1. Introduction
International law and the institutions constituted to reap the benefits of international cooperation affect almost all aspects of our lives: the products we consume, the sustainability of our environment, and our ability to enjoy basic human rights. The increased role played by international law and its institutions has generated, in turn, a growing academic interest in questions about the effectiveness of these social constructs and the assessment of their actual performance.
Prominent in this evolving body of research, primarily among jurists, has been the tendency to approach the effectiveness of international law, and international courts in particular, through the prism of compliance with international norms and decisions (see Martin, Reference Martin, Dunoff and Pollack2013; Howse and Teitel, Reference Howse and Teitel2010; Shany, Reference Shany2014: 4–5; Shany, Reference Shany, Crawford and Nouen2012b: 227; Hafner-Burton et al., Reference Hafner-Burton2012: 93). This focus has been especially conspicuous in the literature on the effectiveness of the World Trade Organization (WTO) dispute settlement system (DSS), as it edged away from its diplomatic orientation under GATT toward a more legalized one with the formation of the WTO. Thus, the effectiveness of the WTO DSS has often been assessed against the benchmark of WTO Member compliance with DSS rulings (see, e.g., Wilson, Reference Wilson2007; McRae, Reference McRae2008; Davey, Reference Davey2005; Horlick and Coleman, Reference Horlick, Coleman, Janow, Donaldson and Yanovich2008; Lee, Reference Lee2011; Davey, Reference Davey2009; Epstein et al., Reference Epstein, O'Halloran, Widsten, Beladi and Choi2009; Varella, Reference Varella2009; Posner and Yoo, Reference Posner and Yoo2005: 46–50), understood as ‘a causal relationship between judicial decisions and state practice, leading to a convergence of the two’ (Shany, Reference Shany2012a: 261).
This focus on compliance surely makes sense when dealing with international adjudicating institutions like the WTO DSS. Compliance constitutes a central goal of international courts, and embodies the aspiration of lawyers operating in the anarchic international legal system ‘to bolster the international rule of law’ (Cogan, Reference Cogan2006: 191) and foster the ‘international culture of compliance’ (Henkin, Reference Henkin1995: 45). Furthermore, focusing on unchanging, one-dimensional benchmarks such as judgment compliance, simplifies effectiveness studies of complex institutions like the WTO DSS, rendering them more manageable and measureable (Martin, Reference Martin, Dunoff and Pollack2013: 591).
Despite their intellectual and practical appeal, however, effectiveness models focusing on the fixed benchmark of compliance are not satisfying.Footnote 1 This is not because of what they reveal about the DSS, which enjoys relatively high judgment compliance rates,Footnote 2 but because of the many things they leave out. First, common approaches gauging the DSS effectiveness through the limited lens of compliance rule out consideration of the broader fabric of multiple organizational goals that WTO Members expect the DSS to achieve, of which compliance is not the most prominent. Second, existing approaches disregard the complex interrelations and conflicts between the DSS multiple goals, and the trade-offs such conflicts impose on the outcomes produced by the system. Finally, current effectiveness models are static in nature, predicated on the supposedly unchanging character of DSS goals and the constant supremacy of the compliance objective. Such models thus overlook important shifts in emphasis amidst the multiple goals of the DSS, which take place over time or across different types of WTO disputes, and the consequent effect of such shifts on the analysis of the DSS effectiveness.
The need arises, therefore, for a more comprehensive, dynamic, and nuanced analytical framework for studying the effectiveness of the WTO DSS. Building on the goal-based approach developed in the social sciences, this article plants the seeds for such a framework, conceptualizing the DSS effectiveness as the extent to which it achieves the goals set for it by the WTO and its Members.
Such a goal-based approach not only brings to the fore the manifold organizational goals of the WTO DSS, beyond compliance; it also enables us to probe the real-life intricacies underlying the system's operation, and consequently its effectiveness, as they derive from the multiple and conflicting nature of its objectives.
