Decision-making at the WTO

5161 words (21 pages) Essay in International Law

02/02/18 International Law Reference this

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Beetham acknowledges that democratic institutions to a large extent exemplify democratic principles that require practical institutional form for their realisation. In order to determine whether the WTO is a democratic institution, we examine whether all the participants have popular control and political equality in decision-making and expound on whether the processes used are transparent, that is, are open to other entities such as NGOs. Decision-making is the most important activity in any IO since it is the process by which the individual wills of Members are coordinated in a given body of an organisation and become the will of the organisation. Ultimately whether the WTO meets the ‘democratic’ criteria requires an examination of how decisions are made and who can actually participate in the WTO.

Like most of the other powers of treaty-based institutions, the power to participate in the WTO is determined by its constituent treaty. Throughout this treaty, only Members as identified in Section One can fully participate in the WTO without restrictions. Currently, WTO membership includes 153 states while 31 governments that have applied for membership are ‘observers’ until their accession. With an almost universal membership, the WTO regulates over 95% of world trade and investment. Whether these Members act democratically in their regulation of trade remains to be determined herein; what is clear is that Members remain the only decision-makers at the WTO and as Thomas G. Weiss asserts, ‘Member states as in all other intergovernmental bodies, call the shots.’

Representation in decision-making

Issues as to how representative and transparent the WTO decision-making processes are, often arise because the powers to make decisions arguably originate from Members’ delegation of power to the WTO. It is questionable as to whether the WTO, even with its legal personality, is in practice a fully autonomous IO with a will distinct from its Members. In response one American scholar, Bacchus asserts that the WTO is only a ‘label’ that Members use to describe their shared efforts to collaborate to trade successfully. His argument is shaped by the Realist school of thought where the institution is analysed as a meeting place for states to conduct their trade affairs. States meet because they anticipate that their interests will be best served through their membership and also that the WTO will help further their own particular national objectives. This is true especially when we examine Members’ participation within the Ministerial Conference and the General Council, which are open to representatives from all Members, in order to have equality of participation and representation. This supports the above assertion that Members join to further their own national purposes since they expect to have a voice at each organ. Members send politicians, Ministers and relevant experts such as lawyers and economists to the organs because the WTO policy-making relies heavily on technical trade information and expert knowledge, a practice that excludes those that do not meet the criteria from political participation. Often policies are developed in locations or technical trade law language that removes them from the scrutiny of citizens. Without a parliament and other representative fora, that are available at a national level to offer a chance for ‘non-expert’ input, this practice is a serious hurdle to democracy at the WTO. The WTO will continue to be viewed as unrepresentative and not transparent by NGOs and individuals who might balance the diverse national interests and add value to the discussion with their additional expertise but cannot contribute to the decision-making process.

In practice, developed Member states have fully staffed diplomatic missions at the WTO headquarters while the less developed Members do not have the means to sustain such representation and usually the same person can represent their government at the different WTO bodies. This makes it hard and sometimes almost impossible for them to attend all meetings and therefore diminishes their influence on the world trade stage. Such Members may not be able to use the WTO to put across their country’s specific trade objectives. It is also argued that the WTO does not give significant weight to the problems of developing countries as evidenced from rich countries not fully opening up their markets to products from poor countries. That is why some reviewers of the WTO continue to call for increasing possible participants, for instance formally allowing NGOs to participate, although others question how NGOs can be more representative than states’ delegates and argue that opening up the WTO to NGOs would compromise the decision-making process. We examine this in detail in this Section.

