Regulatory Shift: The Rise of Judicial Liberalization at the WTO

Abstract

In the early years of the GATT/WTO regime, trade regulation occurred through a negotiated legislative process associated with trade rounds. Over the last fifteen years, however, the focus of GATT/WTO trade regulation has moved to the process. GATT negotiations, reliant on reciprocity between big territories, non-reciprocity for developing countries, and the extension of Most Favored Nation status to all, created a regulatory system that substantially liberalized trade, but also enabled some powerful protectionist sectors to remain entrenched in industrialized countries. Since conclusion of the Uruguay Round, the decline in non-reciprocity for developing countries has catalyzed legislative gridlock at the GATT/WTO, reflected in the current Doha Round impasse. The failure of the Ministerial negotiating process has opened up space for public sector entrepreneurs - the Appellate Body - to push for regulatory change. The same divisions that have undermined trade talks have made it increasingly difficult for the membership to provide a check on lawmaking. The result is that we are entering a period of judicial liberalization at the WTO, led by the Appellate Body.