Vanderbilt Journal of Transnational Law

First Page



The World Trade Organization is a marvelously ambitious effort of now 140 countries to bring the rule of law to international trade. The WTO is a logical extension of the inspired ideas of the draftsmen of the General Agreement on Tariffs and Trade (GATT), who recognized at the end of World War II that the seeds of that conflagration were sown, in part, by the chaotic condition of international trade following World War I.

During that inter-war period, the United States adopted its Antidumping Act of 1921 and its Smoot-Hawley Tariff Act of 1930. Both survive to this day. By 1934, however, the Roosevelt Administration proposed reciprocal trade agreements intended to soften the impact of the barriers to our markets those laws created. The GATT was a logical extension of that concept, essentially enshrining as the two keystones of freer trade "national treatment" and "most-favored nation" commitments. Indeed, the GATT is sometimes characterized as two paragraphs--with two thousand pages of exceptions. The WTO Agreements now cover twenty-seven thousand pages.

From the beginning, the GATT addressed the settlement of disputes between trading nations. Disputes were recognized as inevitable. The GATT dispute resolution procedure was part mediation and part arbitration. It depended on the good offices of experienced representatives of unaffected members to help the disputing parties find common ground to settle their differences. Increasingly, however, particularly representatives of the United States sought a more rigorous procedure leading to a judgment that one party was right and the other one was wrong--and the latter had either to correct its ways or provide compensation to the aggrieved complainant.

Increased American attachment to this rule of law model through the 1980s prompted U.S. negotiators of the WTO agreements to seek a greatly strengthened Dispute Settlement Body (DSB). This Body maintained the previous system of panels to hear--and settle--trade disputes. In addition, an Appellate Body was to be created with semi-permanent judges to review the legal issues raised in panel reports. Moreover, and critically, the judgment of a panel was to be implemented by the affected parties unless a consensus of all the WTO's members decided it need not be adopted.