The WTO continues to be publically scrutinized by scholars such as Keohane, Nye and Khor who argue that despite its outwardly democratic ways requiring equal representatives from all Members, the WTO tends to promote hegemonic western neo-liberalism. An example is the USA, a powerful western WTO Member, that is currently faced with a dilemma of using its hegemonic powers to attempt to “Americanize” the world and in our opinion it partly uses the WTO to achieve this goal. For instance, EC-Biotech case where the US successfully got a ruling that the EC was wrong to ban GMOs despite the fact that this could injure the trade between the agricultural developing countries and the EU whose agricultural products might not be bought in case they were contaminated by GMOs and if it continues down this path it could worsen the plight of the Least Developing Countries.(LDCs) But if the USA elects to join in the effort to create a more democratic WTO, it would further the effort to raise the standards of living for an overwhelming majority of the world’s citizens.

Other scholars dismiss the above criticisms as mere misconceptions since the WTO is a legitimate global entity, acquiring its legitimacy from its Members whose appointed delegates represent all their respective citizens and cannot be separated from the individual legitimacy of each Member. Notably Bacchus’ argument implies that the WTO does not have a legal will separate from its Members and is not an ‘independent international actor’ like other IOs. This argument is supported by Footer who asserts that the WTO ‘represents a single dense layer of state activity where Members operate as if taking part in a forum of States and where there is little place for the development of the organisation as a separate organisational entity.’

Arguably there is only democratic governance of the WTO to the extent that the individual states that comprise the WTO are democratic, that is to say if the states are truly able and willing to represent the will and needs of all their citizens. The paper analyses this argument further in Section 3 where it deals with ways in which the WTO can be made more democratic but at this point concludes that indeed the WTO is established as a Member dominated forum for carrying out international trade negotiations in line with Article III: 2 of the WTO Agreement. There remains an issue of internal transparency concerning the ability of smaller Members to be effective participants; that is, whether the WTO is able to provide a forum for all Members to understand each other’s intentions and where all Members have a voice. Additionally to achieve greater participation and representation, there it is debatable as to whether it is democratically necessary to give individuals opportunities to participate in WTO decision-making. This paper asserts that less developed states have less of a voice and possibly less chance of fully participating in decision-making. In case these Members are not representing the views and the interests of their people at the WTO, there is need for involving other actors such as NGOs who may act as a voice the views of affected citizens. Arguably, NGOs may also serve as a voice of people whose governments are not democratic and those who are not influential at the WTO. This issue is addressed further below following an analysis of the decision-making process at the WTO and observing Members’ participation.

The process of decision-making

Article IX of the WTO Agreement provides that the WTO Ministerial Conference and the General Council would continue to make decisions by ‘consensus’, as was previously used under the GATT 1947. Consensus is achieved if no Member present at the meeting in question formally objects to the proposed decision. The main advantage of this method is that decisions made are more acceptable to all Members; and in the past, Members have made some important agreements, for example the Agreement relating to ‘Trade and Technology, Goods and Services’ and the Agreement relating to Telecommunications. Each WTO Member has the right to attend meetings, make or withdraw proposals or legal briefs, suggest amendments and approve or oppose consensus. In principle, the WTO’s consensus procedure gives every Member country the power of veto; for example the developing countries were able to resist the inclusion of labour standards on the agenda of the 1999 ministerial summit in Seattle. Thus the principle of sovereign equality applies within a mainly consensus-making system. From this principle we infer that all Members, whether developing or not, are able to exercise popular control of the WTO decision-making and thus seem to have a voice at the WTO in answer to the issue of internal transparency raised in the previous section.

In case Members cannot reach a decision by consensus, then decision-making takes place through voting with each state having one vote, although it is rarely used. The voting powers do not depend on Members’ contributions to the WTO budget as it is with the IMF and the WB. This, prima facie, means that the organisation fulfils the criterion of political equality of the participants and that the decision-making is formally democratic. A variation to the rule of equality of voting power exists through a technique of plural voting where an international organisation is a Member of the WTO. Under Article IX (1) of the WTO Agreement, the European Communities has a special number of votes limited to the number of votes of its Member states rather than by reason of being a customs union. This is possibly because of its special status as an IO that is a founding Member of the WTO but it remains an inequitable position since there are other Members such as Chinese Taipei that are customs unions that are not treated the same. Arguably this special number of votes also reflects the weight of the ECs in international economic affairs and could be justified because each EC Member is individually responsible for observance of all WTO Agreement provisions. It is also attributed to EC Member states being represented by the ECs within the WTO, and do not therefore cast their vote separately. However for the WTO to appear more representative and transparent all other customs unions whose membership is similarly responsible ought to enjoy the same voting status. Nonetheless voting is rarely used and consensus remains the favoured practice for all decision-making at the WTO.

