Globalisation, Governance and Trade Policy: The WTO in perspective

Dr Razeen Sally

February 2002

Where does the World Trade Organisation fit in the overall scheme of international public policy? The WTO retains the core business of its predecessor, the General Agreement on Tariffs and Trade, i.e. negotiating and enforcing rules for market access in industrial goods, but it has manifestly gone further than the GATT. It now provides rules for market access in agriculture, textiles and clothing, and services; it has a strong agreement on intellectual property protection; and more detailed coverage of trade procedures (e.g. on subsidies, technical barriers to trade, sanitary and phytosanitary standards, customs valuation and import licensing). In particular, it houses a strong, legalistic and quasi-automatic dispute settlement mechanism, in stark contrast to the GATT’s weak dispute settlement procedures which relied less on strict rule-adherence and more on diplomacy. Lastly, the new round of multilateral trade negotiations, launched at the Fourth Ministerial Conference in Qatar in November 2001, proposes to take the WTO into new territory to cover investment, competition and environment-related policies.

Hence much has changed since the end of the Uruguay Round in 1993. The key transformation has taken place in dispute settlement, for the WTO is an increasingly legalistic body with a burgeoning caseload. Arguably, its jurisprudence has become the most important aspect of public international law. Clearly, the WTO is a weightier international organisation than the GATT. Some would go further and argue that the WTO is now centre-stage in an emerging architecture of “global governance”.

Is this the right way of viewing the WTO, and trade policy more generally? Is trade policy a top-down construct, shaped by the WTO – “from above” as it were -- as part of a new system of global governance? Or should one view trade policy the other way round, bottom-up or “from below” at the national level? Is trade policy still a national affair, i.e. a matter for national governance, in a decentralised international political system of sovereign nation-states? This was the case through the nineteenth century and most of the twentieth century, and is consonant with a Realist model of international politics.[1] In reality, since the inception of the GATT, post-war trade policy has combined elements “from above” and “from below”, and the mix of the two may have changed somewhat with the transition from the GATT to the WTO. In addition, there is an increasingly important “in between” phenomenon, namely the proliferation of regional trade agreements across nearly all regions of the world economy.

My task in this essay, therefore, is to make some sense of the modern governance of trade policy, “from below” at the national level, “from above” through the WTO, and “in between” in terms of regional trade agreements.

I set the scene by placing trade policy against the backdrop of rival visions of economic globalisation.[2] An extremist anti-globalisation minority exists, but it is not as important as a more mainstream “social democratic” critique that is at least half-sceptical about liberal trade policies and globalisation’s touted benefits, especially in the developing world. This world-view rejects the so-called Washington Consensus and favours a more activist, interventionist role for governments. Some commentators and policy-makers in this camp advocate stronger global governance, with national governments acting in concert with international agencies, big business and non-governmental organisations across a widening range of public policies.

Next I restate the opposing case for a liberal international economic order, which emphasises the material (and other) gains from external openness, and the enduring importance of law-governed nation-states. National, not global governance is central to this perspective, although this does not obviate international co-operation where necessary. The issue rather turns upon different types of international co-operation. For example, how does the record of co-operation through the GATT/WTO compare with other forms of international co-operation in the last half-century or so?

At bottom, the classical liberal case for an open international economic order rests on the need for reasonably simple, general rules of conduct in a more complex world. These rules are intended to limit, not enhance discretionary government intervention so that private property rights and contracts are better protected. Such rules operate first and foremost within nation-states, but can be buttressed by an appropriate WTO rule-base.

The following section extends these maxims in a slightly more concrete sense to trade policy, arguing for the primacy of unilateral measures, but also setting out the advantages of the WTO as a means of reinforcing good (or better) national governance. The advantages and disadvantages of regional trade agreements are also taken into account.

I conclude with an assessment of recent trends in the WTO and its prospects, especially in the context of the new Doha round. Does the WTO promote a more liberal international economic order, or is it moving in a different direction? Is it a key instrument of embryonic global governance, reinforced by a growing corpus of public international law? Or it is an adjunct to national governance in a world of enduring power politics? Does the reality lie somewhere in between?

Rival visions of globalisation

a) The anti-liberal critique

Anti-globalisation or fear-of-globalisation sentiment has always been around. During the Cold War communism provided the leading rival vision to that of a liberal international economic order. Another rival vision was the New International Economic Order in the 1970s, culminating in the Brandt Report. Central to the latter was a profound distrust of the market economy and a faith in government command-and-control mechanisms, operating intra and internationally.[3] The NIEO fizzled out in the 1980s, and was well and truly buried by the collapse of the command economies and the end of the Cold War.

The opposition to economic liberalism did not disappear in the 1990s; rather it changed form. Organised interests benefiting from entrenched protectionist policies – “iron quadrangles” of politicians, bureaucrats, employers and trade unions – continued to lobby against trade-and-investment liberalisation. The novelty of recent years, however, has been the rise of what could be termed sentimental opposition to globalisation, especially in the West, for which a congeries of NGOs seems to be the main vehicle of expression. A generation ago, the fear of globalisation was more a Southern phenomenon; now it is more a developed country phenomenon (while by no means underestimating present opposition to globalisation in developing countries).[4] Globalisation, then, faces the opposition of a combination, witting or not, of unsentimental and sentimental forces, of old-style and new-style protectionist interests, ranging all the way from CEOs to NGOs.[5] One is reminded of John Stuart Mill’s reference to “the numerous sentimental enemies of political economy, and its still more numerous interested enemies in sentimental guise ….”.[6]

There remains a root-and-branch rejection of capitalism by an extremist anti-globalisation minority. There is, however, a more mainstream critique, which is less easy to dismiss. It could be termed, very broadly, Globalisation and Social Democracy. This vision accepts the reality of the market economy and international economic integration, and recognises some of the benefits that flow from them. Nevertheless, it rejects a Washington Consensus whose central focus is perceived to be comprehensive liberalisation, and advocates more-or-less radical change in the way in which the world economy is governed, which sometimes travels under the label of global governance. Globalisation and Social Democracy is not street-theatre on the fringe; rather its champions are establishment figures – senior politicians, leading officials in international organisations (particularly within the UN family), large, well-organised NGOs, prominent CEOs, distinguished journalists and academics (including well-known economists such as Joseph Stiglitz and Dani Rodrik).

This vision, from within the international policy establishment, was powerfully reiterated by Mark Malloch Brown, the Administrator of the United Nations Development Program, at a public lecture at the London School of Economics in October 2001.[7] Mr. Malloch Brown argues that, in the context of extreme poverty in weak or failed states across the developing world, it is time for a paradigm shift on globalisation. An orthodox package of further liberalisation and greater public spending on health, education and safety nets needs to be replaced by a “much more vigorous vision”.[8] This requires robust, proactive intervention as part of a more inclusive, redistributive model of politics – indeed nothing less than a “much clearer social compact” between citizens and governments, and between governments and the international community.

Malloch Brown’s core diagnosis is twofold. First, globalisation is an engine of inequity, creating minority winners and majority losers within and between countries, and particularly marginalising and excluding the poor in the developing world. Second, the nation-state is in retreat. National governments, acting separately and independently, are unable to cope with global problems such as pollution, disease, job losses, and health, education and gender issues. The core prescription follows: “global solutions” are needed to provide “global public goods”. Global governance should take the form of partnerships involving governments, international organisations, NGOs, international business and organised labour, acting in concert across a very wide range of public policies.[9]

Malloch Brown’s prescriptions are mostly vague and pitched at a breathtakingly high level of generality. One gets the impression, for example, that all public goods are global. There is also a distinctly corporatist flavour to this scheme for global governance, which finds concrete expression in the UN Secretary General’s Global Compact. The latter seeks co-operation among governments, IGOs, NGOs, Big Business and organised labour to promote and enforce higher labour and environmental standards in the developing world.

Malloch Brown’s arguments do not display a high degree of economic literacy, but are representative of a certain style of thinking in international policy circles, especially on development issues. It would nevertheless be a caricature to reduce Globalisation and Social Democracy to the statements of senior international civil servants. One should search for more systematic and economically literate arguments. In my view, the most intelligently argued, economically plausible and institutionally sensitive treatment in this genre comes from the pen of Dani Rodrik, the brilliant Harvard economist.

In his best-known work on globalisation, Professor Rodrik focuses on the distributional consequences involved and the attendant conflicts within and between nations.[10] As globalisation bites deeper into national social fabrics, intra and international conflicts emerge over domestic norms and institutions. This undermines “domestic social contracts” (mainly those in the West), and with it the domestic consensus in favour of openness to the world economy. What is needed, therefore, is a trade-off between the gains from globalisation, on the one hand, and domestic social stability (within developed countries), on the other. This leads Rodrik to advocate a “social safeguard clause” in the WTO, which would sanction restrictions on imports if they threatened prevailing domestic norms, for instance on labour and environmental standards.[11] This mechanism would be subject to domestic procedural constraints and WTO surveillance in order to ensure transparency and prevent protectionist abuse.

