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Fair Trade Archive: GTW E-Newsletters, Action Alerts, and Updates

WTO and Democracy: Dispute Settlement System

One of the most dramatic changes made to the global trade system by the Uruguay Round negotiations of the GATT was the establishment of a new free-standing global commerce agency, the WTO, with a powerful, binding dispute resolution system replete with tribunals whose rulings are automatically binding unless there is unanimous consensus by all WTO Members to reject the new interpretation. The new WTO enforcement system replaced the consensus-based GATT contract and its dispute resolution system, which was based on diplomatic negotiation and required consensus of the GATT countries to adopt a ruling by a GATT dispute resolution.

In contrast, the Uruguay Round contained hundreds of pages of new regulations going beyond tariffs and quotas and instead affecting domestic standards on matters as diverse as food and product safety to environmental rules on invasive species and toxins. The Uruguay Round also brought new economic sectors such as services, investment and government procurement under international commercial disciplines. The expanded coverage of the international commercial rules newly implicated issue areas loaded with subjective, value-based decisions about the level of health, safety or environmental protection a society desires or relative social priorities, for instance in designing the balance between access to medicine for poor consumers and the degree of protection of intellectual property rights. It sought to apply one-size-fits-all rules on these issues to the whole world. Uruguay Round rules extended the realm of commercial rules beyond requiring that domestic and foreign goods be treated under the same standard (non-discrimination) to actually seeking to set a global standard to which all countries must adapt; a much more complicated, subjective decision.

The combination of the WTO's powerful new enforcement capacities and the Uruguay Round's expansive new rules encroaching into areas traditionally considered the realm of domestic policy effectively shifted many decisions regarding public health and safety, environmental and social concerns from democratically-elected domestic bodies to WTO tribunals.

»	Fatally Flawed Dispute System: Win-Loss Records under the WTO Dispute Settlement Understanding (PDF)

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