Governance, Coherence, and WTO Dispute Settlement Joel P. Trachtman The Fletcher School of Law and Diplomacy

Agenda Role of Dispute Settlement in International Law GenerallyDispute Settlement as Governance Role of Dispute Settlement at the WTO Diagnose Incoherence Diagnose Imbalance Achieving Coherence and Balance A Tale of Heroism

The Role of Dispute Settlement in International Law Role of international law: – Allow states to cooperateto overcome bargaining problems and transaction costs problems in market for authority in international relations Role of dispute settlement in enhancing utility of international law – Incomplete Contracts – Enforcement

Incomplete Contracts All treaties are incomplete Under regime of auto-interpretation, they fail to resolve all disputes Under regime of dispute settlement, all disputes are resolved by definitive interpretation Optimal completeness and rules versus standards Costs of specification, including political costs Constructive ambiguity? Governance gap and heroic response

Enforcement Informal: third party declaration of who is right – Law merchant (Milgrom, North, and Weingast) – Solving information problem in multilateral setting – Facilitating multilateral punishment of violation Formal – No police force – Authorizes self-help – Restrains self-help

The Role of Dispute Settlement in WTO Law Mandate in terms of incomplete contracts: – To clarify (interpret) – Preserve rights and obligations – Provide security and predictability Mandate in terms of enforcement: – Gatekeeper to authorized self-help – Penalties? – Remedies are insufficientadd on continuing informal sanctions

Incoherence, Incompleteness, Imbalance, and Enforcement Where does incoherence come from? – Normative incompleteness – Procedural incompleteness or imbalance in terms of the institutional backing for different norms: variable institutionalization – Institutional imbalance within the WTO

Normative Incompleteness Failure of treaty negotiators to specify how different international law norms relate to one another – National bureaucratic incoherence – Unwillingness to bear political costs of determining hierarchy of values – Superiority of case-based determination? Failure of Vienna Convention on Law of Treaties to provide a normatively satisfactory or predictable response to treaty conflict

Procedural Incompleteness Only selected norms have mandatory dispute settlement Only selected norms have potential remedies Dispute settlement bodies have specialized mandates Result: variable enforcement and variable compliance

Imbalance Strengthened dispute settlement in 1994 Increasingly difficult treaty-making Leaves excessive responsibility to dispute settlement

Are Normative Incompleteness and Procedural Incompleteness Bad? WTO Dispute Settlement has limited mandate to resolve normative incompleteness (reducing concerns regarding procedural incompleteness) – WTO Dispute Settlement makes tough decisions that treaty negotiators failed to make – WTO Dispute Settlement bears the criticism that treaty negotiators avoid

Resolving Incoherence, Incompleteness and Imbalance Protect WTO Dispute Settlement from criticism by avoiding excessive responsibility Where WTO Dispute Settlement mandate is inadequate to resolve normative incompleteness, then diplomats must complete the contract ex post Diplomats can also resolve normative conflicts ex ante, but this is not always possible or desirable

Conclusion Muddling through and constitutional moments in international governance Normative incompleteness Procedural incompleteness Imbalance The heroism of the Appellate Body