Rodrik’s more recent writings have a stronger development focus. He is sceptical of World Bank and other studies that purport to establish a strong relationship between trade liberalisation and growth, arguing rather that factors other than trade liberalisation are usually more important contributors to better economic performance, and that trade openness is more the result of high growth than the other way round. Moreover, he notes that China, India and a host of other East and Southeast Asian countries with high growth rates have pursued highly unorthodox trade policies, with restrictions on imports and inward investment, export subsidies, performance requirements imposed on foreign-owned companies, and the like. His main prescription is that developing countries should have wide leeway to follow heterodox trade policies, which may include trade protection and selectively interventionist domestic industrial policies. The precise policy mix would be contingent on circumstance and institutional capacity, varying inevitably from country to country. Finally, a development safeguard clause, akin to the afore-mentioned social safeguard clause, should be inserted into the WTO to allow for such discretionary policies.[12]

The Malloch Brown/UNDP vision no doubt commands widespread appeal, especially among the armchair socialists of old, transformed into the fashionable Third Way social democrats of today. The “global problems-global solutions” thesis is predictably laced with an emotive, intuitive do-it-yourself economics.[13] It has a false diagnosis of globalisation’s effects and the role of the nation-state (as I will argue in due course). Furthermore, its prescriptions, if realised, would damage the life-chances of the world’s poor, for example through the pursuit of a Corporate Social Responsibility agenda that could impose labour, environmental and other standards on developing countries under conditions where they may not be appropriate.[14] Moreover, this is a profoundly illiberal vision, whose distrust of markets and faith in government intervention (now at the global level) would, if put into practice, undermine the freedom of contract and restrict competition. Needless to say, this has implications for economic efficiency, but one should not forget that these prescriptions erode the freedom of choice: they threaten individual liberty itself.

The Rodrik vision deserves to be taken more seriously. He raises crucial issues in international political economy concerning the distributional effects of globalisation and its political ramifications; the link between trade policy and growth (which is not necessarily simple or straightforward); and the importance of institutions and their variability over time and place. Above all, he warns against simplistic generalisations and “one-size-fits-all” blueprints, rather favouring policy choice tailored to local circumstances and institutional capacity.

Nonetheless, one could and should take issue with some of his analysis and many of his prescriptions. He underplays the contribution of liberal trade policies and external openness to growth (a subject to be developed in the next section), and, arguably, overestimates the positive effect of dirigiste industrial policies in East Asia and elsewhere. His idea for a development and social safeguard clause in the WTO is open-ended (to put it mildly) and would gut the WTO of meaningful content. It would open the door wide to interest group capture and justify protectionism whenever foreign competition threatened domestic production. Despite Rodrik’s suggested procedural controls, such an open-ended safeguard clause, whose litmus test is compatibility with something as vague as “prevailing domestic norms”, would be impossible to police, either domestically or through the WTO, and would be subject to rampant abuse. This happens already through the WTO’s almost unconditional sanction of protection through anti-dumping duties (in Article VI GATT); a social-cum-development safeguard clause would make matters much worse. The chief result of the social safeguard clause, for example, would be the wider restriction of cheap developing country exports made under conditions of lower labour and environmental standards than those prevailing in rich countries – a de facto extraterritorial imposition of rich country standards on poor countries with very different comparative advantages.

b) The case for a liberal international economic order: a restatement

The case for a liberal international economic order is not new: it goes back at least as far as David Hume and Adam Smith. The point is to continually update the argument and make it relevant to modern conditions.[15]

International economic integration (for which globalisation is the modern shorthand) is essentially a positive-sum game, not an engine of marginalisation and exclusion. This is what Adam Smith has in mind when he says that “in civilised society (man) stands at all times in need of the co-operation and assistance of great multitudes, while his whole life is scarce sufficient to gain the friendship of a few persons”.[16] An international division of labour based on specialisation and exchange spontaneously integrates hitherto separated national economies into a world-wide co-operative system that caters for reciprocal wants, or, in the felicitous words of Edwin Cannan, “renders mutual service”. All-round material gain, for rich and poor countries alike, is the outcome of Smith’s “liberal system of free importation and free exportation”.

Removing restrictions on international transactions – the cross-border exchange of goods and services, capital flows and the movement of people – expands the freedom of individuals to choose how to dispose of their property rights and strike non-coercive, mutually beneficial bargains and contracts with foreigners. This is the foundation for the short and long-run gains from external openness. Resources are allocated more efficiently as they are channelled into areas that generate the highest rates of return. This is the necessary preface to the dynamic gains from openness (economies of scale, transfer of technology and skills, the competitive spur that comes from exposure to world-class standards of practice, etc.), which feed into productivity gains, a rise in real incomes and economic growth.

So much for the standard economic efficiency arguments. Often overlooked and under-appreciated is the moral case for a liberal international economic order, which is as important to Hume and Smith. In their scheme, a flourishing, advancing commercial society embodies a progressive state of affairs that is morally superior to any realistic alternative. Commercial society revolves around what David Hume calls a “spirit of industry”, a psychological force which injects a vitality and dynamism into public affairs. This stands a world apart from the vegetative and parochial societies of old. Its engine is individual choice in the selection of means and ends, i.e. laisser faire; its result is individuals in the broad mass of society, rather than the select few, with progressively better life-chances, i.e. with the ability to lead more varied and interesting lives. Free trade (broadly defined) expands life-chances by bringing about widespread and peaceful commercial contact among nations and breeding a worldly cosmopolitanism. It is integral to the “spirit of industry” and a dynamic, ever-wider commercial society.[17]

Hence, Adam Smith’s “natural liberty”, the lifting of artificial restraints upon individual choice and action, is not only of intrinsic value, a “good” in itself; [18] it is also the foundation of the “wealth of nations”. Freedom and prosperity, therefore, are intimately related; and it is impossible to think of either freedom or prosperity without the freedom to engage in international transactions, preferably on a non-discriminatory basis.[19]

Let us return to economic efficiency. The evidence of the past two centuries, roughly since the post-Napoleonic settlement, tends to bear out the proposition that countries that are more open to the world economy grow faster, i.e. become richer, than those that are closed. One of Lord Bauer’s major insights is that economic advancement in the developing world, over a broad historical sweep, has occurred in countries and regions that have had the most contact with the outside world, and particularly with the advanced centres of the world economy in the West.[20] Indeed, no country on earth has delivered a sustained rise in the living standards of its people without being open to the world.

The evidence from the post-1945 period points in the same direction. The gradual liberalisation of trade and capital flows in the OECD countries spurred West European reconstruction, recovery and catch-up growth. The outward-orientation of Japan and other East Asian countries played an important role in their catch-up growth. The gradual liberalisation of foreign trade and inward investment in China, despite continuing protection, has undeniably contributed significantly to spectacular and sustained growth rates over the past decade-and-a-half. [21] Hong Kong and Singapore are the outstanding examples of long-standing free trade (earlier in the former than the latter) acting as a catalyst for dizzyingly high growth since the 1950s and 60s.

Generally speaking, developing countries with progressively more liberal trade policies are the ones with growing ratios of trade and inward investment to national income, and with higher growth rates. East Asian, Latin American and Eastern European countries have lower average tariffs, fewer non-tariff trade barriers and fewer restrictions on inward investment than is the case in South Asia, Africa, the Middle East, South-eastern Europe and the ex-Soviet Union (with the exception of the Baltic states). The former groups of countries have undertaken more extensive external liberalisation than the latter during the last two decades (starting earlier in East Asia and Chile, and later in Eastern Europe), and done so for the most part unilaterally rather than through international negotiations.[22]

Much ink has been spilt recently on the precise linkages between trade openness and growth. Cross-country regressions probably do not provide definitive answers, as it is impossible to completely isolate the impact of trade policies from other aspects of economic policy. Nevertheless, a combination of macro-numbers and bottom-up, in-depth country studies, relying on qualitative as well as quantitative assessments, does suggest that openness is one significant factor in promoting growth.[23]

In addition, a new World Bank study concludes that a basket of 24 developing countries, with a total population of 3bn, is increasingly integrating into the global economy. These countries have rising absolute and relative shares of manufactures in their total exports; their ratios of trade to national income have doubled since 1980; and the growth of income per head in this group has increased from 1 per cent a year in the 1960s to 5 per cent in the 1990s. The bad news, however, is that about 2bn people live in 75 countries with stagnating or declining aggregate growth. This includes virtually all least-developed countries. These happen to be countries that have liberalised less, although they suffer too from other intractable problems, such as poor climate and geography, rampant disease, civil war and chronically corrupt, predatory governments and ruling elites.[24]

Globalisation, then, is growth-promoting. Growth, in turn, promotes poverty reduction. The much-cited Dollar-Kraay World Bank study finds that the incomes of the poor (defined as the bottom fifth of income distribution) rise in the same proportion as increases in average real incomes.[25] Higher-growth countries also register greater success in adult literacy and life expectancy. Trade liberalisation, in particular, allows people to exploit their productive potential, thereby contributing positively to poverty alleviation through growth.[26] China is the emblematic example of the nexus between globalisation, growth and poverty reduction, with over 300 million people lifted out of absolute poverty since 1978. This reflects the wider East Asian experience of dramatic poverty reduction in tandem with external opening and high growth over the past three-and-a-half decades.[27]

The macro-story related so far nevertheless requires careful qualification in order not to oversell the case for external liberalisation and convey the impression that it is a panacea.

First, the liberalisation of international transactions cannot be seen in isolation. It is but one – albeit important – ingredient in economic policy reform, alongside political stability, macroeconomic stabilisation, internal deregulation (including privatisation), domestic reregulation (in the sense of introducing and extending transparent, pro-competitive regulatory principles), in addition to manifold other aspects of institutional reform. This is, of course, easier said than done, for institutional reform – enforcing property rights and contracts through impartial, effective judicial systems, improving systems of public administration, improving education and health care, rolling out transport and communications infrastructure – must be seen in the context of financial, technical and other constraints, with wide variations across developing countries.