Problems with decision-making by consensus

Scholars including Qureishi and Jackson assert that decision-making by consensus can be as biased as weighted voting because the mood of the forum is influenced implicitly by the weight of opinions proffered by more economically dominant Members. Qureishi argues that the consensus method is like latent weighted voting which is visible where some countries that are against a particular decision might remain silent out of deference to economically influential countries with a higher stake in the outcome of a decision. Additionally Kapoor asserts that the power politics involved in WTO decision-making coupled with the lack of qualitative deliberation among WTO Members, mean that decision-making by consensus can sometime be perceived as ‘dubious’ by developing country Members especially. The diverse membership does not help matters and contributes to the organisation being described by Wolfe as “plural if not medieval,” with unsurprisingly untidy decision-making processes. In the large decision-making forum with each Member having a vote, the possibility of stalemate is quite high. An example was in Cancún, Mexico where disgruntled developing country Members unwilling to ignore the arm-twisting on development related issues by the developed country Members, walked out of the negotiations.

WTO efforts to address problems of decision-making by consensus

Due to the fact that achieving consensus among 153 Members is difficult, proposals for the creation of a smaller executive body, perhaps like a board of directors each representing different groups of countries, continue to arise regularly. These proposals are not without criticism, as it will be discussed in Section 3. Still, without a consensus of the Members about these reform proposals, the WTO decision-making process by consensus remains with its problems. In order to simplify achieving consensus, Members resort to green room meetings and form country coalitions, two informal practices that sustain consensus as a form of decision-making lacking both transparency and legitimacy. We look at these matters individually below.

Green room meetings

According to the United Nations Development Programme (UNDP), widespread concerns remain about how WTO agreements are negotiated. Major key trade negotiations leading to these agreements occur in the ‘green room,’ wherein small group meetings or caucuses are convened by the Director-General and heavily influenced by developed Members such as Canada, the European Union, Japan and the United States. Since the results of the green room meetings must be consented to by all WTO Members, the green room is not exactly totally undemocratic. However, the practice is criticised because Members do not use the prescribed legal procedures to openly delegate tasks to elected committees, and instead use informal arrangements that favour influential Members. Due to this, the WTO setup may not meet the democratic criteria because some Members lack control over the IO and are not treated equally. Additionally it contributes to the WTO being describes as one of the least transparent IOs.

Another innovation to the green room practice is the ad hoc extension to the informal meetings of a representative group called ‘mini-ministerial,’ a tactic that worked best when developing countries were content not to be bound by or to play a role in the trading system, and when Members did not see the need to be at every meeting on every issue. Where all interested Members were able to be in the room, the system worked, but when such meeting cannot be organized without excluding interested Members considering the diverse WTO membership, then it cannot work properly. As shown with the mini ministerial innovation, the technique is most controversially used at the Ministerial Conference although the Director-General continues to convene meetings of ambassadors before major meetings of the Doha Trade Negotiations Committee (TNC), as does the Chair of the General Council, to explore where consensus might be found. For example at the Sydney Mini-Ministerial the Members invited included Brazil, India, Nigeria and the USA. A result of these meetings is that decisions taken by the few selected and invited are sometimes adopted at the formal WTO meetings after being presented to the majority as a take-it-or-leave-it package. The new rules end up binding the rest of the Members under the Single Undertaking.