Furthermore, the goal-based approach provides a fertile framework for generating new hypotheses about the DSS goals and their operationalization in the real world, with important descriptive and normative implications for the study of the work and effectiveness of the system. One such novel hypothesis is goal-shifting, according to which the goals of the DSS change with time and context. Thus, contrary to existing studies, which perceive DSS goals as static elements, we conceive these goals as dynamic in at least two senses. First, DSS goals, or their relative weight, shift vertically, along the various stages of the dispute settlement process or along the system's life. Second, the DSS goals also shift horizontally, across disputes, due to the distinct challenges facing the system in different types of cases reaching its docket.
This goal-shifting phenomenon fundamentally challenges the convention that regards compliance as the key objective to be achieved by the DSS over time and across disputes, and consequently as the primary measure of its effectiveness. By framing, instead, the DSS goals as complex, non-binary constructs that change with shifts in the modalities in which the system operates, the goal-shifting concept significantly expands the existing discourse on the DSS and its effectiveness, showing how perceiving its goals and operation in static terms can lead to an imprecise understanding of its performance and outcomes.
In developing this goal-shifting concept and the broader DSS goal-based effectiveness framework of which it is part, the article proceeds as follows. Section 2 draws on the social science literature on organization theory to sketch the conceptual contours of the DSS goal-based effectiveness framework, and addresses the notions of goal-multiplicity, goal-conflict, and goal-shifting, which constitute its theoretical underpinnings. Section 3 then lays the substantive foundations of the DSS effectiveness scheme in the form of the multiple, complementing, and conflicting goals entrusted to the DSS by WTO Members. Thereafter, Section 4 explores the shifting nature of DSS goals and probes their inner conflicts on the ground. It does so by focusing on ‘horizontal goal-shifting’, and by means of an interview-based analysis of two categories of WTO disputes shows how the unique challenges facing the DSS in each dispute category generate shifts in the emphases placed on its various goals, as well as conflicts and trade-offs between them. Section 5 concludes.
Note that the article does not examine de facto the effectiveness of the WTO DSS. Rather, it lays down a broad conceptual framework and benchmarks that can guide future, more methodical and robust research on the effectiveness of the DSS or specific aspects thereof.
2. Toward a goal-based approach for analyzing the effectiveness of the WTO DSS: theoretical underpinnings
2.1 Re-conceptualizing the DSS effectiveness: the goal-based approach
While a broad methodical framework for analyzing the effectiveness of the WTO DSS is missing from current debates, foundations for such a framework may be traced in the social sciences, where questions on organizational effectiveness have long been the subject of academic inquiry. Under the dominant model in the field, known as the goal-based approach,Footnote 3 effectiveness is defined as the extent to which an organization attains its goals (Scott, Reference Scott2003: 351‒352; Etzioni, Reference Etzioni1964: 8); namely, the desired outcomes it is expected to generate in the eyes of relevant constituencies (Scott, Reference Scott2003: 22; Etzioni, Reference Etzioni1964: 6; Rainey, Reference Rainey2014: 150). Following this definition, the effectiveness of the WTO DSS is conceptualized herein as the degree to which it attains the goals set for it by one dominant group of constituencies, the mandate providers, i.e., the international organization and Member states that fund, monitor, and use the DSS.Footnote 4
This goal-based definition seems most suitable for evaluating the effectiveness of international courts such as the WTO DSS (Shany, Reference Shany2014: 6‒8, 13‒16). First, like other international institutions, the DSS is a social structure created by states ‘to support the collaborative pursuit of specified goals' (Scott and Davis, Reference Scott. and Davis2007: 11), such as solving coordination problems or generating certain collective goods. Second, the organizational goals underlying the DSS represent central concepts for its institutional analysis (Zald, Reference Zald1963: 207). They demarcate the legitimate domain in which it may operate, affect its distribution of resources, and serve as guidelines for behavior, providing criteria for selecting from alternative actions and policy choices (Scott and Davis, Reference Scott. and Davis2007: 36). By focusing on the concept of organizational goals, the goal-based model thus goes beyond formal rules when addressing the effectiveness of the DSS, looking more critically at how the system actually operates. Third, the goal-based approach offers a comprehensive, institution-specific, normative benchmark for performance evaluation in the form of goal-attainment.Footnote 5 Finally, by broadly conceptualizing effectiveness, the goal-based approach urges us not only to examine the DSS effectiveness against its goals as a whole, but also to uncover the real-life intricacies underlying the DSS operation and effectiveness, as these arise from the reality of goal-multiplicity, goal-conflict, and goal-shifting characterizing this system.
