa. Jackson noted that one of the reasons for implementing the GATT before the creation of the ITO was due to the fact that US negotiators were backed by a piece of American legislation, dated from 1945, that authorized the approval of the GATT without having to submit it to Congress. This authorization, however, would expire in the middle of 1948. Cf. Jackson (1997), at. 39.
- 11.
Flory (1999), at. 4.
- 12.
It therefore had the nature of a contract. However, the US agreed with a contract lacking symmetrically reciprocal obligations, due to US political interest in collaborating to rebuilding Europe and to reducing the precarious socioeconomic situation of developing nations. This position, however, was temporary. As soon as Europe recovered and as the recently industrialized nations showed signs of growth, the US would request such reciprocity in terms of access to markets.
- 13.
J. Bhagwati, Protectionism, op. cit., at. 40.
- 14.
GATT signatories were not called “members”, but rather “contracting parties”, since the GATT referred to an agreement and not an international organization. When acting collectively, the contracting parties wielded several powers, among which was overseeing whether the GATT provisions were being complied with. In 1960, the Council of representatives was created to receive a variety of powers. There was also a Secretariat with a Director-General.
- 15.
The Conference Rounds were: Geneva (April–October 1947); Annecy (1949); Torquay (1950–1951); Geneva (1955–1956); the Dillon Round (1961–1962), taking the name of the subsecretary of US, Douglas Dillon, who proposed to complete the negotiation of Article XXIV, § 6 of the General Agreement via tariff negotiation; and the Kennedy Round (1963–1967). It is worth noting that the Kennedy Round also resulted in an agreement on anti-dumping practices, which would be modified on the occasion of the Tokyo Round.
- 16.
There are many non-tariff barriers, among which are: quantitative restrictions; subsidies granted to domestic products and exports, and dumping, the latter corresponds to exporting a product at a lower price than the price practiced in the market of origin or below the cost of production.
- 17.
Agriculture played a central role in the Uruguay Round. Including agriculture under the free trade mechanisms gave rise to major divergence between the US and the European Community: the US demanded the elimination of agricultural subsidies, while the EU only accepted their reduction.
- 18.
Another dispute between developed and developing nations resulted from these new fields. Developing nations diverged from developed nations in including textiles and in being against opening negotiations in the field of services, intellectual property, and investments.
- 19.
The legal obligations under the GATT 1947 continued under the text of the GATT 1994 as part of the goods agreements.
- 20.
In 1994, the plurilateral agreements included: the Agreement on Government Procurement, the Agreement on Trade in Civil Aircraft, the International Dairy Agreement and the International Bovine Meat Agreement. The latter two were scrapped at the end of 1997.
- 21.
These Accords were effective as of January 1, 1995 for nations that ratified them domestically.
- 22.
Article II.3 of the Agreement Establishing the WTO.
- 23.
Article II.2 of the Agreement Establishing the WTO. Jackson explains that “the idea was that there should be one complete elaborate text to which all those who wanted to become members of the new structure must adhere and accept.” The world trading system, op. cit., at. 47. It was the end of the “GATT à la carte” which stemmed from the Tokyo Round, and which granted contracting parties the possibility of adhering or not adhering to non-tariff codes applied by a limited number of countries. According to Lafer, “the GATT à la carte was a byproduct of its strictly contractual nature, derived from the fact that it was conceived as a mere legal relationship between the contracting parties.” Lafer (1998), at. 24.
- 24.
According to the Explanatory Notes contained in the Agreement Establishing the WTO, the terms “country” or “countries” include any separate customs territory Member of the WTO.
- 25.
C. Lafer, op. cit., at. 103. The WTO became the main institution for international commerce and, together with the IMF and the World Bank, became part of the Bretton Woods System. Article III.5 of the Agreement Establishing the WTO reinforces the ties of this institutional triad.
- 26.
For example, an importer developed country could influence the opinion of a less developed exporter country by signaling that the support for development and/or the commercial preference would be interrupted in the event the developing country in question does not “voluntarily” reduce its textile and agricultural exports. The example is from Petersmann (1997), at. 66.
- 27.
J. H. Jackson discusses this dichotomy between settlement by negotiation with reference to relative power status of the parties and settlement by negotiation or decision with reference to norms or rules in The world trading system, op. cit., at. 109–110.