The Secretariat is becoming more sophisticated at knowing which representatives of groups should be invited to participate in restricted meetings, and the groups themselves are better organized. Although it is impossible for an outsider to know who attends a green room meeting, Members that attends mini-ministerial meetings are known, and the principles are presumably similar; the meetings are attended by coordinators of the regional groups and Members of the so-called ‘Quad’ (USA, European Communities, Japan, Canada) are always represented along with other leading traders. This paper contends that it is essential that the green room process is understood by everyone, especially the public who are affected by decisions that arise out of it. Failure to realise this, means that the WTO green rooms remain arguably undemocratic.

The use of such meetings to build consensus is arguably undemocratic since it is contrary to the notion of equality presented by each country having one vote and the consensus system of the WTO. Due to these exclusionary and secretive meeting practices, in the past, the public knew little about the negotiations under way at the WTO and even less about their implications. To date, the WTO has taken steps to address this issue by publishing previously restricted information. However, with regard to the green room meetings, it is hard to come up with clear solutions since Members do not complain when not consulted about a decision with which they agree, and where some are critical when a few Members in a closed room try to impose their views on everyone else. Still, many parliamentarians and politicians seem to be unaware of important WTO negotiations, even though as Members, their countries are bound to change their policies on the basis of WTO agreements. For decision-making to be fully consensual, these power politics must be eliminated from the WTO. As Footer asserts, the WTO is incapable of fulfilling a proper institutional role and becoming a pillar for global governance if its individual Members continue to shape the organisation to their own ends through a variety of informal arrangements and established practices.

Formation of country coalitions

As Wolfe states it is impossible to give all developing and least developed countries a real voice in all WTO decisions; yet it is essential that they participate in negotiations in order to understand the decisions made and the new rules do not impose conditions that they cannot meet. Clearly as Deere asserts, there cannot be effective decision-making without boosting the negotiating capacity of developing countries. To improve their participation in negotiations towards consensus and partly deal with problems of power politics, WTO Members group themselves into country coalitions. The effectiveness of these groups was obvious in Cancún, although the disparate basis of the geographic and sector coalitions made it easier to oppose than propose. After the Uruguay Round there has been a shift in North-South politics in the GATT-WTO system whereby in the past, developed and developing countries had tended to be mainly divided in opposite groups. This divide is still clear for instance in textiles and clothing, wherein developing countries have organized themselves into alliances such as the African Group and the Least-Developed Countries Group. Where developing countries do not share common interests they end up on opposite sides of negotiations leading to more country coalitions being formed although they are still able to form a single coalition on subjects of immense importance to them, such as agriculture.

All in all, developing country coalitions play a major role in addressing the capacity gap on the part of developing countries since they have improved both the technical and lobbying capacity of developing countries, act as a platform for joint-representation towards access to the consensus-building process and a strategy that increase the internal transparency of the green room. Regional groups of developing countries, and the LDC group, now coordinate among Geneva ambassadors, they have ministerial meetings, and since Cancún they are working together at ministerial level as the G-90 grouping of the African, ACP, and Least-developed countries. In spite of the reduction of the later coalitions’ market share over the last 15 years, they have secured greater institutional access and are consistently included in green room discussions.

Coalition building partly alleviates some of the ‘democracy deficit and illegitimacy’ criticisms traditionally directed at WTO negotiations, since it has contributes to greater access to decision-making processes, a vital first step to increasing the potential of all member states to influence the outcomes of future trade agreements. Since these coalitions are effective, they may improve democratic participation at the WTO in case coalition members observe democracy nationally as it will be discussed further in Section 3 when looking at the role that can be played by Members’ Parliaments.

