Sixth Annual WTO Conference: An Overview

INTRODUCTION

On 23–24 May 2006, the Sixth Annual WTO Conference, held at Gray’s Inn, London, attracted again a broad audience of trade scholars, students, practitioners, and diplomats to explore and discuss the current and future challenges of the WTO and, in particular, of its dispute settlement system.¹ The annual two-day conference, co-organized by the British Institute of International and Comparative Law (BIICL), the Institute of International Economic Law (IIEL), and the Journal of International Economic Law (JIEL), is now established and recognized as one of the most prominent gatherings of trade experts from various backgrounds to confront the systemic problems facing the WTO and its dispute settlement system.² The first day of the conference addressed the current and future challenges of WTO dispute settlement, which included the interplay between the principles of state responsibility and the conduct of WTO Members under the WTO-covered agreements; the interpretation of exception clauses and the principles of necessity and non-discrimination; the practice of panels and the Appellate Body in applying judicial economy and/or completing the analysis; and the recent jurisprudence involving the interpretation of schedules of concessions. The second day of the conference consisted of a WTO Research Seminar during which the concept of regulatory convergence was discussed in the context of the WTO, and the relationship between the WTO dispute settlement system and investment treaty arbitration was explored in great detail. The WTO Research Seminar concluded with a discussion of how the eventual results of the Doha Development Round may be implemented and of the meaning of the concept of ‘development’ in the light of the history of the GATT/WTO and the ongoing negotiations.

This article provides a summary of the discussions during the two-day conference and highlights various facets of the conclusions drawn from those discussions.

I. WTO DISPUTE SETTLEMENT: CURRENT AND FUTURE CHALLENGES

A. What conduct is a Member responsible for?

The debate about the extent to which a WTO Member is responsible for private conduct and the controversy about mandatory versus discretionary legislation dates back to the era of GATT dispute settlement. Both questions were essential to the discussion of the conduct for which WTO Members are responsible and also relate to the influence of the principles of state responsibility on WTO dispute settlement.³

In general international law, Articles 1 and 2 of the International Law Commission’s (ILC) Principles of State Responsibility describe the conduct for which a State is responsible as conduct that consists of ‘an action or omission: (a) [is] attributable to the State under international law; and (b) constitutes a breach of an international obligation of the State’. As a result, the two relevant questions in WTO dispute settlement are, on the one hand, what conduct is attributable to a WTO Member (and whether, and to what extent, this includes conduct of private parties) and, on the other hand, what constitutes a breach of the WTO covered agreements.

The discussion of the first question mostly focused on whether and under which conditions a WTO Member is responsible for private conduct in the event that this Member has induced private actors to WTO-inconsistent behaviour, and on a Member’s obligation to not tolerate such private conduct. In general international law, Article 8 of the ILC’s Principles of State Responsibility sets out a high threshold for the attribution of private conduct to a State and requires that ‘the person or group of persons is in fact acting on the instructions of, or under the direction or control of, that State in carrying out the conduct’. One speaker pointed out that in none of the relevant WTO cases on the matter this high threshold of State intervention has been met or proved. The importance of voluntary private action that is WTO-inconsistent first came to the forefront in Japan – Film, where the panel relied on past GATT jurisprudence to conclude that

an action [is] taken by private parties does not rule out the possibility that it may be deemed to be governmental if there is sufficient government involvement with it. It is difficult to establish bright-line rules in this regard, however. Thus, that possibility will need to be examined on a case-by-case basis.⁴

In the discussion of Japan – Film and other panel reports, one speaker remarked that panels have only examined whether a WTO Member’s act of inducing is inconsistent with the WTO-covered agreements. Contrary to this case law, the suggestion was made that panels should—in cases involving the attribution of private conduct to a Member—examine each time the definition of the provision that describes the WTO-(in)consistent behaviour, that is, how the conduct, requirement, measure ... is defined in the WTO covered agreements. In addition, panels and the Appellate Body could be assisted by the introduction of a rebuttable presumption that if a WTO Member acts in a legally binding way, there exists a presumption of causality between that conduct and the private behaviour. In the other case of a WTO Member acting in a discretionary manner, no such presumption would apply and causality should be established. Another speaker presented a counterargument to this proposal pointing out that the WTO jurisprudence has recognized that a non-binding action could constitute a measure. Nevertheless, this speaker also recognized that once the jurisdiction of a panel is established, the introduction of a presumption of causality may serve a useful purpose.

