The Imbalances within the WTO Srividhya Ragavan University Of Oklahoma Law Center

Why the topic The failed WTO negotiations Two controversial issues that led to the failure: –Public health –Agriculture

The WTOs inherent imbalance caused its failure. Normative Structure/ Enforcement mechanism sustains the power imbalances and preserves the bargaining inequality –Preserves a rule oriented Lockean system rather than the envisaged utilitarian system. Normative Structure & Imbalance

WTO Creating an integrated multilateral trading system – by entering into reciprocal and mutually advantageous relationship – consistent with their respective needs and concerns at different levels of economic development The Envisaged Utilitarian System

A normative system Rule oriented Consequently, detached from the objectives The Lockean System (The Second Treatise of the Government)

Reduces the line between domestic issues and & market access issues. Does not balance rights & obligations (Art. 7) Allows powerful nations to avoid the rules by not making them Preserves Bargaining imbalances Problems from the Normative Structure

Works towards preserving existing property instead of serving as an incentive to create new property

1. Mail Box dispute between India and US. – It is a a domestic subject because: investments required to set up the interim mechanisms investments to smoothly transition into the patent regime. – Suspends sovereign determination of art 27 (3) [morality] issues – (America v. Antigua is another example). Reduces the Line between Domestic & Market Access Issues

Curtailed developing country members right to independently determine whether an invention can be allowed into their channels of commerce. Assuming the invention fails the test of patentability after five years, owner enjoys market exclusivity – Consumers in developing countries pay a privilege for 5 years for what is in public domain. Cost of the obligations of the interim mechanism not balanced with the benefits At the end of 5 years, countries reexamined all the mail-box applications contributing to backlogs and further degeneration of the system; or allowed unpatentable items to be patented. Skews Balance of Rights & Obligations

Powerful nations can avoid the rules by not making them. – Agricultural subsidies Powerful nations Avoid Obligations

Upland Cotton Dispute with Brazil Dispute & DSBs adoption of panel report US agreed to implement by July, 2005 July 2005, US notified that the matter had been sent to Congress and that it would need additional time Brazil requested for countermeasures: – Intellectual property suspension – Imposing duties on US items (impractical because it could hurt Brazil). US pointed to TRIPS DSB ruled that countermeasures will be illegal Preserves Bargaining Imbalances

Other examples include EC Sugar subsidies and the Hormones Dispute which the EU refused to implement. Bargaining Imbalances

Bargaining Imbalance The solutions of the DSB contributes to the bargaining imbalance

Trade sanction – Does not work for developing nations Cost ineffective Dispute where Brazil and India chose not to impose sanctions – Counter measures – bilateral agreements/ donor country theory – Trade sanction works towards integrating against the west Rule based Construction

DSB rules on issues affecting national social and economic interests: –But not required to take stock of social and economic circumstances Indifference to compelling social and economic circumstances of developing nations –DSB forges trade sanctions even if the imposition of sanctions adversely affects the objectives of WTO agreement Therefore reiterates the power imbalance b/w parties

Recognition of: – Reverse interest theory for protectionism (Novartis in India) – Theory of necessity Theory of Trade Benefit – justifying the move from a power based structure – Similar to the July package African countries Solution