Second, trade policy reform is not a smooth, frictionless process. It is one of the most sensitive political undertakings, for in reality trade politics is more a snakepit of distributional conflict than an exercise in delivering economy-wide efficiency. It entails often painful short-term adjustments, reshuffling resources between winners and losers, e.g. between tradable and non-tradable sectors, urban and rural areas, domestic and foreign investors, and between ethnic groups. This does not vitiate the case for liberalisation; rather it strengthens the case for complementary domestic policies to ease the path of adjustment in tandem with external liberalisation.

Third, the modalities of external liberalisation need to be considered. Should it proceed fast, in “big-bang” fashion, or should it be gradually implemented? How should it be sequenced with other aspects of economic policy reform, especially macroeconomic stabilisation? There are economic and political arguments pro and contra big-bang liberalisation, [28] but I would argue that these are secondary issues, more a matter of political expediency and technical import than of principle, contingent on different circumstances and constraints in different places at different times. The principle of movement in the direction of free trade as a medium-to-long term goal is more important.

Fourth, and in my view most important, external liberalisation does not take place in vacuo: it must be seen in the context of domestic institutional change. The liberalisation of international transactions on its own does not deliver much; but in interaction with institutional upgrading at home there are abundant, long-term dynamic gains to reap. One should add that this is not a new social democratic insight attributable to Messrs. Stiglitz and Rodrik; rather it is the centrepiece of classical liberal trade theory in the works of Hume and Smith. Both are more concerned with the dynamic gains arising from the mutual reinforcement of external openness and domestic institutional change than they are with static allocative efficiency gains. External opening creates the spontaneous stimulus for institutional upgrading to better exploit trade-and-investment opportunities, e.g. through better currency and banking practices, and the development of ports and inland communications. Reciprocally, better enforcement of property rights and contracts and more investment in social infrastructure maximises the gains for exporters, importers, and domestic and foreign investors.[29] Openness, therefore, is a handmaiden of growth.[30]

Bearing these caveats in mind, one can conclude that the liberalisation of international transactions is to be welcomed in the name of freedom and prosperity. The anti-liberal critique is wrong: marginalisation is in large part caused by not enough rather than too much globalisation. As Martin Wolf argues: “Globalisation does not make countries poor; it helps make them rich. …. But one thing, above all, is clear: if the world is to become less unequal through raising the bottom, rather than collapsing the top, and still more if mass poverty is to be eliminated, it can only be via successful integration, not its opposite”.[31]

c) The retreat of the state?

The second plank of the Malloch Brown/UNDP thesis is that the nation-state is in inexorable retreat before the advancing battalions of globalisation. True, many developing countries have witnessed the collapse and wholesale failure of the institutions of state, although this has much more to do with internal ethnic and other forms of conflict than with globalisation. Nevertheless, the fact remains that for all developed countries, and most developing and transitional countries, the core functions of law and public policy continue to be performed primarily at the national level by governments, not by IGOs, MNEs or NGOs. These functions of national governance – defence of territory from external threat, internal law and order, the protection of private property rights and contracts, and the provision of other public goods -- are as vital as ever. Not least, governments still set the national policy stance on international trade, foreign direct investment, portfolio capital flows and cross-border migration.[32] This in turn determines how integrated the national economy becomes with the global economy.

Neither globalisation nor governance is “new”. Right through the nineteenth century, national governance, in the context of an international political system of sovereign nation-states, co-existed with increasing international economic integration (especially in the last third of the century). The classical economists saw no inherent contradiction in this state of affairs; indeed, they viewed the public policy challenges of dealing with the globalisation of their day as a matter, first and last, for national governance. Has the globalisation-and-governance equation changed so much a hundred years on? Arguably not. Globalisation continues to depend fundamentally on law-governed nation-states. Put another way, the preconditions of a good or bad, healthy or sick, liberal or illiberal international economic order are to be found “within and beneath”, as the German economist Wilhelm Röpke put it, i.e. in the legal and policy subsoil of nation-states.[33]

National policy choice is still crucial. Through the last half-century the world economy has exhibited marked divergence in national economic performances, especially within the developing world (and more recently between countries in transition too). This corresponds to divergence in national policies, particularly in external economic policies. As mentioned earlier, some countries, first in East Asia, then in Latin America and later in Eastern Europe, have opened their economies and, to a greater or lesser extent, taken advantage of globalisation. Others have not.

This is not to deny the importance of international co-operation where national-level action is insufficient. Even a sceptic of global governance may concede that there are legitimate zones of intergovernmental collaboration, and that more of the latter is required compared with nineteenth century practice. However, clear thinking and good policy demand a specification of the problem; and, if concerted action is required, a keen sense of the extent and limits of such action. This applies in particular to global public goods where genuine and serious cross-border externalities are involved, as may be the case, for example, with climate change. In contrast, the global governance catchphrase – “global solutions for global problems” – assumes, wrongly, that most or all problem-solutions are global, to be dealt with by (often unaccountable and unrepresentative) members of the “international community”. It is this unconditional embrace of global governance that is both glib and illiberal.

Unfortunately, the record of most international organisations and other mechanisms of intergovernmental collaboration since the Second World War has been one of ad hoc bureaucratic intervention in markets, often exacerbating misguided government intervention at the national level. There is some useful “soft” policy co-ordination through cross-country surveillance, information-exchange and dialogue, as happens in the IMF, World Bank and OECD. On the other hand, there is much counter-productive aid disbursement, sullied by arbitrary politics, bureaucracy and incompetence (as also happens in the Bank and Fund). The heart of the problem is that most international organisations lack a clear, specific function, rather trying to achieve diffuse and mutually contradictory objectives all at once. This bedevils UN agencies, as it does the Bank and the Fund.[34]

To Jan Tumlir, the former research director of the GATT, all this smacks of “co-operation without rules”. It is an exercise in rampant international adhocery, resulting in an extra layer of detailed, complex regulations. At one extreme, there seems to be an unconditional acceptance of international organisations and intergovernmental collaboration for their own sake. As Tumlir says: “International organisations, negotiations, agreements and functions seem to be favoured, wholesale and uncritically, more for their international character than for their substantive content”.[35]

The GATT, on balance, was an exception, with a relatively clear mandate – to negotiate and enforce non-discriminatory rules on international trade. These rules on the whole limited rather than expanded the ability of governments to intervene in markets in an arbitrary and discretionary manner. By entering into international agreements governments collectively tied their hands, forswearing discriminatory intervention in a delimited area of policy.

Admittedly, the story is not that simple: from the GATT’s inception, and continuing with the WTO, governments have enjoyed plenty of in-built flexibility to resort to discriminatory protection.[36] Moreover, the waters have become muddied since the founding of the WTO. It has ventured further into the complexities of domestic regulation, and its widening rule-base lacks the clear, sharp market access focus of the old GATT. More on this in due course.

d) Rules for international economic order: a classical liberal view

The distinguishing feature of the classical liberal approach to international economic order, from Hume and Smith to Hayek and Tumlir, is its stress on the need for general rules of conduct in a more complex world. As the world becomes more complex in globalisation’s wake, it does not follow that governance should become more complex too. Ratcheting up the output of detailed, complicated regulations is not necessarily the answer. On the contrary, simplicity is the key.

The motor of an integrating world economy is the “natural liberty” to enter into cross-border transactions, mediated by a spontaneous, freely-forming world price system that emits signals to economic agents, equipped with only very partial knowledge, to adapt their actions as speedily as possible. A world economy powered by these forces is one of “incessant and manifold change”, as Tumlir puts it, and its progress depends on the “anticipation of change” and the “rapidity of adjustment”. However, it would be folly to think that natural liberty and a world price system are free-standing: they require an appropriate framework of rules and institutions to provide a minimum of stability and predictability. Such a framework serves as an anchor of orderliness and regularity in the midst of constant change; it facilitates the flexible adaptation of private agents to external change.[37] The question now turns upon the nature of “appropriate” rules.

Rules should be consonant with Smithian and Humean procedural (or commutative) justice – “general and inflexible rules of justice” as Hume calls them. They should be simple, transparent, non-discriminatory and negative rules of conduct, telling actors what not to do, but otherwise leaving them free to do as they wish. In other words, such rules are proscriptive, not prescriptive.[38] In Hayekian terminology, they are nomos, not thesis. General rules of conduct, applying equally to all, exist to protect private property rights and contracts, [39] in the defence of individual freedoms of course, but also as the basis for entrepreneurship and growth. Within national jurisdictions these rules are embodied in private (commercial) law, the legal underbelly of market society (what the German lawyer Franz Böhm calls a “private law society”). They are to be distinguished sharply from specific, detailed, i.e. prescriptive, regulations, which usually fall within the sphere of public administrative law.[40]

Domestic private law has its external complement in international private law and the informal rules, customs and conventions of the lex mercatoria, all of which grease the wheels of international commerce. But the principles of private law also find expression in one specific domain of international public law, namely the Most Favoured Nation and National Treatment clauses of the WTO (especially Articles I and III GATT). Like the rules of private law, MFN and National Treatment are reasonably simple, transparent, non-discriminatory and negatively defined principles, enjoining governments not to discriminate in international trade but otherwise leaving them free to do anything not specifically forbidden. Their effect, at the margin, is to help protect private property rights and contracts by limiting the arbitrary and coercive powers of governments in international transactions. Like private law, they are bulwarks of constancy and predictability that facilitate the adaptation of private agents, as well as of national policies, to external change.[41]

To reiterate, classical liberal-type rules – what Hayek calls “negative ordinances” – protect private property rights against big, discretionary government. This was clearly appreciated in the nineteenth century, especially in British economic policy in the second half of the century. Unilateral free trade was part and parcel of a “Victorian social contract”: it was fastened, ideologically and in practice, to the gold standard (to provide stable exchanges) and small, limited government run according to the maxims of Gladstonian public finance (low taxation, low expenditure and fiscal balance). As the great political economists and reformers of the day saw it, free trade has an essential constitutional function. It removes the politicised discrimination inherent in protectionist policies that favours powerful organised interests, and thereby helps to bring about greater transparency and equality of treatment before the law. In conjunction with other policies, free trade enables government to perform its core functions well, but prevents (large and expanding) government from becoming the slave of vested interests. Hence, free trade helps to keep government “knaveproof”.[42]

This government-limiting function of free trade has not been well appreciated over the past century. The first half of the twentieth century witnessed rampant government intervention in domestic and international transactions. The post-war GATT was intended to progressively liberalise international trade, but without going back all the way to nineteenth century-style free trade. Like the Bretton Woods agreements, it was designed to achieve a compromise between a gradually more open international economic order, on the one hand, and large, expanding government at home, on the other.[43] Correspondingly, the post-war theory of commercial policy explicitly decoupled free trade abroad from laisser faire at home, justifying a series of “first-best” interventions on welfare-economic grounds alongside free trade.[44] Given these developments – broadly consistent with the Globalisation and Social Democracy vision set out earlier -- it is not surprising that intergovernmental co-operation through the GATT, and now the WTO, was and is regarded as something flexible and ad hoc rather than as a government-limiting device.