The second question of what constitutes a breach of the WTO covered agreements has been prominent in the discussion of whether discretionary, in contrast with mandatory, legislation may constitute a violation of a WTO Member’s rights and obligations. In US – 1916 Act, the Appellate Body recognized that the right to challenge legislation as such before a panel forms part of the GATT acquis.⁵ In that case, the Appellate Body explained the doctrine of mandatory versus discretionary interpretation as ‘the concept that mandatory and discretionary legislation should be distinguished from each other, reasoning that only legislation that mandates a violation of GATT obligations can be found as such to be inconsistent with those obligations’.⁶ The rationale for the doctrine is that ‘the GATT and the WTO, as well as the dispute settlement system, are intended to protect not only existing trade but also the security and predictability needed to conduct future trade’.⁷ The Appellate Body has also added that ‘[W]hen a measure is challenged “as such”, the starting point for an analysis must be the measure on its face’, which implies that if ‘the meaning and content of the measure are clear on its face, then the consistency of the measure as such can be assessed on that basis alone’.⁸ Whether the mere existence of a measure as such could constitute a violation has not, so far, been adequately addressed in international law. One speaker asserted that the WTO jurisprudence on the matter was likely one example of the substantive contribution of WTO dispute settlement to the development of general international law, although the Appellate Body was still struggling with whether the doctrine of mandatory versus discretionary legislation in fact continued to apply in WTO dispute settlement. No treaty text is available on the matter; the distinction between mandatory and discretionary legislation is a product of WTO jurisprudence. The Appellate Body has generally adopted a very cautious approach to the matter. Although mandatory legislation will entail ipso facto a breach of a WTO obligation, discretionary legislation only grants the discretion or authority to (possibly) violate a WTO obligation. Article XVI WTO Agreement sets out the basic obligation that ‘[E]ach Member shall ensure the conformity of its laws, regulations and administrative procedures with its obligations as provided in the annexed Agreements’. Mandatory legislation that is inconsistent with the WTO covered agreements will always amount to a breach, unless it is justified by one of the exceptions provided in the covered agreements. One suggestion for a possible framework to analyse mandatory and discretionary legislation was to consider the distinction between both types as a tool of review, comparable with other means of review such as the principle of proportionality. Within this framework, panels and the Appellate Body should give attention to the importance of the distinction when reviewing administrative acts. One speaker suggested that the Appellate Body could overturn the distinction in future cases. In the case of administrative acts, the administrative authority or agency acting upon discretionary legislation would always have the possibility to ensure compliance with Article XVI WTO Agreement. Therefore, the suggestion was made that the distinction between mandatory and discretionary legislation should only be maintained in reviews of national laws but not of administrative measures. Whereas it was acknowledged that such a distinction resulted in some tension or contradiction, the distinction was defended on the assumption that national laws and administrative measures have different functions and a finding of their inconsistency with the WTO covered agreements would, in practice, have varying implications. In essence, this was a proposal for that more deference be given with respect to national laws and less deference with respect to administrative measures. As a result, this view defended that the distinction be respected in WTO dispute settlement but with some variation.

Another suggested way of conceptualizing the distinction between mandatory and discretionary legislation was to consider it as an element of the burden of proof in WTO dispute settlement. Within this conception of the distinction, it did not suffice to merely find that certain legislation was of a discretionary character. It was more relevant to differentiate ‘as applied’ challenges to the application of a rule to a given set of facts from ‘as such’ challenges to general rules or norms that could be attributed to a WTO Member. This more complex framework to approach the distinction—recognizing that there was often no clear dividing line between mandatory and discretionary legislation—involved that three different categories of discretion be identified. These three categories of discretion allowed examining whether a general rule violated a WTO obligation in substance, this speaker suggested. If there is discretion to adopt or withdraw a general rule and irrespective of whether this discretion is enjoyed by the legislator or an administrative agency, the WTO Member concerned should be responsible for the WTO-inconsistent measure. The second category was the discretion not to apply a rule. This discretion involved rules whose application depends on the existence of particularly defined circumstances, and was subject to particular exceptions or was just a matter of general discretion. The proposal was that this category of discretion be given no meaning in WTO dispute settlement because, as a matter of principle, WTO Members should in all circumstances and always apply WTO-consistent rules. Finally, the third type of discretion related to the authority of the legislator, courts, or agencies to interpret general rules. Interpretative uncertainty about a substantive rule could result from imprecise drafting or from intended discretion to interpret the general rule. If, in the latter case, the general rule is interpreted in a WTO-inconsistent manner, there may be no factual evidence of this avoidance of a WTO violation. In the absence of factual evidence, the respondent should be presumed to have acted in a WTO-consistent manner. It was important to emphasize that these three categories were not hermeneutically sealed. Although it was recognized that this alternative conceptualization of the distinction offers illuminating insights and is worthwhile pursuing further, this framework also raises other, more systemic, questions relating to the burden of proof and the functioning of the dispute settlement system in general. Such questions include whether the effect of a rule also depends on the size of (the economy of) the WTO Member concerned; whether reports in which account is taken of the effect on trade of other WTO Members would not amount to an advisory opinion; and what role is reserved for domestic interpretation of national laws (and their consistency with the WTO covered agreements). One speaker recognized, however, that certain WTO provisions as such prevent that particular measures be qualified as discretionary. One example of such a provision is Article 10.1 Agreement on Agriculture.⁹ Others questioned, however, whether the distinction is not to some extent artificial. In the discussion of these different proposed frameworks, the point was made that the WTO covered agreements may not only require Members to have a certain type of law but equally require Members not to have certain kinds of law. The mere existence of the latter could constitute evidence of a violation of the WTO covered agreements, irrespective of how the law is applied. This point confirmed the close relation between the doctrine of mandatory versus discretionary legislation and the question of burden of proof.