2.2 Goal-multiplicity, goal-conflict, and goal-shifting
The goal-based model offers a comprehensive and straightforward conceptualization of organizational effectiveness. Yet it also brings to the fore several complexities inherent in the goals of most organizations, with important implications for institutional performance and the analysis of effectiveness.
Goal-multiplicity and goal-conflict
Organizations are complex and heterogeneous social constructs, serving numerous constituencies, who often set multiple and competing demands on them (Tolbert and Hall, Reference Tolbert and Hall2009: 186–187; Connolly et al., Reference Connolly, Conlon and Deutsch1980: 216). As a result, ‘organizations have many goals, which vary along many dimensions and often conflicting with one another’ (Rainey, Reference Rainey2014: 155; Tolbert and Hall, Reference Tolbert and Hall2009: 187). The multiple and conflicting nature of organizational goals underscores the many dimensions against which organizational effectiveness may (and ought to) be measured. It also exposes the constraints placed on the effectiveness of organizations, as in a world of multiple and competing institutional goals organizations are often required to trade off one goal against another.
Like other institutions, the DSS ‒ a quasi-judicial system nested within the complex WTO edifice and subject to the expectations of many constituencies ‒ is a system of multiple complementing and conflicting goals. These goals, as Section 3 shows, consist of certain ‘ultimate ends’ – overarching general goals the DSS ought to achieve in the long run – alongside several more specific, ‘intermediate goals’, instrumental to achieving its long-term objectives.Footnote 6 Some of these goals are explicitly stipulated in the DSS constitutive instrument, the Dispute Settlement Understanding (DSU),Footnote 7 while others are implicit in the DSU or unstated.Footnote 8 Unstated goals, as seen below, are no less vital for the functioning and effectiveness analysis of the DSS, as they often reflect constituencies’ beliefs in inherent goals that are pivotal to the system operation (such as conferring legitimacy on the regime in which the DSS is embedded or legitimizing the authority of the DSS itself) (Shany, Reference Shany2014: 19).
Goal-shifting
Related to the concepts of goal-multiplicity and goal-conflict, yet separate, is goal-shifting. As noted by Thompson and McEwen, in many analyses of organizational goals and performance, ‘the goals of the organization are often viewed as a constant’ (Thompson and McEwen, Reference Thompson and McEwen1958: 23). Yet goals define the desired relationship between an organization and its environment. Changes that occur in the organization, its environment, or both may also generate shifts in the goals the organization pursues, their scope, and application (ibid.; Tolbert and Hall, Reference Tolbert and Hall2009: 189‒190). Hence, Thompson and McEwen suggested, organizational goals should not be viewed as static elements, but rather as dynamic constructs (Thompson and McEwen, Reference Thompson and McEwen1958: 23).
Following this line of thought and unlike effectiveness studies, including on the DSS, which employ a static approach to organizational performance and regard goals as constant variables, this article views the DSS goals as dynamic concepts that change along two axes: vertical and horizontal.
First, the goals pursued by the DSS or their relative weight shift vertically, along the various stages of the dispute settlement process (i.e., the consultation stage, the panel proceedings, the Appellate Body (AB) process, and the implementation stage),Footnote 9 because of the distinct attributes pertaining to each stage of the process.Footnote 10 The DSS goals or their relative weight may also shift vertically throughout the system's life, as societal changes within the system and its surroundings may affect its goals and functions. Such changes may occur gradually and informally, depending on changing needs, circumstances, and goal-priorities of stakeholders, and may therefore not always be reflected in modifications to the formal DSS mandate.
