The Goals of the Multilateral Trading System

Ask a WTO delegate what the goal of trade liberalization is and the likely answer will have a good deal to do with stimulating economic growth. If trade stimulates growth, then liberalizing trade increases the volume of trade and therefore stimulates more growth than would occur otherwise. Economic growth, however—like trade liberalization— is a means to an end and not an end in itself. (See Chapter 1.) What goal, then, is the trade regime dedicated to reach, against which it must inevitably be judged?

At its origins in 1947, GATT had a highly utilitarian purpose, based on the need to raise standards of living and to ensure full employment by "developing the full use of the resources of the world" and expanding trade. The WTO, established on 1 January 1995, is an altogether different animal. Its agreements focus less on what happens to manufactured goods at the border than on the trade impacts of domestic policy. Further, the key agreements that make up the WTO package— including a revamped GATT—are part of a "single undertaking." GATT member countries that became the initial WTO members and the countries that joined the organization since then are all bound by these rules (with minor exceptions). Countries are either in or out of the multilateral regime, and it is increasingly impossible to remain out of it. Being part of the system requires accepting the decisions of the WTO's dispute settlement system, which are not only binding but enforceable in the most extreme cases through economic sanctions.5

No doubt thanks to the high political profile of the environment at the 1992 Earth Summit in Rio, the Marrakesh Agreements that established the WTO articulated an ambitious and both socially and environmentally responsible goal for the trading system. The governments who signed on agreed in the Preamble "that their relations in the field of trade and economic endeavour should be conducted with a view to raising standards of living, ensuring full employment and a large and steadily growing volume of real income and effective demand, and expanding the production of and trade in goods and services, while allowing for the

New Approaches to Trade Governance optimal use of the world's resources in accordance with the objective of sustainable development, seeking both to protect and preserve the environment and to enhance the means for doing so."6

They further recognized the particular need for a trading system that boosts the development efforts of the poorer countries by noting "that there is need for positive efforts designed to ensure that developing countries, and especially the least developed among them, secure a share in the growth in international trade commensurate with the needs of their economic development."7

So the goal of the multilateral, rules-based trading system managed by the WTO is to harness trade to the task of achieving sustainable development, ensuring that trade openness provides a boost to development in the less-advanced countries, and recognizing the distinct needs of countries at different stages of development.

Unfortunately, while the trade disciplines contained in the WTO texts are binding, enforceable, and set out in precise language, the legal status of the Preamble agreed to in Marrakesh was at first unclear. One leading negotiator of the agreement has remarked that the Preamble was used to "park" notions held to be important by one government or a group of countries but around which no consensus could be built. Most trade lawyers would argue that the Preamble sets tone and context and has exhorta-tory value but is unenforceable. This view is not shared by the WTO's own dispute settlement system, however. The Appellate Body, for one, has made clear in a few landmark cases that the Preamble is to be regarded as part and parcel of the legal agreements that bind members.8

It is important to note here that the environmental community has been among those most suspicious of the multilateral trading system and has often been in the front lines of protests against the North American Free Trade Agreement (NAFTA), the WTO, the Free Trade Area of the Americas, and others. There are several reasons for this.

Extension of free trade reinforces the relative strength of the corporate sector and especially the multinational corporations. This leads to the perception that the trading system is an ally of the corporate sector, which the environmental community continues to distrust.

The trade rules embodied in the WTO appear stronger—and the compliance mechanisms much stronger—than the equivalent environmental rules, whether at the national or international level. When there is overlap and contradiction between the two sets of rules, it is not unreasonable to expect that the trade rules will prevail, especially given that economic policy generally has stronger political support than environmental policy does.

Attempts to extend trade policy to cover services (such as water supply, forestry, protected area management, and so on) smack of an attempt to privatize what the environmental community regards as public goods. As WTO rules on nondiscrimination appear to question domestic policy decisions such as the setting of environmental standards or the adoption of environmental labels, they appear to threaten hard-won environmental progress and to question the ability of the state to act in accordance with the public good.

Finally, early trade dispute cases decided by GATT appeared to attack the ability of states to harness the power of the market to advance environmental goals. One famous case suggested that the trade rules did not allow the United States to distinguish between tuna caught with massive associated dolphin deaths and "dolphin-safe" tuna, because the two were "like" products under the trade rules and no discrimination between them was allowed.9

New Approaches to Trade Governance

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