Participation by NGOs

The term ‘NGOs’ broadly refers to non-state established voluntary, non-profit organisations that engage in governance activities as insider policy-making participants and/or outside challengers. Herein, it refers to such organisations that engage in advocacy and lobbying to reform the WTO into a democratic IO. Participation in the WTO of NGOs is examined with respect to representation and organisational transparency. International NGOs are recognised by the UN as key international players under Article 71 of the UN Charter which wording is also used in Article V: 2 of the WTO Agreement. The later Article provides that the General Council may make appropriate arrangements for consultation and cooperation with NGOs concerned with matters related to those of the WTO. This provision shows that it is not compulsory for the WTO to work with NGOs and it is totally discretionary for the Council to make such arrangements. NGOs do not participate in WTO activities except in special events such as seminars and symposiums. NGOs can only exert their influence on WTO decisions by putting pressure on their states’ governments, in an attempt to influence their decision-making as Members of the WTO, despite their (NGOs’) attempts to get more access. The WTO appears undemocratic since it does not require democratic governance within its Members as a condition of membership. In case WTO Members’ governments do not take up NGO requests, there is no way that they can get their views, and those of ordinary citizens that they represent, considered before the WTO.

Due to the above, the WTO continues to receive strong criticism particularly from environmental NGOs who argue that they possess expertise and information to bear on WTO questions.Charnovitz asserts that NGOs should be allowed to participate so as to strengthen democratic foundations of global government as the WTO operates too remotely from the public that it is ostensibly serving. This view is supported by Van Den Bossche who states that decision-making is democratic if it involves either directly or not, through representation of those that will be affected by the decisions taken. These are the ordinary citizens and it is to them that Members’ delegates are accountable to reach decisions as a result of an open and transparent exchange of rational arguments which allows those represented to ‘watch-dog’ the representatives. Scholte argues that NGOs would ‘force the WTO to explain and justify its decisions and act as channels through which marginalized stakeholders who are usually the citizens of some country Members, can voice their concerns in addition to educating these citizens about trade. According to Charnovitz, NGOs can contribute to legitimisation by fulfilling a demand for new social intermediaries mainly on behalf of developing countries that lack the technical capacity which is simply not provided elsewhere. He argues further that NGOs can make the WTO more transparent and open to the public. These measures are examined in the next section when we analyse proposals for democratising the WTO.

On the other hand when NGOs are compared to IOs, it is clear that IOs enjoy a more favourable status at the WTO as prescribed under Article V: 1 of the WTO Agreement. The WTO is required to cooperate with the IMF and the WB in order to facilitate greater coherence in global economic policy-making, and has granted the two and other IOs interested in trade, observer status at the WTO to enable them to follow discussions. These I.Os as observers do not participate directly in the WTO deliberations but are able to contribute to the WTO discussions towards decision-making. Since these IOs also serve as forums for states, it is easier for them to be accepted as observers unlike NGOs which states working under their IOs are reluctant to open up to, because they perceive NGOs as unelected and illegitimate. This is discussed further in Section 3 with regard to the WTO.

Arguably NGOs ought to be treated like the IOs above and given a better standing at the WTO because they may act as citizens’ link in the ‘legitimacy chain’ to WTO national representatives. It remains to be seen how much more the WTO can and will do to extend participation to NGOs. As Marks points out efforts should be made to democratize the processes of transnational and global decision-making, since this will make national states democratic. It is important that NGOs are given more access to the WTO as this will assist in making it more representative and transparent. This paper agrees with most authors of the vast literature that supports the idea that NGOs can boost the WTO’s legitimacy and alleviate its democratic deficits.

Conclusion

On first examination the WTO appears to be functioning democratically especially with regard to the equality criterion but in other areas some of its Members are not able to control the WTO or cannot be said to have political control during their participation in decision-making as evident from the Least Developed Countries. From the weaknesses identified in the decision-making process, it is clear that the WTO has to improve in certain areas especially making sure that all Members can equally participate and that the civil society is given a better standing, notwithstanding the fact that they are not Members. In the next Section we critically examine the reform proposals that can improve democratic representation and participation in the WTO.