Alongside these vertical goal-shifting instances, the goals of the DSS, or the relative weight ascribed to them, also shift horizontally, across different types of WTO disputes. Such horizontal goal-shifting may result from various factors, including the subject matter of the dispute, WTO obligations involved, social values at stake, or the systemic challenges facing the WTO and its DSS. Hence, while in all WTO disputes the DSS is expected to achieve a broad set of goals, the diverse features and challenges associated with different categories of disputes reaching its docket shift the emphasis placed on these goals in the move from one dispute category to the other. This horizontal goal-shifting phenomenon is illustrated in Section 4 in a comparative analysis of two categories of WTO disputes.
Taken together, vertical and horizontal goal-shifting have important ramifications for the study of the goals, operation, and effectiveness of the DSS. First, they challenge the common view of the DSS goals as static elements, suggesting instead that these goals, including the compliance objective, are embedded in dynamic and discursive practices of changing audiences, interests, and pressures, which regularly cause the relative prominence of the DSS objectives to shift. Second, these goal-shifting notions further imply that prevalent static effectiveness studies, based on the premise of compliance being the fixed primary goal sought by the DSS, may fall short of capturing its actual goal-attainment patterns, and consequently the diverse outcomes it produces.
Taken as a whole, the goal-shifting concept and the goal-based effectiveness model of which it is part provide the groundwork for a more rigorous and dynamic conceptual framework for analyzing the operation and effectiveness of the WTO DSS. Below we lay down the substantive criteria against which the DSS effectiveness is to be measured, in the form of the goals set for the system by its mandate providers. To operationalize this goal-based effectiveness framework, these institutional goals should be translated into suitable effectiveness indicators that measure the actual performance of the DSS in attaining these objectives.Footnote 11
3. The substantive foundations of the DSS goal-based effectiveness framework: the multiple, complementing, and conflicting DSS goals
With the transition from GATT to WTO, in 1995, and the introduction of a reformed DSS to the multilateral trade system (entrusted with compulsory jurisdiction, standing appellate instance, and extended implementation procedures), a clearer statement of the WTO DSS goals was incorporated in Article 3 of the DSU. Examination of this provision and other sources such as the DSU negotiating history, DSS rulings, and interviews with WTO practitioners, reveals the DSS complex matrix of ultimate ends and intermediate goals, which complement and at times contradict one another.Footnote 12 Such goal-conflicts stem largely from the hybrid nature of the DSS, which, alongside new elements of legal adjudication, preserves ‘traditional’ GATT elements of trade diplomacy (e.g., mandatory consultations and an explicit preference for mutually agreed solutions) (Weiler, Reference Weiler2002).
3.1 The WTO DSS ultimate ends
Providing security and predictability to the multilateral trading system
The first ultimate end of the DSS, explicitly enshrined in DSU Article 3.2, is to provide security and predictability to the multilateral trading system. Such conditions are vital to the efficient conduct of governments that make up the multilateral trade system. Yet, since this system consists not only of states but also, indeed, mostly of individual economic operators (producers, importers, and exporters), it was important for the WTO founders to foster, through the DSS, secure and predictable market conditions that are conducive also to individual economic activity in national and global marketplaces.Footnote 13 The DSS was intended to advance these vital conditions by achieving several concrete intermediate goals, including the clear and coherent interpretation of WTO law, the inducement of compliance with WTO rules, and the prevention of unilateral actions that could be harmful to the security of the system, as suggested by the history of GATT.