B. Exceptions to the rules: evolving jurisprudence

The discussion of the evolving WTO jurisprudence on the exceptions to WTO obligations centred primarily on the interpretation of the language of ‘necessary’ in the WTO covered agreements and more specifically in Article XX GATT and Article XIV GATS.¹⁰ In this context, one speaker remarked that the Appellate Body had introduced the threshold of ‘less restrictive alternative measures’—replacing the condition of ‘necessary’ as the general organizing principle for its jurisprudence on the exceptions in the WTO covered agreements. In Korea – Various Measures on Beef, the Appellate Body explained that it would, in its interpretation of ‘necessary’ in Article XX(d) GATT 1994, take account of the fact that ‘[T]he more vital or important [those] common interests or values are, the easier it would be accept as “necessary” a measure’ and that ‘a measure with a relatively slight impact upon imported products might more easily be considered as “necessary” than a measure with intense or broader restrictive effects’.¹¹ According to this speaker, Korea – Various Measures on Beef and later cases such as EC – Asbestos, US – Gambling Services, and Dominican Republic – Cigarettes demonstrated that the Appellate Body no longer applied a balancing test in such cases, despite what the Appellate Body explicitly claimed in its reports. The speaker asserted that these cases also revealed a contradiction between the alleged balancing by panels and the Appellate Body and the discretion of WTO Members to determine their own level of protection. Only under the latter test, should panels and the Appellate Body value the local regulatory benefit; under the former test, this value is a given. During the discussion, the point was made that in practice the analysis of the level of protection could not constitute a mathematical exercise and may necessarily imply that panels and Appellate Body assess and balance different values. This line of reasoning was not entirely undisputed. In the context of interpreting ‘relating to the conservation of...’ in Article XX(g) GATT, one speaker remarked that failure to take account of less restrictive alternative measures may negatively affect not only a Member’s trading partners but also the regulating country itself. In contrast, failure to engage in a balancing exercise under Article XX GATT could prove beneficial to the regulating country. In this context, a speaker pointed out that large (economy) WTO Members might not necessarily purposively use trade policy to improve their terms of trade. This argument was premised on the assumption that domestically optimal policies entail also global efficiency. Consequently, the Appellate Body should take account of the domestic optimality of the measures involved.

Another view defended that Article XX GATT and Article XIV GATS still involve a balancing exercise, but that much depends on how this balancing is defined and whether it implies a cost-benefit analysis. From this perspective, the relevant questions relate to how, where, and by whom the line of equilibrium is or should be drawn. In examining the evolution of the WTO jurisprudence on Article XX GATT and Article XIV GATS, a trend towards more deference to the responding Member was noted. Speakers noted some evolution in the case law on the relevance of the level of protection under the analysis of both exception provisions. While Korea – Various Measures on Beef was decided on the basis of the level of protection set by Korea and of whether less restrictive alternative measures were available to achieve this level of enforcement, US – Gambling Services and other recent cases showed how the level of protection has become less important for compliance with Article XX GATT and Article XIV GATS. The Appellate Body has continued to give deference to the responding WTO Member, but it now appears to be deferential through a different methodology, that is, through the burden of proof rather than the test of less restrictive alternative measures. One speaker added, though, that it remains unclear to what extent this difference in methodology also results in a different outcome under Article XX GATT and Article XIV GATS. The Appellate Body’s reasoning in US – Gambling Services was cited as an example of the Appellate Body engaging in more balancing, although here also a burden of proof analysis was in fact applied.

A different view on the necessity test and the test of less restrictive alternative measures found that this discussion also raised the question in a concrete dispute of what the alternative measures are or could be. If a measure can be less restrictive alternative measure even when its administrative and enforcement costs are higher, this brings with it the question of how to assess such costs. Such costs cannot be expressed merely in monetary terms because there are also regulatory costs and the costs of protected and non-protected values. Also, the assessment of trade restrictiveness does not involve a given value and might differ depending on the size of (the economy of) the WTO Member concerned and its technical capacity. Again, an evolution of the burden to prove the existence of less restrictive alternative measures was shown on the basis of a comparison of Korea – Various Measures on Beef with US – Gambling Services. In Korea – Various Measures on Beef, the Appellate Body agreed with the panel that ‘Korea has not discharged its burden of demonstrating under Article XX(d) that alternative WTO-consistent measures were not “reasonably available” in order to detect and suppress deceptive practices in the beef retail sector and that the dual retail system is therefore not justified by Article XX(d)’.¹² In US – Gambling Services, the Appellate Body first recognized the well-established principle that it was for the party asserting a defence to prove the defence,¹³ and then found that ‘it is for a responding party to make a prima facie case that its measure is “necessary” by putting forward evidence and arguments that enable a panel to assess the challenged measure in the light of the relevant factors to be “weighed and balanced” in a given case’.¹⁴ The Appellate Body clarified that ‘[T]he responding party may, in so doing, point out why alternative measures would not achieve the same objectives as the challenged measure, but it is under no obligation to do so in order to establish, in the first instance, that its measure is “necessary” ’.¹⁵ One speaker commented that US – Gambling Services demonstrates that, at the prima facie stage, it is no longer required that the respondent invokes less restrictive alternative measures at all. It is for the complaining party to demonstrate the existence of less restrictive alternative measures. This speaker proposed that, beyond the prima facie stage, the burden of proof should remain with the complaining party. Others questioned whether it is desirable to apply a different test depending on who is involved in a dispute and who can pay; it also remains unsettled whether the language of the chapeau of Article XX GATT allows such differentiation. Doubts were also cast on whether the proposal to leave the burden of proof in both stages with the complainant would not force a respondent to prove that a negative hypothetical less restrictive alternative measure does not exist.