Jan Tumlir, in contrast, was very much a classical liberal lone voice in arguing for international rules more along nineteenth century lines. Put another way, he recouples free trade abroad to limited government and laisser faire at home. To him, hyperactive government meddling in resource allocation distorts a world price system, breeds rent-seeking and rigidifies economic structures, thereby retarding adaptation to external change. Protectionism and greater international friction are the predictable structural outcomes. GATT MFN-type rules should counter this trend; they should check overactive government, help protect private property rights and play their part in making domestic structures more flexible in order to facilitate adaptation to external change. With appropriate implementation within national jurisdictions, therefore, international trade rules should be an instrument of domestic constitutional refurbishment – “the second line of national constitutional entrenchment”.[45]

Following Tumlir’s line of thought, one could say that nineteenth century trade policy was a matter of national adaptation to external conditions through national policies and institutions (at least for the Western powers and the white colonies, if not for the non-white dependent colonies). This remains the case today, although, since the 1930s and 40s, regional and multilateral regimes play a much larger role in trade policy. The GATT/WTO is not a substitute for national governance in trade policy; rather, with the right sort of rules, based on MFN and National Treatment, it can be a helpful auxiliary to good national governance.

The GATT, inevitably the result and creature of political compromise, lived up only very partially to these classical liberal expectations. It excluded many areas from market access-promoting rules (agriculture, textiles and clothing, services, foreign direct investment); it had a weak dispute settlement mechanism; developing countries were largely free from market access obligations; and even coverage of industrial goods suffered from sweeping exemptions. It is instructive to note that only 11 of the 25 founding articles of the GATT contain negative, proscriptive rules of the type discussed above (with MFN and National Treatment in Articles I and III respectively as the foundation stones). Of the rest, 9 articles sanction more-or-less detailed means of evading market access obligations (e.g. import quotas on balance of payments and infant industry grounds, safeguards, anti-dumping and countervailing duties, general waivers, waivers on national security and other public policy grounds, customs unions and free trade areas). Finally – to Tumlir the fatal flaw – GATT rules were hostage to the vagaries of “fuzzy diplomacy” and the willingness of governments to stick to them; they were not enforceable as private rights within national jurisdictions.[46]

The WTO has more “rules of law” than the GATT. But is it closer to the Rule of Law in the classical liberal sense set out above? That is the question to which I will return in the final section of this essay. Before that, however, I should like to flesh out the division of labour between national, regional and multilateral governance of trade policy.

Multi-track trade policy

Trade policy proceeds, usually simultaneously, along three main tracks: the national (unilateral) track, the bilateral/regional track and the multilateral track. Let us examine each in turn, and then consider their interaction.

a) The unilateral track: liberalisation “from below”

I trust the government…. will not resume the policy which they and we have found most inconvenient, namely the haggling with foreign countries about reciprocal concessions, instead of taking that independent course which we believe to be conducive to our own interests. … let us trust that our example, with the proof of practical benefits we derive from it, will at no remote period insure the adoption of the principles on which we have acted.

Sir Robert Peel, House of Commons, 1846 [47]

The nature and pace of reform have been determined by our own internal political processes, not by the slow speed of international negotiations. We should not wait for international reform to make decisions that seem to be in our own best interests.

Ministry of Foreign Affairs and Trade, New Zealand [48]

The bulk of recent trade-and-investment liberalisation in developing and transitional countries has taken place unilaterally, i.e. governments have liberalised quotas, tariffs, licensing arrangements, restrictions on foreign investment and the like independently and not as part of international agreements. Although many governments have reluctantly undertaken unilateral liberalisation as part of IMF and World Bank structural adjustment programmes, the really strong and sustained liberalisers, such as Chile and Mexico in Latin America, most of the East Asian countries, and many Eastern European transition economies, have gone ahead under their own steam, without the need for strong external pressure. Among the developed economies, only Australia and New Zealand have undertaken radical unilateral liberalisation in recent decades. Hong Kong, Singapore, and more recently Estonia, stand out as unilateral liberalisers that have come close to free trade. [49] The paragon of unilateral free trade remains Great Britain between 1842 and 1914, whose emblematic act was Peel’s announcement of the repeal of the Corn Laws in 1846.[50]

There are powerful economic and political arguments in favour of unilateral liberalisation. To begin with, national gains from trade result directly from import liberalisation, which replaces relatively costly domestic production and spurs more efficient resource allocation. One important effect of import liberalisation is to channel resources into profitable export sectors, removing the bias against exports inherent in protectionist regimes.[51]

Seen in this light, there is every reason to go ahead on the fast track to unilateral liberalisation without wasting time on the slow, circuitous track of reciprocal negotiations. The latter are cumbersome and time-consuming. They encourage trade negotiators to play international power games, and threaten to delay liberalisation while governments seek to extract maximum concessions from each other. In contrast, unilateral liberalisation, “from below” as it were, is the simple, direct route to freer trade. It is the trade policy equivalent of the Nike strategy: governments can simply go ahead and “just do it!”.

In this scheme, free trade internationally is not a construct of international negotiations; rather it is epiphenomenal, a by-product of autonomous liberalisation by one or several countries, progressively emulated by others. This was the preferred route for the classical economists from Smith to Marshall, and for the titans of mid-Victorian British politics.[52]

Under twentieth and twenty-first century conditions of democratic politics and vigorous interest group lobbying, unilateral liberalisation is of course an altogether more difficult political proposition than it was in the nineteenth century. In recent times, governments have usually embarked upon radical unilateral liberalisation in situations of national economic and political crisis, especially when it has become all too clear that long-standing policies of protectionism have failed.[53] They sally forth with autonomous liberalisation when they realise that the costs of own trade barriers are greater than the costs suffered because of other countries’ trade barriers.

b) The multilateral track: liberalisation “from above”

The great political virtue of multilateralism, far exceeding in importance its economic virtues, is that it makes it economically possible for most countries, even if small, poor and weak, to live in freedom and with chances of prosperity without having to come to special terms with some Great Power.

Jacob Viner

The reciprocity principle, upon which the nineteenth century Cobden treaties, twentieth century regional trade agreements, and indeed the GATT/WTO are based, has an important disadvantage: its rationale is basically mercantilist. Governments bargain over export concessions, for which they “concede” import access to own markets. This conveys the impression that exports are “good” and imports are “bad”, contrary to the fundamental insight from classical and neoclassical trade theory that the gain, in terms of beneficial resource allocation, comes from imports. However, given the practical difficulty of undertaking autonomous liberalisation in the context of modern domestic politics, the multilateralised reciprocity that the GATT/WTO embodies has its advantages. The following advantages come to mind: [54]

Most obviously, international treaties act as an external prop: they can strengthen the hand of governments and shift the balance of interest group politics within the domestic sphere. Binding international obligations protect governments against politically influential domestic producer groups clamouring for protection against imports. At the same time, intergovernmental negotiations mobilise the support of domestic exporters, who have a stake in lobbying their governments to “concede” market access at home in return for improved market access for their products abroad.

WTO rules, in return for certain obligations, provide members with rights: rights to market access for exports; and rights against the arbitrary protection and predation of more powerful players. This is a particularly important consideration for developing countries. They tend to be small, poor and weak compared with the large trading nations of the developed world. Hence their more pressing need for the protection of a well-functioning system of international trading rules.

Perhaps most importantly, but often overlooked, multilateral rules can bolster domestic reform efforts. Binding WTO commitments, such as GATT tariff ceilings, lock in previously undertaken measures of liberalisation and help prevent a descent back into protectionism, especially in conditions of low growth or recession when domestic pressures for protection increase. This lowers uncertainty and risk for business agents, and increases the stability and predictability of the business environment, particularly in tradable sectors.