Maintaining/reestablishing the balance of benefits between WTO members
The principal goal of the GATT DSS was ‘to provide for an orderly process for maintaining or restoring the balance of concessions between GATT contracting parties’ (Stewart, Reference Stewart1993: 2669). This goal fits well the diplomatic-oriented approach to dispute settlement under GATT, which sought to achieve a balanced accommodation of states reciprocal trade concessions rather than adherence to agreed rules (Weiss, Reference Weiss and Weiss2000: 21). Although the WTO DSS mandate providers created a more rule-oriented system, ‘[m]embership in the WTO, as was the case with GATT, is not a matter simply of adhering to a set of legal rules’ (Palmeter and Alexandrov, Reference Palmeter, Alexandrov, Kennedy and Southwick2002: 654). The WTO is also reciprocity-based, founded on a delicate negotiated balance of rights and obligations specified in WTO agreements, as well as of additional trade concessions exchanged between WTO Members (Pauwelyn, Reference Pauwelyn2000: 339). One of the ultimate ends of the WTO DSS is to maintain that balance of trade benefits and restore it whenever a scofflaw Member upsets it (Linarelli, Reference Linarelli2000: 348; Ludema, Reference Ludema2001: 357). This rebalancing goal is explicit in DSU Article 3.3, stating that the settlement of disputes is essential for the ‘maintenance of a proper balance between the rights and obligations of Members’, and echoed in the remedies of compensation and suspension of equivalent concessions provided in DSU Article 22. Yet, the rebalancing objective is not always compatible with other DSS goals, particularly securing compliance and legal predictability, because under the current system, the negotiated balance of benefits may not necessarily be restored by withdrawing the WTO-inconsistent measure, but rather through bilateral recalibration of the bargain between the disputing parties in a settlement that effectively tolerates ongoing WTO violations (Tallberg and Smith, Reference Tallberg and Smith2014: 126). In some cases, however, as Section 4 shows, it is the ability of the DSS to preserve a pre-existing equilibrium through a rebalancing act that protects the long-term economic, political, and legal security of the WTO regime by introducing a contractual flexibility mechanism in times of political pressures (Rosendorff, Reference Rosendorff2005: 389–90).
Sustaining the operation of the WTO and the realization of its goals (regime support)
Like other regime courts, the DSS was created in part to ‘enhance the success and effectiveness’ of the WTO regime in which it is embedded (Kingsbury, Reference Kingsbury, Crawford and Koskenniemi2012: 218), to sustain its operation and the realization of its goals,Footnote 14 among them promoting global welfare and development through trade liberalization, and ‘deeper objectives … such as establishing stability and peaceful economic relations’ (Weiler, Reference Weiler2002: 181). Upholding the WTO regime, as DSU Articles 3.3 and 3.7 imply, is to be achieved, inter alia, by facilitating the prompt settlement of disputes, where possible through mutually agreed solutions, and by containing ongoing conflicts, diffusing their political aspects, and preventing across-the-board deterioration through unilateral actions.Footnote 15 Additionally, the ‘regime support’ goal of the DSS is to be achieved through the enforcement of WTO rules, embodying the goals of the multilateral system, and through the clarification of WTO agreements in light of unforeseen circumstances, so as to ensure the adaptability of the WTO regime and its viability over time.Footnote 16
Legitimizing the operation of the WTO and its underlying norms
The WTO is a global governance institution that must possess legitimacy in the eyes of multiple constituencies – e.g., WTO Members, civil society, and economic operators – in order to thrive and provide the valuable goods of international cooperation (Buchanan and Keohane, Reference Buchanan and Keohane2006). Like other courts holding a ‘legitimacy-conferring’ capacity (Gibson and Caldeira, Reference Gibson and Caldeira1995: 466), the DSS plays a pivotal role in enhancing the legitimacy (i.e., social acceptance) of the WTO and its underlying norms among such constituencies (cf. Shany, Reference Shany2014: 44–46; von Bogdandy and Venzke, Reference von Bogdandy and Venzke2013: 59). It does so mainly by providing a forum for third-party dispute resolution based on law and reason, and by offering procedures for clarifying WTO norms and producing coherent legal interpretations that may bolster the ‘compliance-pull’ of the norms (Franck, Reference Franck1990: 49–66, 142, 147–48). Although the ultimate end of legitimizing the WTO is unstated in the constituting DSS instrument, it seems to represent a basic reason for introducing the DSS into the WTO setting in the first place. As Cameron and Gray note, ‘[i]nstalling an equitable dispute settlement resolution mechanism within the trading regime entrenches the legitimacy of the regime itself and provides a better incentive to comply with international trading obligations’ (Cameron and Gray, Reference Cameron and Gray2001: 249).