C. Jurisdictional issues in WTO disputes: ‘judicial economy’ and ‘completing the analysis’

Jurisdictional issues such as ‘judicial economy’ and ‘completing the analysis’ remained difficult to define and to assess. Judicial economy can be defined as the discretion of a panel to refrain from making a finding about a claim.¹⁶ For example, the Appellate Body in US – Lead and Bismuth II recognized that panels had discretion to exercise judicial economy, even if the Dispute Settlement Understanding (DSU) did not contain any language on the matter.¹⁷ It was suggested that judicial economy is subject to the requirement that panels make sufficient findings to enforce their reports without need for additional reports. Several branches of the case law on judicial economy were discerned. One possible branch is the so-called Salmon formula, according to which ‘[A] panel has to address those claims on which a finding is necessary in order to enable the DSB to make sufficiently precise recommendations and rulings so as to allow for prompt compliance by a Member with those recommendations and rulings “in order to ensure effective resolution of disputes to the benefit of all Members” ’.¹⁸ This Salmon formula was described as the principal limit to (false) judicial economy to redirect panels. Despite the general statement of this principle in Australia – Salmon, the Appellate Body has not in subsequent cases upheld this high standard. Another possible branch consists of the concept of ‘deprived of legal basis’, on which the Appellate Body has not been given the opportunity to elaborate. Understood in this sense, judicial economy could also function as an indicator that a certain issue is moot and not ripe yet for judicial resolution. In certain cases, exercise of judicial economy could be compelled by the wide range of individual claims made in a dispute and the strict time frame within which panels are instructed to operate. In general, the strict timeframe in the DSU often does not allow panels and the Appellate Body to address the string of arguments presented to them, and this helps to explain why panels have repeatedly refused to offer guidance on how findings should be implemented, as provided in Article 19.1 DSU.¹⁹

Judicial economy only deals with the practice of panels, while the jurisdictional issue of ‘completing the analysis’ also applies to the reasonings of the Appellate Body. From the case law, one speaker concluded that the Appellate Body will complete the analysis and make findings that are not addressed by the panel if doing so is necessary to resolve the dispute and the Appellate Body is capable of doing so. It was remarked that whether the Appellate Body completes the analysis is less a matter of discretion than a matter of the Appellate Body being capable of doing so.

One possible relationship between judicial economy and completing the analysis is that the more judicial economy a panel exercised, the greater may be the need for the Appellate Body to complete the analysis. In any event, both judicial economy and completing the analysis should and can only be exercised when doing so is necessary for the resolution of the dispute concerned. Another suggested relationship between both jurisdictional concepts is that panels may often build up the factual record or make additional alternative findings because of their fear of appellate review or to facilitate or avoid completing the analysis by the Appellate Body. One speaker emphasized, however, that a panel will not engage in judicial economy per se and that judicial economy by a panel will not necessarily lead to the Appellate Body completing the analysis.

A different facet of the analysis of these jurisdictional issues was the discussion over the extent to which the Appellate Body has ‘over-reached’ or ‘under-reached’. There was general agreement that such evaluations of the Appellate Body’s jurisprudence depend mostly on how one defines ‘over-reaching’ and ‘under-reaching’ and are in the eye of the beholder. It also appeared that, in contrast to claims of ‘over-reaching’, in practice the Appellate Body might have more ‘under-reached’ in certain disputes. It was observed that the Appellate Body has often tried to circumvent its obligation under Article 17.12 DSU²⁰ when finding that the obligation to address certain issues does not entail an obligation to also decide on such matters: when finding that insufficient facts are available; when finding that deciding on certain issues will introduce novel issues at the appellate stage; and when finding that deciding on certain issues will negatively affect due process. Not everyone agreed with this appreciation of ‘under-reaching’ by the Appellate Body, and examples of ‘over-reaching’ were also mentioned. These examples included cases where the Appellate Body has applied an inappropriate standard of review, liberal interpretations of the language in the WTO covered agreements, the development by the Appellate Body of new methods of analysis such as the causation analysis in anti-dumping cases, and occasions where the Appellate Body has decided issues that were not necessarily and strictly submitted to dispute settlement by the disputants. Despite these different diagnoses of the WTO jurisprudence, the general tenet of the discussion was to recognize that conclusions about ‘over-reaching’ and ‘under-reaching’ are always the result of subjective appreciations of the jurisprudence and, therefore, not necessarily the most appropriate qualifications to evaluate panel and Appellate Body reports.