Moreover, sound WTO rules, when fully implemented within national jurisdictions, perform a quasi-constitutional function: they contribute to a more disciplined and credible economic policy framework, thereby invigorating competition and benefiting individual citizens. Indeed, the value of implementing WTO obligations domestically cannot be underestimated in most developing countries with serious policy and institutional deficits. Thus, the WTO mechanism can reinforce the clarity, coherence and credibility of national trade policy reform in the eyes of exporters, importers, local and foreign investors, and, not least, consumers. This gets back to the point made earlier that the WTO, at its best, is a helpful auxiliary to good national governance.

c) The bilateral/regional track: liberalisation “in between”

Regional trade agreements (RTAs) involve two or more countries getting together to regulate trade. Advocates argue small groups of like-minded countries should club together to take trade-and-investment liberalisation deeper, wider and faster than would be possible in the much larger and more diverse WTO. Such relatively cohesive clubs could also experiment with regulatory co-operation to tackle behind-the-border, non-tariff barriers (e.g. in services, investment, competition policy, intellectual property, customs administration, public procurement, technical standards, sanitary and phytosanitary standards) to greater effect than would be the case in the WTO. Moreover, progress on market access and rule making through RTAs could be transposed in due course to the WTO, i.e. RTAs could act as “building blocks” for multilateral liberalisation.[55]

On the other hand, detractors argue that RTAs are “stumbling blocks” in the multilateral trade order. RTA members undertake trade liberalisation on a preferential basis, thereby discriminating against third parties and violating the WTO’s MFN principle. The danger is that RTAs can lead to a “spaghetti bowl” of opaque, overlapping and discriminatory procedures, particularly in the form of incredibly complex rules of origin requirements that become obstructive, costly non-tariff barriers to trade. In addition, negotiating and administering RTAs could divert time and resources from both unilateral and multilateral liberalisation – by no means a trivial point given minimal trade policy capacity in many developing country administrations, particularly in the least-developed countries. Finally, major powers, acting as RTA “hubs”, could force weaker “spoke” countries, especially in the developing world, to accept inappropriate conditions in regional agreements, such as minimum labour and environmental standards.[56]

RTAs have proliferated in practically all regions of the world economy since the 1980s. Activity on the regional track has accelerated since the failure of the WTO’s Seattle Ministerial Conference in 1999, especially in Asia-Pacific, starting with Singapore and involving Japan, South Korea, Australia, New Zealand, Mexico, Chile, the US, Canada, and now China and Hong Kong. The WTO Secretariat estimates that there are 170 RTAs currently in force, and that this number could grow to 250 by 2005.[57]

So far, there is little evidence that RTAs have retarded the overall liberalisation of trade and FDI.[58] Indeed, RTAs may well have contributed to political stability and economic policy reform in some countries, e.g. in Mexico through NAFTA and the East Central European countries en route to EU membership. Nevertheless, the discriminatory, rule-evading and power-reinforcing potential of RTAs cannot be overlooked, especially as multilateral disciplines on them (in Article XXIV GATT and Article V GATS) are rather weak.

d) Interaction between tracks: complementarity of unilateral and multilateral tracks

As mentioned earlier, unilateral liberalisation should be pursued on its own merits when and where politically feasible. However, most developed and developing countries lack the domestic political requisites to undertake and sustain unilateral trade reforms. The multilateral track can therefore serve as a helpful auxiliary: WTO agreements not only lock in unilateral reforms; they also provide a springboard for further and deeper unilateral reforms.

The experience of countries with strong trade-and-investment liberalisation illustrates how unilateralism and multilateralism can be complementary tracks. For example, unilateral liberalisation in several Latin American, East Asian and Eastern European countries increased the penetration of trade and FDI in their economies, and increased their reliance on export-led growth. This gradually changed their attitude towards the GATT/WTO: they came to realise its advantages in promoting export market access; defending them against tariff and non-tariff protection by more powerful players; and, more generally, in providing them with a secure framework of non-discriminatory rules. Hence they agreed to bind MFN tariffs for the first time in the Uruguay Round, and generally came round to support a pro-liberalisation agenda in multilateral trade negotiations.[59]

Also illustrative are the recent WTO agreements on financial services and basic telecommunications services (both inscribed as Annexes to GATS in 1997). Developing country signatories view these multilateral agreements, which for the most part lock in previously undertaken autonomous liberalisation, as a way of advertising the credibility of national economic policy reforms. This, they hope, will attract more FDI to improve their service infrastructures. The GATS, in turn, has triggered national debates on regulating services, thus preparing the ground for further unilateral reforms. Several developing countries have since proceeded beyond GATS commitments with further unilateral liberalisation in financial and telecom services.[60]

That said, there remains a wide gap (or “wedge”) between applied measures of unilateral liberalisation “at home,” on the one hand, and bound WTO commitments, on the other, as far as most developing countries are concerned. Applied tariffs are usually well below bound GATT MFN tariffs; and the gap between services liberalisation at home and still very modest GATS commitments is even wider.[61] New Zealand (admittedly a developed, not a developing, country, albeit a recent convert to liberal trade policies) is exceptional in having effectively locked in unilateral liberalisation by binding GATT and GATS commitments at or close to applied measures at home.

The WTO: state-of-play and prospects

a) Developments post-Uruguay Round

The GATT provided rules for progressively more open trade in (some) industrial goods. As a result of the Uruguay Round agreements, the WTO goes much further and comes closer to universal coverage, providing market access rules for the bulk (if not all) of international trade. GATT 1994 (replacing GATT 1947) continues the fifty-year-old process of reducing tariff and non-tariff barriers to trade in manufactures. The Agreement on Agriculture and the Agreement on Textiles and Clothing, although relatively weak and shot through with loopholes, have GATT-style rules and procedures for gradually liberalising important but hitherto highly protected chunks of goods trade. The GATS, although architecturally complicated and with modest commitments to date, nevertheless establishes the framework for the liberalisation of trade and factor movements in cross-border services transactions. The GATS also has provisions for making the domestic regulation of service sectors more transparent and non-discriminatory – a vital consideration given that opaque and discriminatory domestic regulations hinder services trade far more than classic border restrictions. New or revamped trade procedures, notably on subsidies, technical barriers to trade, sanitary and phytosanitary measures, customs valuation and import licensing, furnish some of the regulatory infrastructure for tackling behind-the-border trade restrictions and taking better advantage of trade opportunities. This is especially important for developing countries that lack such regulatory infrastructure. As for developing countries, an increasing number (but still a relatively small minority) are more active and effective participants in the WTO, eschewing old-style Special and Differential Treatment and subscribing to basic, common rules for market access. Finally, the WTO’s quasi-automatic dispute settlement procedures, reliant more on law and due process than on the vagaries of diplomacy (compared with dispute settlement in the old GATT), give market access rules more teeth and bite. Developed and developing countries make much more use of WTO dispute settlement than was the case pre-1995. Arguably, such a stronger rules (or law) based system, with beefed-up enforcement mechanisms, benefits smaller and weaker players to a greater extent than the more power (or diplomacy) based GATT system.[62]

If this were the sum total of the WTO story, then it could be said that the WTO would be performing its ideal constitutional function. It would be supplying, and helping to enforce, a wider and deeper non-discriminatory rule-base for market access in cross-border transactions. Rather than representing a leap in global governance, this kind of WTO would be a helpful, more effective auxiliary to better national governance, dovetailing with unilateral liberalisation and domestic regulatory reforms “down below”. The WTO, however, like political life in general, is more complicated than that; there is another, more vexing side to the WTO story.

The Uruguay Round agreements contain a Trojan Horse, which goes by the name of TRIPS (the Agreement on Trade-Related Intellectual Property Rights). TRIPS is perhaps the strongest agreement coming out of the Uruguay Round, with harmonised legal standards on the protection of patents, trademarks and copyrights to be applied across the WTO membership, regardless of differences in levels of development. It differs fundamentally from classic GATT-type market access rules, for its short-term effect is to close, not open, markets: strong patent protection in particular increases prices and transfers rents from poorer developing countries to multinational enterprises headquartered in the West, especially in the pharmaceuticals sector.[63] Most controversially, developing countries are concerned that TRIPS could inhibit cheap and plentiful access to essential medicines, such as patented drugs to combat HIV/AIDS.

The main point to bear in mind is that TRIPS takes WTO rules in a new direction – not farther in the direction of market access, but elsewhere, towards a complex, regulation-heavy standards harmonisation agenda intended to bring developing country standards up to developed country norms. It sets the precedent for artificially raising developing country standards in a range of other areas, such as labour, environmental and food safety standards, armed with stronger WTO dispute settlement and the Damocletian Sword of trade sanctions in case of non-compliance. Let us be clear: these are not negative, proscriptive, classical liberal-type general rules of conduct to protect property rights in international transactions; rather they are detailed, prescriptive regulations to be implemented within domestic jurisdictions, with the potential effect of hindering rather than promoting market access.

The WTO has displayed other worrying signs since its foundation in 1995. There has been an underlying bias against developing countries, reflecting their self-exclusion pre-Uruguay Round, and the preponderance of developed country negotiating power during and after the Uruguay Round. The strength of TRIPS, heavily weighted against developing countries, has to be contrasted with the weakness of the agreements on agriculture, and textiles and clothing – areas in which developing countries enjoy comparative advantage. To date there has been little or no net liberalisation in these sectors.[64]

Furthermore, most developing countries, and particularly the least developed among them (LDCs), face severe constraints in implementing many Uruguay Round agreements, such as TRIPS, SPS, TBT and TRIMS. All require national implementing legislation, as well as new or upgraded domestic enforcement mechanisms. This is a tall order for most developing countries, and simply beyond the reach of LDCs starved of administrative, technical and financial resources.[65]

Finally, the creeping legalisation of the WTO is not all good news. Trade negotiators have a not-unsurprising tendency to conclude vaguely worded final texts that give legal expression to political compromise and fudge. In WTO-speak this is known (perhaps not so accurately) as “constructive ambiguity”. Many Uruguay Round agreements, such as GATS, SPS, TBT and TRIPS, contain numerous gaps and ambiguities. With quasi-automatic dispute settlement, there is an increasing, indeed alarming trend to fill in these gaps through litigation in panels and Appellate Body rulings rather than through negotiation and quiet, behind-the-scenes diplomacy.[66]

This is a dangerous and slippery slope. The WTO, like the GATT before it, is a “contract organisation” bringing together a large, diverse group of sovereign nation-states. Its always-brittle political consensus can only tolerate rules interpreted as much as possible according to the “letter of the law”, i.e. with judicial restraint. This is indeed a principle enshrined in the Uruguay Round agreements establishing the WTO and the new dispute settlement procedures.[67] The Dispute Settlement Body simply does not enjoy the political consensus to sustain “creative” judicial interpretations of legal texts and policy driven by litigation, as happens from time-to-time in the US Supreme Court and the European Court of Justice. And this is for the best: unless the views of a wide cross-section of the WTO membership are heard, including developing and smaller members, policy may be driven in crucial areas by those large and powerful members able to commit significant legal resources to dispute settlement cases. This could conceivably lead to rulings inimical to developing country interests, such as an expansive, open-ended interpretation of the precautionary principle on food safety issues, and discrimination against imports based on their production and processing methods.