- 28.
It is important to point out that the GATT is referred to in this book as a de facto institution. Only by doing so can we attach to it the controlling power that international organizations are endowed with. It is worth noting that the control exercised over a certain Nation-State that does not comply with its obligations under the international organization can take three forms: (a) via a claim against the State in alleged breach; (b) at the discretion of the organization; or (c) at the discretion of individuals or groups. Control over commercial issues in the realm of the WTO falls under (a).
- 29.
E.-U. Petersmann, The GATT/WTO dispute settlement system, op. cit., at. 69.
- 30.
The non-jurisdictional procedures for conflict resolution in the WTO are provided for in Article 5 of the DSU. Different from the consultations, where only litigant States are present in the negotiation toward an amicable solution for the conflict, in the other means of conflict resolution third-party states are present. Third parties may be a State, an international organization, or an independent entity.
- 31.
The opinion supported by Canal-Forgues (1993), at. 687. According to Pace, the dispute settlement mechanism of the GATT was strongly conciliatory: “It tried to resolve conflicts not by means of decisions legal in nature, but by means of recommendations to re-establish the balance of concessions and advantages between litigants. […] The Contracting Parties had the main task of reaching a solution via conciliation, and not to reach a decision under a court of jurisdiction.” Pace (2000), at. 203.
- 32.
J. H. Jackson, The world trading system, op. cit., at. 116. Despite the change to a “rule-oriented” solution, during the life of the GATT 1947, the procedures for dispute settlement went through phases of falling into relative disuse. Some contracting parties feared that invoking the procedures could be considered a deliberately contentious act or, in the words of Jackson, an “unfriendly act”. Cf. ibid., at. 114.
- 33.
See Hudec (1993), at. 138.
- 34.
Ehlermann (2002), at. 607.
- 35.
Article II.1 of the Agreement Establishing the WTO. Hereinafter, “Members”, with a capital M, refers to the nations that take part in the WTO.
- 36.
Article III, paragraphs 1 and 2, and Article VIII.1 of the Agreement Establishing the WTO. As a legal entity, the WTO has the authority to enter into agreements with other intergovernmental organizations – especially those that operate in WTO-related fields – aiming at establishing “effective cooperation” (Article V of Agreement Establishing the WTO). It is important to point out that, contrary to what had been established in the ITO project, the WTO did not receive the status of specialized agency from the UN. According to Flory, the reason for not giving the WTO the status of a UN-specialized agency was probably the very “need of recognizing the specificity of this new international economic organization, due to the particularities of the commercial matters involved and the negotiating procedures.” (L’Organisation mondiale du commerce, op. cit., at. 15).
- 37.
See Article IV of the Agreement Establishing the WTO. Also, the Secretariat of the WTO, which is run by a Director-General. Article VI of the Agreement Establishing the WTO.
- 38.
Article IX.1 of Agreement Establishing the WTO.
- 39.
The other cases concern: the procedures of amending the provisions in the Agreement Establishing the WTO and of the Multilateral Trade Agreements (Article X of the Agreement Establishing the WTO), the procedures of interpreting and granting waivers to a Member for an obligation under aforementioned Accords (Article IX of the Agreement Establishing the WTO).
- 40.
Article III.3 of the Agreement Establishing the WTO. Although representing a specialized function of the General Council, the DSB holds its own institutional identity, with a president and own internal regulation.
- 41.
Article 3 of the DSU.
- 42.
According to the terms of Article 1.1 of the DSU, “covered agreements” are the numbered agreements in Appendix 1 of the DSU: the Agreement Establishing the WTO, the Multilateral Trade Agreements, the DSU, and the Plurilateral Trade Agreements. Therefore, the Trade Policy Review Mechanism is not one of them.
- 43.
Croome (1995), at. 324. Emphasis in the original.
- 44.
See Articles 6.1, 16.4 e 17.14 of the DSU.
- 45.
V. Pace, L’Organisation mondiale du commerce et le renforcement de la réglementation juridique des échanges commerciaux internationaux, op. cit., at. 171.
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de Carvalho, E.M. (2011). From GATT to the WTO: Regulating International Trade. In: Semiotics of International Law. Law and Philosophy Library, vol 91. Springer, Dordrecht. https://doi.org/10.1007/978-90-481-9011-9_7
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