D. Treaty interpretation revisited: interpreting schedules of concessions

The interpretation of schedules of commitments is increasingly challenging the interpretation methods of panels and the Appellate Body, including their application and interpretation of the Vienna Convention on the Law of Treaties (VCLT). In discussing the interpretation of tariff schedules, two different perspectives to the matter were offered. One perspective critically analysed the manner in which panels and especially the Appellate Body have interpreted schedules of concessions in recent reports. Another perspective explored the status of schedules of concessions in general international law and examined whether guidance could be found in the interpretation of other instruments of international law, than treaties.

Central to both approaches was the difficulty to apply Articles 31, 32, and 33 VCLT to tariff schedules. The manner in which schedules are negotiated, and the documents relied upon by negotiators and the (GATT/WTO) Secretariat during those negotiations, raises particular questions with respect to, for example, the definition of subsequent practice under Article 31(3)(b) VCLT, the scope of context under Article 31(2) VCLT, and the value of the Harmonized System as a means of interpretation under the VCLT.

A discussion of the WTO jurisprudence on the interpretation of schedules demonstrated the often problematic interpretation of the VCLT and how instruments such as the Harmonized System, the document W/120,²¹ and the 1993 Guidelines²² can be qualified as means of interpretation under the VCLT. In US – Gambling Services, for example, the Appellate Body rejected the qualification of document W/120 and the 1993 Guidelines as context under Article 31(2) VCLT,²³ because both documents were prepared by the GATT Secretariat, and could therefore not constitute an agreement between the WTO Members, as understood under Article 31(2)(a) VCLT.²⁴ In contrast, the Appellate Body in EC – Boneless Chicken Cuts accepted that the Harmonized System fell under Article 31(2)(a) VCLT because a GATT decision was evidence of the consensus among GATT Contracting Parties to use the Harmonized System.²⁵ Another interpretation of the Appellate Body’s interpretation of Article 31(2)(a) VCLT in EC – Boneless Chicken Cuts explained that the narrowest interpretation of Article 31(3)(c) VCLT might have found expression in Article 31(2)(a) VCLT. It was questioned whether the Harmonized System can strictly be defined under Article 31(2)(a) VCLT, and the suggestion was made that this Appellate Body finding, along with the introduction of the notion of ‘factual context’ under Article 31(1) VCLT, might indicate a trend towards a less formalistic and broader understanding of what constitutes context under the VCLT. Problems were also noted with respect to the Appellate Body’s strict interpretation of subsequent practice in Article 31(3)(b) VCLT, which may not accommodate the particular types of obligations that schedules impose on (only) the committing WTO Member.

There was no doubt that schedules of concessions are an integral part of the WTO-covered agreements.²⁶ Panels and the Appellate Body have also confirmed that schedules of concessions need to be interpreted in accordance with Articles 31, 32, 33 VCLT (Article 3.2 DSU).²⁷ One view identified an inherent tension in the WTO covered agreements between the recognition that schedules are an integral part of the WTO treaty language and the provisions relating to the (re)negotiations of schedules, which in certain cases provide for the unilateral modification of a schedule by the committing Member. This tension is also reflected in parts of the WTO jurisprudence on the matter. Even if schedules of concessions were part of the WTO covered agreements, their interpretation might require some differentiation in the means of interpretation on which panels and the Appellate Body can and should rely. It was generally agreed that schedules of concessions should not be qualified as unilateral acts or declarations under general international law, but, nevertheless, this conclusion did not preclude that the practice of other international courts and tribunals in interpreting unilateral acts or declarations be used as a model of comparison and possible guidance. A discussion of some of the means of interpretation relied upon by the Appellate Body in recent cases involving the interpretation of schedules demonstrated that the Appellate Body has put particular emphasis on the intent of the Members making the commitments, the surrounding circumstances (including the negotiation process), and even domestic laws and case law. It was remarked that these interpretative practices of the Appellate Body might have found some inspiration in the jurisprudence of the ICJ on unilateral acts or declarations.