These trends in dispute settlement reinforce the case for the negotiation of reasonably simple, transparent and negative rules for market access, based on MFN and National Treatment, which give clear direction to dispute settlement. One of the dangers of intrusive and complicated TRIPS-type regulation is that it opens new vistas for judicial activism powered by rich WTO members able to afford armies of high-fee lawyers.

b) Developments post-Seattle and prospects for the Doha Round

The Uruguay Round was, predictably, a delicate, not to say Byzantine, political compromise. It bequeathed the new WTO with extra layers of rules on top of the old GATT, but the rules had lots of loopholes allowing governments to evade constraints on protectionist policies. The WTO, then, instead of marking a decisive shift from power to rules, updated and continued the age-old tension between them. Moreover, the rules themselves seemed to proceed in contradictory directions, some promoting market access, others, notably in TRIPS, hindering it. Thus, the WTO had more rules of law, but did not come closer to the Rule of Law in the classical liberal sense. Indeed, it could be argued that, after the first five years of operation, WTO members had lost sight of the relatively clear market access vision of the old GATT. There was no longer a reasonable consensus on what the rules should be.

This was the backdrop to the WTO’s infamous Third Ministerial Conference, which took place in Seattle in November/December 1999. The WTO was in a state of drift and deadlock in the run-up to, during and after Seattle. Problems with trade policy-making in the US and the EU, a series of bitter trade disputes between them, divisions among developing countries, and an anti-globalisation backlash outside the WTO, all contributed to this state of affairs.

After much political brinkmanship and down-to-the-wire haggling, WTO members successfully concluded their Fourth Ministerial Conference in Doha, Qatar, last November with an agreement to launch “broad and balanced” negotiations, which started in early 2002. The new Doha Round puts the WTO show back on the road after the disastrous failure of Seattle. It took careful, painstaking preparation, aided indispensably by the sense of political and economic crisis post-September 11th, to dig the WTO out of its post-Seattle ditch and bring about success at Doha. Failure there would have crippled the WTO, perhaps fatally, and speeded up regional block formation, leaving poor and weak countries exposed to the protectionist whims of rich and powerful counterparts.

The Doha Ministerial Declaration, in addition to welcoming China and Taiwan as new WTO members, contains a pretty large, complex and rather ambitious agenda, reflecting the post-September 11th mood of all-round compromise.[68] There is a market access core to the new round, i.e. negotiations on further trade liberalisation in agriculture, services and industrial goods. Developing countries have successfully flexed collective muscle with major concessions on the “implementation agenda” (flexibility and assistance in implementing Uruguay Round agreements) and flexibility in interpreting WTO rules on patent protection. The EU has forced other WTO members to dilute the commitment to abolish agricultural export subsidies; and extracted new commitments to negotiate on trade-and-environment and the “Singapore issues” (competition, investment, trade facilitation and transparency in public procurement, all introduced into the WTO work programme at the Singapore Ministerial in 1996).

Looking ahead to the negotiations to take place this year and beyond, there is much to play for, with vast opportunity and great danger in equal measure. Two factors deserve to be highlighted:

First, the Doha Round presents the WTO system with one major opportunity: to rediscover the raison d’être of its predecessor, the GATT, to progressively reduce and remove barriers to trade, underpinned by simple, transparent, non-discriminatory rules, as embodied in the National Treatment and Most Favoured Nation principles. This constitutional package for open markets has a proven record of success, for growth and prosperity in developed and developing countries alike. The Bush administration’s trade policy team, ably led by Robert Zoellick, has partial sight of this market access vision, despite complications and vested interests in US domestic politics. A core of other developed and developing countries have an even stronger stake in this kind of WTO. They and the US must forge effective alliances, in individual negotiating areas and across-the-board, to ensure the WTO heads in the right direction.

Second, the EU presents the WTO with its major headache. It has imposed a cordon sanitaire around a scandalously protectionist and massively harmful agricultural regime. Moreover, it seems to want to turn the WTO into a lumbering regulatory agency in its own image. It proposes to add complex and intrusive regulation to the WTO agenda, some of which would impose burdensome environmental and other standards on developing countries. This implicit standards harmonisation agenda, aimed at raising developing country standards to developed country levels, is now the most insidious force in the WTO. The door was opened with the TRIPS agreement in the Uruguay Round; the environmental aspects of the Doha Round threaten to open the door much wider. The result could be an extra layer of developed country regulatory barriers that would shut out cheap developing country exports.

Other WTO members must make sure the EU does not steer the new round by stealth in the wrong direction. Rather they need to have a clear, sharp market access focus, while leaving countries at different stages of development (and with different histories and preferences) to regulate their economies in different ways. This makes eminent economic and political sense. Economically speaking, mutually beneficial North-South trade according to comparative advantages is based on cost differences, which subsume differences in labour, environmental and other standards associated with the world of work.[69] It follows that harmonising standards “from above”, and in an upwards direction, would drive up developing country costs of production and make their products uncompetitive in international markets. Politically speaking, an EU-style regulatory agenda in the WTO would make unwarranted intrusions into national sovereignty and do untold damage to the brittle intergovernmental consensus that (just about) holds the WTO together. On both political and economic grounds, therefore, WTO rules, focused on market access, should provide the necessary minimum for fair play in international commerce while respecting the diversity of policies and institutions among countries at very different stages of development.

c) Trade policy at home: direct effect and transparency

The WTO is not the be-all and end-all of trade policy. To paraphrase Wilhelm Röpke, trade policy, like charity, begins at home, not in the IMF, the World Bank or indeed in the WTO. Good trade policy, in the context of a coherent overall economic strategy, is fundamentally a national affair. Only on this domestic terra firma can a well-functioning WTO be of second-line constitutional assistance. This brings me briefly to two final issues concerning the national operation of trade policy: direct effect and transparency.

As Jan Tumlir realised, the GATT suffered from a structural defect: its rules were the creature of power politics and intergovernmental diplomacy; they lacked an impartial, credible, third-party enforcement mechanism within nation-states. While the WTO has a stronger international enforcement mechanism, the latter has distinct limits when it comes to domestic (intra-national) implementation and enforcement of WTO rules. To Tumlir, the only way to rectify this problem is to enshrine the freedom to trade as a private right, and as a matter of private law, within national jurisdictions. International rules, such as the MFN clause, would then take direct effect: private agents would have recourse to national courts to defend their rights against governments if the latter contravened relevant GATT/WTO rules. Trade policy would then become more a matter of law and less of diplomacy. Viewed more widely, giving direct effect to international rules – with the crucial proviso that these rules were “negative ordinances” and not prescriptive regulations – would contribute to domestic constitutional refurbishment: they would be part of a classical liberal package of limited, law-bound government, laisser faire at home and free trade abroad.[70]

There are plenty of political and legal obstacles to a policy of giving direct effect to international trade rules. However, it is happening, albeit in slow, piecemeal fashion. The WTO’s Government Procurement Agreement (GPA) stipulates that members must establish independent tribunals at home, to which private agents can have recourse if they wish to challenge bid procedures. Other WTO agreements (GATT 1994, Customs Valuation, Preshipment Inspection, TRIPS, GATS, Subsidies and Countervailing Measures) have provisions that could be used by members to give direct effect at home.[71] Time will tell whether this will become a stronger trend. The danger is, of course, that the “wrong” and not “right” sort of rules, i.e. more along the lines of TRIPS obligations than Articles I and III GATT, will take direct effect.

Finally, there is the issue of transparency in national trade policies. It is a commonplace that trade policy-making tends to be opaque, dominated by coteries of politicians, officials and organised interests (now including well-funded and well-organised Western NGOs). This is true of developed countries, but is particularly prevalent in the developing world.

As the GATT Eminent Persons Group argued (in the Leutwiler Report of 1985), trade policy-making should be opened up to public scrutiny so that an intelligent and inclusive public discussion can take place on vital collective choices affecting national wealth and welfare. This requires independent research and analysis that can be fed into a broad public debate on the costs and benefits of trade policy choices.[72]

International-level mechanisms for “policy surveillance” and “policy dialogue”, i.e. the systematic scrutiny of national policies and the follow-up exchange of ideas and information, can help. To some extent this happens in the IMF, World Bank, OECD and other international and regional organisations. On the trade policy front, it takes place most prominently through the WTO’s regular Trade Policy Reviews of its members.

