Free Trade, Sovereignty, Democracy: The Future of the World Trade Organization

1. INTRODUCTION The World Trade Organization ("WTO"), only six years old, faces two formidable challenges. First, it must mobilize support to confront determined and growing attacks from outside groups and individuals who proclaim that the organization lacks democratic accountability and is merely a front for multinational corporations and dehumanizing capitalist values. Second, even as it attempts to mobilize its resources to meet these onslaughts, the WTO finds its own institutional viability jeopardized by internal constitutional flaws that play into the hands of opponents: namely, the pressure to "legislate" new rules-through a highly efficient new dispute settlement system-that flout the mandate that dispute settlement judgments must neither add to nor diminish the existing rights and obligations of WTO members. The United States faces a different, though related, set of challenges. In a world of increasing technological and economic integration, it must continue to balance and rebalance a defense of national sovereignty against grants of authority over economic and social policy to international organizations such as the WTO. The United States must also devise domestic political mechanisms that provide greater democratic accountability with regard to decisions affecting US international obligations. The first draft of this article was completed during the week of the United Nations "Millennium Summit" in early September 2000. On the opening day of the summit, the New York Times interviewed leaders of the anti-globalist movement who stated that, in contrast to Seattle, their groups were in New York not to protest but to give support to the UN: "We've lately begun to worry that the mandate [of the UN] was weakening, and that the same ideologies that drive the WTO will appear in the United Nations ... It is our role to still insist and assert that the United Nations is not a body that should be siding with the interests of capitalists..."' I had to chuckle because I had just finished writing a book that stemmed, at least in part, from the fear that the ideological flow was in the opposite direction-that the free market principles embodied in the rules of the WTO would be suborned by protectionism in the name of other social, economic, or political interests. The day after that news item appeared, the New York Times published a second article that is also directly relevant to this study! It reported that the European Union had rejected as still inadequate a US effort to come into compliance with the ruling of a WTO panel that the United States had granted an illegal export subsidy to American companies.3 This had ominous implications. Stuart Eizenstat, the deputy secretary of the US Treasury, had warned in July that a "major trade war" could ensue if the two sides could not come to some agreement Sanctions in the WTO are based upon the amount of harm suffered in the international marketplace by the complaining country. Using that metric, the EU calculates that it could seek 100 percent tariffs on $4 billion of US exports.5 Should this occur, it would be far and away the largest retaliation taken under the new WTO dispute settlement system. It would come on top of two other corrosive quarrels between the two trading partners. In one, the US has levied some $200 million in tariffs on European goods after the EU refused to alter its restrictions on banana imports from Central America; and in the second, the US has levied over $100 million in tariffs on European goods because the EU has banned hormone-- treated beef. Taken together, these snapshots of the current travails of the WTO create a picture of the current state of the organization. The WTO faces enormous new pressures from the outside, with the emergence of powerful anti-globalist sentiment matched by determined new transnational interest groups that are effectively exploiting that sentiment. At the same time, the WTO is saddled with a constitutional structure that may cripple its ability both to deal with its external antagonists and-of greater importance-to settle disputes between member states in a manner that upholds the rules and at the same time is satisfactory to the contending parties. …