For the purpose of the interpretation of schedules, it was suggested that their interpretation might require an element of pragmatism, taking account of the particular process of negotiation and conclusion of schedules, and their particular structure and content (often only short headings). It was noted that schedules might not perfectly fit the definition of a treaty or of a unilateral act or declaration. One speaker explored the possibility of an alternative framework to interpret schedules, which was to recognize that they are ‘multilateral acts of a special character’ and allow a more contextual and pragmatic interpretation of schedules. Also, another speaker suggested that it may be appropriate that panels and the Appellate Body show some appreciation for the operation of the most-favoured nation (MFN) principle in interpreting schedules. Another possible approach consisted of shifting the attention to the concept of legitimate expectations as part of a more nuanced approach, but it remained to be resolved to what extent this concept amounts to an objective, or rather a subjective standard. The Appellate Body in EC – Computer Equipment rejected this alternative approach to interpret schedules in the light of legitimate expectation of the exporting WTO Member because such an interpretation would undermine the security and predictability of schedules and is not consistent with the principle of good faith interpretation (Article 3.2 DSU).²⁸

II. WTO RESEARCH SEMINAR

A. Regulatory convergence – a role for the WTO?

The consideration of the role of the WTO in producing regulatory convergence resulted in a critical discussion of the desirability of the project of global regulatory convergence in general, and if desirable, what role should be reserved to the WTO. The process of convergence was defined as a process of developing certain common normative standards, either by inducing methods or by compulsory principles. It was uttered that substantive harmonization might not be the appropriate model to apply in the WTO context and that it is better to aim for decentralized regulatory cooperation (and innovating policies resulting from such cooperation). Speakers explained how attempts at regulatory harmonization often overestimate the existence of optimal regulatory standards and underestimate the desirability and value of problem-solving approaches and experimentation in regulation. As a result, decentralized regulatory cooperation was put forward as a more realistic and promising alternative, which also accurately described some of the existing policy-making processes in the WTO. The obligations in the SPS Agreement and the TBT Agreement for Members to base SPS and TBT measures on relevant and applicable international standards – and the qualified exceptions to these obligations – were described as practical examples of how regulatory diversity and innovation applies in the WTO. Also, these examples reflected a framework for the management of regulatory diversity, requiring convergence or reasoned divergence.

Speakers suggested that the functioning and the results of the SPS and TBT committees reflected the viability of this suggested ‘problem-solving’ and ‘policy-innovation’ framework. The operation of the SPS Committee demonstrates how it is often difficult or impossible to achieve anything from a mere theoretical perspective and how contextualization of WTO Members’ concrete challenges and problems is essential to realize workable outcomes. For example, the consideration of ‘specific trade concerns’ in the SPS Committee has offered a catalyst for dialogue and a forum for contestation and justification of existing regulatory approaches and practices of WTO Members. Another possible test case of regulatory convergence in the WTO is the ongoing negotiations on ‘trade facilitation’, although it was pointed out that this might be more an example of consolidation than of convergence. In comparison with the EU’s internal market, it was suggested that WTO Members in both the SPS Agreement and the TBT Agreement may have put more faith in the objective of harmonization than the EU Member States have. From this perspective, it was questioned whether the WTO covered agreements have not overly deferred to international SPS and TBT standards, which have become the benchmark for WTO-consistency of SPS and TBT measures. Others shared the scepticism towards substantive harmonization, and there was appreciation for a shift to regulatory diversity instead. It was suggested that regulatory diversity should also include the wide economic and cultural diversity of WTO Members. Here again, the example of the SPS and TBT Committees, and also often of international standard-setting bodies, shows that there is broad participation of many Members, including developing and least-developed Members, in the process of discussion and deliberation in those bodies. From this perspective, the SPS and TBT Committees also contribute to the development of linkages and cooperation between developing countries, which are then also employed in other bodies and areas of the WTO institution.

On the need for global administrative practices as an element of regulatory convergence, caution was expressed about the probability and desirability of such global standards. This cautious approach was justified in the reality that administrative law has traditionally been the area of law that has most resisted internationalization and in the implied requirement for a judicial body to guarantee the uniform application and interpretation of such global administrative practices and to supervise their efficiency and equivalence. One speaker remarked that an alternative component of regulatory convergence is the introduction of the principle of subsidiarity, although subsidiarity also requires judicial supervision. The value of the principle of subsidiarity consists, in part, of its ability to indicate how much divergence is desirable. Another speaker mentioned the possibility of exploring the role of the concept of variable geometry. The discussion concluded with the suggestion that more work be done on the development of a regulatory theory for the WTO with close consideration of the criteria to define whether harmonization or other regulation is desirable and possible in particular areas. Suggestions for such criteria included, among others, the principles of subsidiarity, reciprocity, and equivalence; though each of these criteria should allow a degree of flexibility, because the value of regulatory divergence is a relative one that evolves and changes over time.