However, these cannot be substitutes for “transparency bodies” at home. Think tanks, industry associations, consumer organisations and universities can help to generate useful public information on trade policies. There is a strong case for going a step further and setting up independent national transparency bodies, perhaps with statutory investigative powers, to assess the costs and benefits of national trade policies (e.g. the economy-wide impact of sectoral protection; impediments to trade and inward investment in the domestic market; the links between domestic regulation and trade policies, especially in services sectors; obstacles to export market access; keeping track of WTO dispute settlement cases; monitoring the international and domestic implementation of WTO rules). Only Australia has such a body, the Productivity Commission (formerly the Industry Commission), which could serve as a model for other developed as well as developing countries.[73] Such an institutional innovation could feed into what Lord Bryce termed “government by discussion”, by which he meant the thorough, deliberative consideration of public issues rather than unreflective, precipitate action taken on the basis of scant knowledge. To reiterate, initiatives of this kind are most important “from below”, not “from above”.

Conclusion

With the right sort of rules, the WTO can help to improve the economic policy framework and the business environment within nations, particularly by buttressing the protection of private property rights and the enforcement of contracts in international transactions. This is first and foremost a national task – “from below” as it were – but the WTO can be a helpful external prop. This, then, would be the WTO’s circumscribed but vital contribution to globalisation, and ultimately to the liberty of individuals and the prosperity of nations.

1. This is the prism I use to view trade policy in Classical Liberalism and International Economic Order (London: Routledge, 1998).
   
   
2. I refer to “visions” in the Schumpeterian sense, i.e. world-views of how the world works, or should work. According to Schumpeter, this is the necessary preface to the narrower analytical exercise of positive theory building. See his History of Economic Analysis (London: Routledge, 1954), p. 42.
   
   
3. P.D. Henderson, “Survival, development and the report of the Brandt Commission”, The World Economy 3,1, 1980, pp. 87-117.
   
   
4. Jagdish Bhagwati, “The global age: from a sceptical South to a fearful North”, The World Economy 20,3, May 1997, pp. 259-283.
   
   
5. See David Henderson’s Anti-Liberalism 2000 (London, Institute of Economic Affairs, 2001) for a survey of new and old anti-market forces in recent years.
   
   
6. John Stuart Mill, Autobiography (London: Penguin Classics, 1989 {1873}), p. 179.
   
   
7. Mark Malloch Brown, “Human security and human development in the 21st century: a post-September 11th agenda”, Address at the LSE, 25th October 2001
   
   
8. The orthodox package Mr. Malloch Brown refers to is associated with the Research Department of the World Bank and its stream of recent publications on trade liberalisation, growth and poverty. The Research Department, however, is only a small part of the Bank; there are other powerful constituencies within the Bank whose instincts and sympathies are closer to those of Mr. Malloch Brown.
   
   
9. For an elaboration of this perspective, see Inge Kaul, Isabelle Grunberg and Marc A. Stern eds., Global Public Goods: International Co-operation in the 21st Century (New York and Oxford: Oxford University Press, 1999).
   
   
10. Dani Rodrik, Has Globalisation Gone Too Far? (Washington DC: Institute for International Economics, 1997). See my review of this book in “Globalisation and policy response: three perspectives”, Government and Opposition 35,2, Spring 2000, pp. 237-253.
    
    
11. This would go considerably beyond the present safeguard clause in Article XIX GATT. As things stand, the GATT stipulates non-discrimination between “like products” and prohibits discrimination on the basis of how products are produced or processed. Import restrictions that upset “prevailing domestic norms” on labour and environmental standards would not, therefore, be permissible under existing GATT rules.
    
    
12. Dani Rodrik, “Trading in illusions”, Foreign Policy, March/April 2001 The New Global Economy and Developing Countries: Making Openness Work (Washington DC: Overseas Development Council, 1999); “Trade policy reform as institutional reform”, mimeo, August 2000; The Global Governance of Trade: As if Development Really Mattered (New York: UNDP), October 2001; Francisco Rodríguez and Dani Rodrik, “Trade policy and economic growth: a sceptic’s guide to the cross-national evidence”,
    
    
13. On do-it-yourself economics see David Henderson’s various writings, from his Reith Lectures, published as Innocence and Design: The Influence of Economic Ideas on Policy (London: Basil Blackwell, 1986), to The Changing Fortunes of Economic Liberalism: Yesterday, Today and Tomorrow (London: Institute of Economic Affairs, 1998), and Anti-Liberalism 2000, op cit..
    
    
14. David Henderson, Misguided Virtue: False Notions of Corporate Social Responsibility (London: Institute of Economic Affairs, 2001). One of Henderson’s main arguments is that proponents of Corporate Social Responsibility habitually ignore different conditions in different countries, which result in differences in costs and revenues at the margin. An agenda of levelling up standards across the world would raise costs out of line with prevailing conditions in particular countries, thereby suppressing mutually beneficial employment opportunities. The world’s weakest and poorest would suffer most.
    
    
15. On the case for a liberal international economic order, drawing inspiration from Smith and Hume, see my Classical Liberalism and International Economic Order, op cit., especially chs. 2,3,9.
    
    
16. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, Book I, ch. II (Chicago: University of Chicago Press, 1976 {1776}), p. 18.
    
    
17. To quote the younger Mill again: “But the economical advantages of commerce are surpassed in importance by those of its effects which are intellectual and moral. It is hardly possible to overrate the value, in the present low state of human improvement, of placing human beings in contact with persons dissimilar to themselves, and with modes of thought and action unlike those with which they are familiar….” John Stuart Mill, Principles of Political Economy, Book III, ch. XVII (Fairfield NJ: Augustus M. Kelley, 1987 {1848}), p. 581.
    
    
18. Smith defines natural liberty in the following terms: “All systems either of preference or of restraint, therefore, being thus completely taken away, the obvious and simple system of natural liberty establishes itself of its own accord. Every man, as long as he does not violate the laws of justice, is left perfectly free to pursue his own interest his own way, and to bring forth his industry and capital into competition with those of any other man, or order of men”. Smith, The Wealth of Nations, op cit., Book IV, ch. IX, p. 208.
    
    
19. Arguably, the litmus test of freedom in international transactions is non-discrimination under national laws as between own citizens and foreigners. David Henderson, “International economic integration: progress, prospects and implications”, International Affairs 68,4, 1992, p. 635.
    
    
20. Peter Bauer, “Western guilt and Third World poverty”, in From Subsistence to Exchange and Other Essays (Princeton NJ: Princeton University Press, 2000), pp. 57-59. Also see Angus Maddison, The World Economy: A Millennial Perspective (Paris: OECD Development Centre, 2001).
    
    
21. Angus Maddison, Chinese Economic Performance in the Long-Run (Paris: OECD, 1998), p. 16.
    
    
22. Zdenek Drabek and Sam Laird, “The new liberalism: trade policy developments in emerging markets”, Journal of World Trade 32,5, 1998, p. 264; J. Michael Finger and Ludger Schuknecht, “Market access advances and retreats: the Uruguay Round and beyond”, World Bank Working Paper, September 1999; Henderson, Changing Fortunes of Economic Liberalism, op cit., pp. 54-58.
    
    
23. For such a combined quantitative and qualitative assessment, see Deepak Lal and H. Myint, The Political Economy of Poverty, Equity and Growth: A Comparative Study (Oxford: Clarendon Press, 1996). Also see Jagdish Bhagwati and T.N. Srinivasan, “Outward-orientation and development: are revisionists right?”, Yale University Economic Growth Center Discussion Paper no. 806, September 17, 1999.
    
    
24. World Bank, Globalisation, Growth and Poverty: Facts, Fears and an Agenda for Action (www.worldbank.org)
    
    
25. David Dollar and Aart Kraay, “Growth is good for the poor”
    
    
26. Dan Ben-David, Håkan Nordström and L. Alan Winters, Trade, Income Disparity and Poverty, Special Study no. 5 (Geneva: WTO, 1999), p. 1.
    
    
27. World Bank, Globalisation, Growth and Poverty, op cit.
    
    
28. In favour of big-bang liberalisation, see Leczek Balcerowicz, Socialism, Capitalism, Transformation (Budapest: Central European University Press, 1995). For arguments against, see Rudiger Dornbusch, “The case for trade liberalisation in developing countries”, Journal of Economic Perspectives 6,1, Winter 1992, pp. 69-85; Dani Rodrik, “The limits of trade policy reform in developing countries”, Journal of Economic Perspectives 6,1, Winter 1992, pp. 87-105.
    
    
29. On these aspects of Hume’s and Smith’s trade theory, see my Classical Liberalism and International Economic Order, op cit., ch. 3, pp. 40-48; Hla Myint, “Adam Smith’s theory of international trade in the perspective of economic development”, Economica 44, 1977; D.K. Fieldhouse, The West and the Third World: Trade, Colonialism, Dependence and Development (London: Blackwell, 1999), pp. 21, 350-355.
    
    
30. Irving Kravis, “Trade as handmaiden of growth: similarities between the nineteenth and twentieth centuries”, Economic Journal LXXX, 1970, pp. 850-872.
    
    
31. Martin Wolf, “Growth makes the poor richer”, Financial Times, January 24th 2001.
    
    
32. The EU is a partial exception, given supranational competence in commercial relations with third countries. The EU, however, is sui generis.
    
    
33. Sally, Classical Liberalism and International Economic Order, op cit., p. 134f..
    
    
34. Razeen Sally, “Looking askance at global governance”, in Joseph Daniels, John Kirton and Andreas Freytag eds., G8 Governance in the Twenty First Century (Aldershot: Ashgate, 2001).
    
    
35. Jan Tumlir, “Need for an open multilateral trading system”, The World Economy 6,4, December 1983, p. 400; Jan Tumlir, “Evolution of the concept of international economic order, 1914-1980”, in Frances Cairncross ed., Changing Perspectives of Economic Policy: Essays in Honour of Sir Alec Cairncross (London: Methuen, 1981), p. 179.
    
