I’ve seen discussion as to how the judicialization of the WTO is far beyond what the US originally contemplated. What does that mean? I fear, as others do, that the absence of the WTO Appellate Body is not a return to the GATT legal system, it is return to unilateral retaliation.
Without focusing too much on the prescriptions (@nicolas_lamp offers cogent ideas @WorldTradeLaw), the driving force behind the emergence of the multilateral trade system was international cooperation and the shared view that no member should take the law in its own hands.
But, why not go back to the GATT–before the judicialized system? The GATT was a small group of contracting states, and not today's WTO heterogenous group. I note there was thinking about non-market economies, the size of the Chinese economy was not contemplated in the 1940s/50s.
The GATT was not meant to be an institution – deliberately so, it had to NOT be an institution to avoid US Congressional approval. The GATT grew up into a trade institution – the WTO - with much more regulatory impact and formal dispute settlement to ensure compliance with rules.
The GATT provided tariff reductions and some legal controls for nontariff barriers (ie balance of payment restrictions). It was negotiated against a broader institution for economic affairs of participating member states. The story of GATT development has been told many times.
Art XXIII GATT did not establish formal procedures for handling disputes. The early GATT years saw dispute settlement working well, with Bill Davey explaining that the system was largely run by those who negotiated the deal originally (Bill Davey, Dispute Settlement in GATT 1987)
In contrast, the "middle years" saw a system more like "consensus/negotiation model." (Davey 1987). Davey elaborates as to how, over time, the GATT became the key forum for trade negotiations and members saw growth in the use of the dispute settlement mechanism.
In the 1980s, with concerns of trade deficits and trade restrictions from others, the US Administration turned to “highly visible acts of arm-twisting retaliation to prove that it was actively defending U.S. interests” (Hudec, Enforcing International Trade Law, 1991 at 313).
Hudec also remarked that “self-righteousness is an extremely powerful spur to action” (at 363). He recognized then that US trade policy was a problem. And, he emphasized that major legal commitments required “an extra-large political stage.”
Robert Hudec, also a trade historian at heart, recognized that whether speaking to the ITO or WTO, the US had to go first. For what is international cooperation on the world stage without them? This is a question asked across many international law fields.