B. Trade and investment disputes: complement or conflict?

The relationship between WTO law and investment law treaties was explored for their mutual influence, which demonstrated how both regimes could complement each other or conflict. Practice has shown that WTO standards, remedies, and procedures have in various degrees influenced investment treaty arbitration. Although, so far, there are only few cases of investment treaty arbitration that involved measures which were in reality trade measures, these cases do demonstrate how it may become important to find a cause of action in WTO law and to examine whether WTO law can inform certain standards in investment treaties. In general, investment treaty arbitration often relies on the WTO jurisprudence on the standards of product likeness and national treatment as interpretative context. In certain cases, however, parties have also tried to find a cause of action for the violation of the investment treaty standard of fair and equitable treatment in a breach of WTO law. With respect to remedies, one speaker identified a possible disconnect between the mantra of prospective remedies in the WTO context and the remedy of restitutio in integrum (reparation and cessation) provided in many bilateral investment treaties. Arguments in favour of strengthening the WTO remedies have, so far, not resulted in concrete proposals in the context of negotiations on DSU reform. On the procedural level, the development of WTO jurisprudence on amicus curiae briefs and the introduction by the DSU of an interim review at the panel stage were cited as examples of the influence of WTO law on investment treaty arbitration. Another suggested influence is the proposal to introduce an appellate review stage in investment treaty arbitration, but the feasibility and desirability of such appellate review was doubted. One speaker explained that the scepticism towards the introduction of a body like the WTO Appellate Body is rooted in false claims of coherence and legitimacy and in the reality of the practice in investment treaty arbitration, which involves no uniform body of law, an asymmetry between the disputants, and disputes that are often more of a contractual character than international law disputes. One speaker proposed that litigation assistance be provided to developing countries in investment treaty arbitration, modelled on the Advisory Centre on WTO Law, although its structure and purpose would differ somewhat in the context of investment disputes. Investment treaty arbitration has also left traces on the procedures in WTO dispute settlement. The decision to organize open panel hearings, through direct broadcasting, in US – Continued Suspension of Obligations in the EC – Hormones Dispute and Canada – Continued Suspension of Obligations in the EC – Hormones Dispute was cited as an example of this relation.²⁹ Similar to the practice in investment treaty arbitration, WTO Members are slowly but increasingly positing their panel and Appellate Body submissions on websites, thereby enhancing the transparency of WTO dispute settlement proceedings.

The relationship between WTO dispute settlement and investment treaty arbitration can also result in conflicting jurisprudence. On the one hand, panels or the Appellate Body and investment tribunals may arrive at different, conflicting interpretations while ideally these interpretations of identical legal questions should be similar. This diagnosis of possible conflict was cautious, nevertheless, not to generalize this type of conflict because this speaker emphasized that is necessary to take account of the particular language in the WTO covered agreements and investment treaties, the character of the measures concerned, and the general context of the dispute at issue. On the other hand, panels or the Appellate Body and investment tribunals may also misinterpret each other’s jurisprudence and incorrectly act upon these misinterpretations. Apart from this general description of possible points of conflict, a more concrete comparison of WTO jurisprudence and that of investment tribunals on the standard of national treatment showed that there is more convergence between both systems than traditionally perceived or anticipated. The point was made that, though there are occasions of overlap and tension, the jurisprudence of WTO panels and the Appellate Body and of investment tribunals on national treatment does not conflict in the strict sense. Instead, a remarkable convergence on the interpretation of the standard was identified. The jurisprudence of the WTO and investment tribunals on the interpretation of the national treatment principle has (cyclically) matured and appears to evolve towards a standard of unjustifiable differential treatment, instead of mere differential treatment. It was suggested that both dispute settlement systems are currently applying a less restrictive national treatment standard in the context of cyclical interpretative evolutions of that standard. From a more normative perspective, it was also remarked that over time, despite the differences between trade and investment in terms of their respective treaty language, history, purpose, and object, the differences between both areas of law and dispute settlement have become less outspoken. For example, trade agreements increasingly deal with investment and vice versa. Also, the concept of fairness is gaining influence in the context of trade law, while the value of efficiency is becoming more important in investment law. The suggestion was made that these trends may signal the development of a common set of rules on national treatment.

C. Doha Development Round: current and future challenges

The conference concluded with a discussion of the current and future challenges of the Doha Development Round, which reached beyond a mere assessment of the current state of the negotiations. The discussion covered a broad range of issues and perspectives ranging from a theoretical framework on how development concerns relate to and interact with other concerns, to proposals for the implementation of the (eventual) results of the conclusion of the Doha Development Round.

On a theoretical level, the argument was made that the development objectives of the ongoing round are in fact goals that can only be progressively realized. Consequently, these objectives have raised expectations of developing and least-developed WTO Members to a level that they can and will not be achieved by this round of negotiations. Drawing on John Ruggie’s theoretical framework of embedded liberalism,³⁰ this speaker sketched the evolution of the role of developing countries and of the purpose of the international trading regime over the last decade, since the creation of the WTO. This analysis demonstrated how the position of developing countries in the WTO has changed from ‘regime takers’ towards active participants and even ‘regime-givers’ and ‘regime-blockers’. Because of this shift in power distribution in the regime-creating process within the WTO, the social purpose of the WTO regime has become less articulated and more fragmented. Consequently, the perception and appreciation of development concerns and special and differential treatment in the WTO are increasingly progressing towards a less inclusive and less accountable process of regime making. It was added that this evolution is not entirely disconnected from the ability and willingness of WTO Members to take account of the domestic public consensus about the value and purpose of the WTO. It was suggested that the ongoing negotiations should pay more attention to securing inclusiveness and accountability of all WTO Members to strengthen the value of development, which can only lead to concrete and satisfactory outcomes within a problem-solving framework. Another view cautioned against the ‘UNCTADisation’ of the WTO, whereby the rhetoric in the WTO institution is becoming less concerned with actual trade liberalization and more preoccupied with the diversification of WTO-related issues.