    
36. On the post-war compromise between power and rules, see Jacob Viner’s superlative “Conflicts of principle in drafting a trade charter”, in his International Economics (Glencoe: The Free Press, 1951).
    
    
37. Jan Tumlir, “National sovereignty, power and interest”, Ordo 31, 1980, p. 19; “Clash of security and progress: the constitutional resolution”, Ordo 36, 1985, p. 5.
    
    
38. To Smith, justice is “but a negative virtue, and merely hinders us from hurting our neighbour”. It is also “the main pillar that upholds the whole edifice. If it is removed, the great, immense fabric of human society … must in a moment crumble into atoms”. The Theory of Moral Sentiments, Part II (Indianapolis: Liberty Fund, 1982 {1759}), pp. 82,86.
    
    
39. In Hume’s terms, “the stability of possession, its transference by consent, and the performance of promises”. A Treatise of Human Nature, Book III, Part II (Oxford: Clarendon, 1978 {1740}), pp. 520,526,567-69.
    
    
40. On general rules of conduct, see F.A. Hayek, The Constitution of Liberty (London: Routledge, 1960), pp. 19, 162f., 529; Law, Legislation and Liberty: Liberal Principles of Justice and Political Economy, vol. 2: The Mirage of Social Justice (London: Routledge, 1982), pp. 2,38,62f.. Also see Franz Böhm, “Privatrechtsgesellschaft und Marktwirtschaft”, Ordo 17, 1966.
    
    
41. Tumlir, “National sovereignty, power and interest”, op cit., p. 3; “International economic order and democratic constitutionalism”, Ordo 34, 1983, p. 72.
    
    
42. Schumpeter, History of Economic Analysis, op cit., pp. 398-406. For a comprehensive political history of British trade policy in the nineteenth century, see A.C. Howe, Free Trade and Liberal England, 1846-1946 (Oxford: Clarendon, 1998).
    
    
43. John G. Ruggie, “International regimes, transactions and change: embedded liberalism in the post-war economic order”, International Organisation 36,2, Spring 1982, pp. 203-4, 210-11.
    
    
44. Douglas A. Irwin, Against the Tide: An Intellectual History of Free Trade (Princeton NJ: Princeton University Press, 1996), ch. 12, pp. 180-188.
    
    
45. Tumlir, “International economic order and democratic constitutionalism”, op cit., pp. 80,82; Protectionism: Trade Policy in Democratic Societies (Washington DC: American Enterprise Institute, 1985), pp. 67,71.
    
    
46. Ibid..
    
    
47. Quoted in Jagdish Bhagwati, Protectionism (Cambridge MA: MIT Press, 1988), pp. 27,29.
    
    
48. Ministry of Foreign Affairs and Trade, New Zealand Trade Policy: Implementation and Directions -- A Multi-Track Approach (Wellington: MFAT, 1993).
    
    
49. On the Estonian experience, see Magnus Feldmann and Razeen Sally, “From the Soviet Union to the European Union: Estonian trade policy in the 1990s”, The World Economy 25,1, January 2002 (forthcoming). Also available as a Bank of Finland Institute for Economies in Transition Working Paper (www.bof.fi/bofit)
    
    
50. See Howe, Free Trade and Liberal England, op cit..
    
    
51. There is the theoretical possibility of (usually large) countries being able to exercise long-run market power in international demand for certain goods, thereby placing them in a position to shift the terms of trade in their favour by means of an optimal tariff. The obverse argument is that these countries should only lower tariffs if others reciprocate, in order to avoid worsening terms of trade. However, in reality very few countries have such market power under long-run conditions. In addition, retaliatory tariffs by other countries would tend to nullify terms-of-trade gains. Thus, a beautiful idea on the Olympian heights of theory (not for the first time!) turns out to have limited practical relevance. This returns policy, as a practical proposition, to a presumption in favour of unilateral free trade. On the terms of trade/reciprocity debate, see Lionel Robbins, Robert Torrens and the Evolution of Classical Economics (London: Macmillan, 1958), pp. 182-231; Irwin, Against the Tide, op cit., pp. 106-115.
    
    
52. On the unilateralism vs. reciprocity debate in classical political economy, see Sally, Classical Liberalism and International Economic Order, op cit., pp. 54-56, 94-95, 168-170, 198-199.
    
    
53. On the role of crisis in policy reform, see Stephen Haggard and John Williamson, “The political preconditions for economic reform”, in John Williamson ed., The Political Economy of Policy Reform (Washington DC: Institute for International Economics, 1995), pp. 527-596.
    
    
54. See, for example, Bernard Hoekman and Michel Kostecki, The Political Economy of the World Trading System: From GATT to WTO (Oxford: Oxford University Press, 1995), pp. 20-33.
    
    
55. C. Fred Bergsten, “Open regionalism”, The World Economy 20, 1997, pp. 545-565; Gary P. Sampson and Stephen Woolcock, Looking at Regional Agreements Afresh, Report on New/Regulatory Issues in Regional Trade Agreements, LSE International Trade Policy Unit, June 2001.
    
    
56. Jagdish Bhagwati, “Regionalism versus multilateralism” , ch.9 in his Writings on International Economics (Delhi: Oxford University Press, 1997); “US trade policy: the infatuation with free trade areas”, in The Dangerous Drift to Preferential Trade Agreements (Washington DC: American Enterprise Institute, 1995).
    
    
57. Overview of Developments in the International Trading Environment: Annual Report by the Director-General (Geneva: WTO, 2001), p. 86.
    
    
58. World Trade Organisation, Regionalism and the World Trade System (Geneva: WTO, 1995).
    
    
59. Sheila Page, “Developing countries in GATT/WTO negotiations”, ODI Working Paper, 2001
    
    
60. Pierre Sauvé and Robert Stern, “Overview”, in Sauvé and Stern eds., GATS 2000: New Directions in Services Trade Liberalisation (Washington DC: Brookings, 2000), p.7. Also see my report for the Commonwealth Business Council, Developing Countries and the Liberalisation of Services: Strategies for Market Access and Growth (London: Commonwealth Business Council, 2001).
    
    
61. Ibid.; Finger and Schuknecht, op cit..
    
    
62. On the Uruguay Round agreements and the implications of the transition from GATT to WTO, see WTO, The Legal Texts: The Results of the Uruguay Round of Multilateral Trade Negotiations (Cambridge: WTO/Cambridge University Press, 1999).; Hoekman and Kostecki, op cit.; John Croome, Reshaping the World Trading System: A History of the Uruguay Round (Geneva: WTO/Kluwer, 1999); John Jackson, The World Trade Organisation: Constitution and Jurisprudence (London: Pinter/ Royal Institute of International Affairs, 1998).
    
    
63. On TRIPS, see Hoekman and Kostecki, op cit., ch.6.
    
    
64. Finger and Schuknecht, op cit..
    
    
65.  J. Michael Finger and Philip Schuler, “Implementation of Uruguay Round commitments: the development challenge”, Paper for the WTO/World Bank Conference on Developing Countries in a Millennium Round, Geneva, 20-21st September 1999.
    
    
66. John H. Jackson, “Dispute settlement and the WTO: emerging problems”, Journal of International Economic Law 1,3, 1998, p.344; Marco C.E.J. Bronckers, “Better rules for a new millennium: a warning against undemocratic developments in the WTO”, Journal of International Economic Law 2,4, 1999, pp. 551,554,562-564; Arthur Dunkel, Peter Sutherland and Renato Ruggiero, “Joint statement on the multilateral trading system”, WTO News 1st February 2001, p.2
    
    
67. Gilbert Winham, “The World Trade Organisation: institution-building in the multilateral trading system”, The World Economy 21,3, May 1998, pp. 349-368; Debra P. Steger and Susan M. Hainsworth, “World Trade Organisation dispute settlement: the first three years”, Journal of International Economic Law 1,2, 1998, p. 209; Bronckers, op cit., pp. 554,556.
    
    
68. For a detailed assessment of the Doha outcomes, see my “Whither the WTO? Prospects for the new round”, mimeo 2002. The official texts released at the end of the Doha Ministerial are: “Ministerial Declaration”, WT/MIN(01)/DEC/W/1 14 November 2001; “Declaration on the TRIPS Agreement and Public Health”, WT/MIN(01)/DEC/W/2 14 November 2001; “Implementation-Related Issues and Concerns”, WT/MIN(01)/W/10 14 November 2001. All available at www.wto.org
    
    
69. Jagdish Bhagwati, “The demands to reduce domestic diversity among trading nations”, in Jagdish Bhagwati and Robert Hudec eds., Fair Trade and Harmonisation: Prerequisites for Free Trade? (Cambridge MA: MIT Press, 1996).
    
    
70. Tumlir, “International economic order and democratic constitutionalism”, op cit., p.82f.. Also see notes 45&46.
    
    
71. Bernard M. Hoekman and Petros C. Mavroidis, “Enforcing multilateral commitments: dispute settlement and developing countries”, World Bank/WTO Conference on Developing Countries in a Millennium Round, 20-21st September 1999, pp. 24-27; Ernst-Ulrich Petersmann, Journal of International Economic Law 1998, pp. 34-35. (need ref.).
    
    
72. Fritz Leutwiler et al, Trade Policies for a Better Future: Proposals for Action (Geneva: GATT, 1985).
    
    
73. See Hoekman and Mavroidis, op cit.; Sam Laird, “The WTO’s trade policy review mechanism – from through the looking glass”, The World Economy 22,6, 1999, pp. 741-764.

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