This is an anonymous guest post that responds to a recent op-ed by U.S. Trade Representative Robert Lighthizer. [Note: Some people’s work means that they prefer to discuss such issues on a non-attributable basis, and there have been many anonymous comments on this blog over the years, which I think have been very useful. This is the first anonymous post. - SL]
A response to Robert Lighthizer (How to Set World Trade Straight; Bilateral pacts promote protectionism. The WTO needs to return to the vision of equal rules for all. The Wall Street Journal, 20 August 2020).
To thrive, international trade requires security and predictability, that is, an agreed set of rules and reasonable certainty as to how they will be interpreted and applied. Only then can transnational business plans be made and relied upon, to the benefit of all. Because it is always possible that reasonable people may disagree about the meaning of words, this necessitates independent third party adjudication. The adjudicators’ task is to identify and consider the relevant treaty terms on the one hand, and the often different terms used in the measure under scrutiny on the other hand, and explain, with logical and detailed reasoning that both parties can understand, whether or not, in their view, the latter is consistent with the former. In doing so, it is appropriate that they should use an agreed interpretative cipher, such as the customary rules of interpretation of public international law, which refer to good faith, ordinary meaning, context and object and purpose, as well as preparatory work, because this helps to narrow the scope of the dispute and result in an adjudication that is in line with the expectations of the parties and their principal stakeholders. They can construct their explanation deductively, working from the general to the specific, from the law to the facts; or inductively, working from the specific to the general, from the facts to the law.
In this process, the WTO adjudicator is not controlling the manner in which a WTO executive has interpreted and applied WTO law (a scenario that, in municipal law, would suggest that some measure of deference would be appropriate), there being no WTO executive. Rather, the WTO adjudicator is simply considering whether or not the measure is consistent with the balance of obligations and rights set out in WTO law. In that context, the WTO adjudicator is tasked with reaching the conclusion that best comports with the law and the facts and evidence. That said, in WTO regulatory law, there is in general no mandatory international harmonisation. WTO Members remain entirely free to choose their own legitimate policy objectives and strive towards them, provided only that they do so in a manner that minimises any disruption of international trade. In this sense, therefore, deference to municipal rules is structurally embedded in WTO law.
In this adjudicative process, because reasonable people may disagree about the meaning of words, the independence of the adjudicators is paramount. The adjudicators are human and therefore cannot be expected to completely eliminate all subjective elements from their considerations. However, they must strive to limit themselves to the agreed terms of the treaty, the terms of the measure and the agreed interpretative cipher, to the exclusion of any exogenous factor that might favour the interests of one party over the other. This constitutes the currency of the adjudicative system, indissociably linked to the parties’ consent to be bound by the result. The process is no longer about the substance of the dispute but rather the means by which it will be resolved. If done properly, litigation in this sense is actually a strange way of finding agreement. Reasonable people may continue to disagree on the substance: some may complain of what they see as the judicial errors of “activism” or “default”; whilst others may welcome what they perceive as the judicial virtues of “engagement” and “restraint”. But these same reasonable people can at the same time agree to the process that has produced a particular outcome, because there is no other means of achieving the overarching objective of security and predictability for international trade, to the benefit of all.
The great majority of cases turn on the facts and evidence, that is, the outcome depends on the manner in which the law has been applied to the facts and evidence, as opposed to the manner in which the law has been interpreted. Therefore, the great majority of cases are primarily of interest only to the parties. That is why there is no formal or binding system of precedent in WTO law. However, when adjudicators resolve a particular dispute, it is in the nature of the process that some parts of their explanations relate to the way in which the law has been interpreted. Since the WTO is a multilateral organisation, whose central rule is the most favoured nation rule, the purpose of which is to avoid any discrimination and associated trade diversion or deflection, other Members and their stakeholders have a reasonable expectation that the law will be interpreted in the same way for them. That is not to say that this will necessarily determine the outcome of future cases, which will turn on their facts and evidence. It is just to recognise that all WTO Members have a reasonable expectation that WTO law means the same for everyone, and that its meaning does not vary according to the identity or wishes of a particular litigant. That is, indeed, the defining characteristic of a multilateral system that has the most favoured nation rule at its core: equal rules for all.
It may well be that there is a need for WTO Members to negotiate and agree updated rules that take account of the changing world. However, any such rules, just like the existing rules, in order to be effective in achieving the overarching objective of security and predictability in international trade, to the benefit of all, must also be subject to third party adjudication, as outlined above. Reasonable people can survey the work of WTO panels and the Appellate Body over the last 25 years and continue to disagree on the substantive outcomes in one case or another. However, it does not follow that the nature of third party adjudication should be weakened or become unpredictable or arbitrary. On the contrary, it follows that Members should further invest in the WTO dispute settlement system in order to make it even better than it already is, helping all Members and their principal stakeholders to both realise and adjust their expectations accordingly, whilst constantly safeguarding the independence of the adjudicators, without which the system is nothing.