On a practical level, the discussion was multi-faceted and covered proposals for strengthening the WTO’s institutional capacity and rules to address development concerns, as well as suggestions for the post-Doha stage, that is, the implementation of the results of the negotiations. Ongoing development initiatives include an integrated framework for trade-related technical assistance to least-developed countries,³¹ a joint integrated technical assistance programme,³² WTO technical assistance, and the establishment of the Doha Development Global Trust Fund. A more recent and ambitious attempt to address and remedy some of the development concerns is the Aid for Trade project, which was formally launched at last year’s Hong Kong Ministerial Conference.³³ It was observed that the Aid for Trade project is only at an embryonic stage, and many issues still need to be resolved. It is undecided whether the programme applies only to least-developed countries, how it relates to the integrated framework mentioned earlier, who decides on the funding, whether the funding will be tied or untied, and what role is reserved for other institutions such as the World Bank and the IMF. The proposal was made that the funding allocated to the Aid for Trade programme could be used to enhance and broaden technical assistance, capacity building, and adjustment assistance, and to increase the level of coordination and coherence between present training and capacity-building initiatives. Some of the concrete expenditure proposals mentioned in the discussion related to the potential of the use of the Internet and other IT applications to improve the participation of developing and least-developed Members in the WTO institution.

Although the outcome of the Doha Development Round is unsettled, one speaker considered important to already start exploring how the eventual results of the negotiations can be implemented for all WTO Members. The speaker recognized that there are no guarantees that the Doha Development Round negotiations will be successfully concluded and that much depends on the interplay between the negotiations and the dispute settlement system, the impact of domestic political climates of certain WTO Members, and the cost of any deal for developing Members as well as developed Members. The implementation of the legal result of the negotiations, irrespective of the substance, presents important legal and operational challenges for both WTO Members and the Secretariat. The concept of the single undertaking in the Doha Round negotiations implies that all WTO Members need to agree on the entire package, this speaker emphasized. However, the concept of the single undertaking does not mean that the ultimate result of the negotiations will only enter into force for all WTO Members simultaneously. In contrast to the Uruguay Round negotiations, the Doha Round negotiations are proceeding within a clearly defined legal framework of a corpus of existing rules and procedures, covering also the issue of implementation. Although these rules offer legal certainty, this speaker cautioned that these same rules might also lead to fragmentation between WTO Members with respect to the entry into force of the Doha Round single undertaking. The strict amendment requirements in the WTO Agreement present real challenges for WTO Members to manage the process of implementation of the results of the Doha Development Round. Article X:1 WTO Agreement sets out strict time frames and a two-third majority – if no consensus can be reached – to amend the WTO covered agreements. All WTO Members will also need to complete internal domestic processes before the amendments can become binding legal obligations and enter into force. Despite this legal framework, it is unresolved which criteria will guide and inform the implementation process of the Doha Development Round – a process in which the Secretariat will arguably have a considerable role. In the alternative, this speaker argued that WTO Members can still opt for plurilateral agreements to make commitments in certain areas, which not all WTO Members are able to support and implement. Not everyone shared the pessimistic view on the outcome of the Doha Development Round, and one speaker was even relatively optimistic that Members will eventually find a consensus on issues such as market access and domestic support. However, this speaker emphasized that Members should not reach an agreement for the sake of agreement, and therefore, current proposals on market access and domestic support should be substantially improved. In essence, the US and the EU needed to improve their offers on agriculture but not at the price of aggressive positions in the negotiations on non-agricultural market access, it was suggested.

III. CONCLUSION

The Sixth Annual WTO Conference succeeded again in bridging theoretical frameworks with the practical – current and future – challenges of the WTO, and especially of the WTO dispute settlement system. The underlying theme of many of the focused discussions on WTO-specific matters was the role of the WTO legal system as part of the broader international legal system. There was not only attention for how general international law governs parts of WTO dispute settlement (for example, with respect to treaty interpretation), but also the mutual influence between different areas or sub-systems of international law was addressed. For example, the discussions demonstrated how investment treaty arbitration and WTO dispute settlement have mutually contributed to the development and evolution of the substantive norms in both areas of international law. Even the contemplation of a theory of regulatory convergence for the WTO was seen as part of a broader theory of regulation in international law. Another recurring theme was how the WTO relates to the national legal systems of WTO Members. The scope and limits of deference to the nation-state was central to the discussions on the evolving jurisprudence on the exceptions to the rules, the responsibility of WTO Members, and the need for decentralized regulatory convergence. The challenges of the implementation of the (eventual) results of the Doha Development Round also illustrated how differences between national legal systems affect the functioning and the character of the WTO legal system. Ultimately, the discussion on the significance and rationale of development within the international trading system crystallized both themes because not only did this discussion relate to the position of the WTO in a global effort to realize development objectives, it also touched on the interaction and congruence between national policy-making and international norm-creating processes.