Reform proposals for a more democratic WTO

As shown from the discussion above, the WTO does not provide for sufficient levels of participation and transparency that are essential for a totally democratic IO. Arguably there is need for a number of tangible, procedural reforms in order to create a democratic WTO with transparent decision-making procedures and easily accessible to NGOs. Aware of being perceived as undemocratic and illegitimate, the WTO altered the actual practices of consensus building resorting more to country coalitions playing a role as joint-representative platforms for the concerned Members in decision-making processes. The WTO cannot act without the consensus of all its Members towards reform of the green room meeting practice and new rules governing the criteria of who participates in such meetings. Members are aware of the need to reform the WTO, stressing the need for greater procedural transparency, inclusiveness of Members irrespective of their levels of development in the Geneva process and at Ministerial conferences. In view of the possible role that can be played by non-state actors including NGOs, this paper proposes that WTO operations be reformed just like the GATT was, in order to carter for the realities of today’s increasingly democratised world.

In order to be more democratic, the WTO needs to improve its internal transparency to match the transparent reporting rules that its Members are obliged to observe when implementing WTO policies. Notably the WTO treaty does not impose similar democratic requirements of transparency on the Organisation nor grant individuals a right to information save for Annex 3 of the Understanding on the Rules and Procedures Governing the Settlement of Disputes which obliges a Member upon the request of another Member to provide a non confidential summary of its submissions that could be disclosed to the public. This paper notes that since most Members do not abide by some existing WTO rules on reporting, it would be surprising for them when meeting under their creation (the WTO), to oblige them be bound to act transparently internationally when they neglect doing so at a national level.

It is clear that the WTO is faced with most of the problems previously faced by the GATT for instance ensuring that all Members particularly the Least Developing Countries can participate efficiently and secondly, that it engages more with NGOs who could arguably represent disadvantaged population in certain Member states, and also act as checks for transparency at the WTO. As Bacchus asserts more can and should be done to improve on the democratic governance of the WTO, especially in how Members build consensus. In that respect, WTO Members have taken greater efforts to make the consensus building processes more transparent by means of better notification to all Members about informal consultation processes and by affording the public greater access to the published results of decision-making. This is a commendable move towards increasing democracy at the WTO since all Members need information about ongoing consultations so that they decide whether to participate.

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Several authors have proposed ways in which the WTO can be made more democratic and this paper briefly highlights them as follows. Atik proposes requiring democratic practice within states as a condition of WTO membership, introducing a WTO parliament, and creating a new law-making body removed from the negotiating rounds. While Charnovitz canvasses various ‘cosmopolitic’ strategies including giving NGOs a chance to speak for themselves at the WTO, greater transparency and publicity, and parliamentary participation. Sutherland chaired a Consultative Board charged with examining the future of the WTO in terms of its institutional challenges, released the Sutherland Report which recommended the creation of an executive body in the form of a ‘senior level consultative body’ along the lines of the Consultative Group of Eighteen (CG18)-which wound up in 1990 in the GATT, but without any executive or negotiating powers and it is difficult to see how this could bring any changes in the current situation with respect to the executive function.

Herein we expound on two proposals from those suggested above that may arguably make the WTO more transparent and representative. As Stein asserts the participation of citizens in the WTO is probably one of the basic rights protected by general international law under Article 25 of the International Covenant on Civil and Political Rights which guarantees the right to participation in public affairs. Thus the methods we look at revolve around involving national citizens either through their Parliaments or through NGOs that were presented earlier as being the voices of those citizens whose views are not put across by their governments at the WTO. It is noted that most of the Members are mainly concerned with building the capacity of the Least Developed and Developing Countries that are not yet able to put across their views and not the participation of non-members such as NGOs, although the later could arguably boost those Members’ capacities. The proposals considered herein include: firstly, using Members’ Parliaments and secondly, closer monitoring and supervision of its activities through increased NGO participation. The paper analyses these two possible reform proposals in detail in order to determine whether they could make the WTO more democratic WTO in this section.

Parliamentary Dialogue

That the WTO may arguably become more democratic when political influence within the processes of decision-making is equally accessible to affected parties, and not only restricted to states that use it mainly as a forum for trade regulation.

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