3.2 The WTO DSS intermediate goals
Alongside the above-mentioned ultimate ends, the DSS is expected to promote various intermediate goals, conducive to attaining its open-ended objectives. First, is the explicit goal of inducing compliance with WTO rules,Footnote 17 to be realized by the DSS by allocating reputational and economic costs in instances of non-compliance (Guzman, Reference Guzman2008: 181, 225–227), and by strengthening the compliance-pull of WTO norms through legal interpretations (Franck, Reference Franck1990: 49–66). This often-cited goal is vital to promoting the predictability and legitimacy of the WTO regime. At the same time, ‘there is an inherent conflict between the desire to maintain rule integrity and the desire to facilitate the resolution of disputes’ (Horn and Mavroidis (Reference Horn, Mavroidis, Guzman and Sykes2007: 188), the traditional goal underlying the DSS and international adjudication more broadly.
Thus, Article 3.7 of the DSU mandates that the aim of the DSS ‘is to secure a positive solution to a dispute’. It then adds that ‘[a] solution mutually acceptable to the parties … is … to be preferred’, elucidating that a critical aspect of the DSS dispute settlement goal is encouraging negotiated settlements in the ‘shadow of the law’ (before or after litigation), alongside third-party adjudication. While the peaceful settlement of disputes, as DSU Article 3.3 indicates, ‘is essential to the effective functioning of the WTO and the maintenance of a proper balance between the rights and obligations of Members’, it may impinge on other DSS goals. Particularly, the desire to foster mutually acceptable solutions might lead to greater flexibility in outcomes that moves away from strict compliance with WTO rules. Similarly, as such solutions may take place even before a DSS ruling has been published, they may come at the expense of clarifying the law for the benefit of the entire WTO Membership.
Like other treaties, WTO agreements are incomplete contracts, making conflicting interpretations of WTO rules inevitable. Clarifying these rules and removing ambiguities from the agreements constitute therefore another goal of the DSS. This goal, explicitly embraced in DSU Article 3.2, is conducive to the settlement of bilateral disputes between Members and to promoting the security and predictability of the multilateral trade regime. Yet, the clarification of the law through elaborate, well-reasoned rulings may not always coincide with other DSS objectives, most notably the prompt settlement of disputesFootnote 18 – a goal prescribed in DSU Article 3.3.
The intermediate goals of the DSS also include the following objectives: leveling the playing field between WTO Members (unstated in the DSU but prominent in the Uruguay Round negotiating history and the views of academics and practitioners);Footnote 19 discouraging unilateralism (Keisuke, Reference Keisuke2004: 215) (implicit in DSU Article 23 and representing the ‘trade-off’ struck in the Uruguay Round between the US demand for a strengthened DSS and the desire of other states to curtail US power to use unilateral measures); and, finally, the goal of legitimizing the DSS itself, an unstated but intrinsic objective, essential for sustaining the DSS authority and for accomplishing the many goals delineated above.Footnote 20
Together, these goals constitute the entire corpus of missions entrusted with the DSS by WTO Members. This multiple-goal account highlights the many dimensions of the DSS operation, and consequently the need for a broad framework for analyzing its effectiveness, which goes beyond compliance and factors in its various complementary and conflicting objectives. Below, we complete this account by adding the last piece of the puzzle, concerning the shifting nature of the DSS goals.
4. Goal-shifting: a tale of two categories of WTO disputes
More than 500 complaints have been filed with the DSS since its establishment in 1995. These disputes share many commonalities: all involve competing trade-related interests, all are political in some sense (fought between states), and all have been addressed under the DSU, with reference to the WTO agreements. But in contrast to the tendency in writings about the DSS and its effectiveness to treat all WTO disputes as a monolithic unit, in which the key objective sought is compliance, these disputes should not be viewed as a monolithic phenomenon. WTO disputes differ and may be classified in different ways.
Thus, within the DSS caseload we find a growing number of disputes, referred to as ‘trade-and’ disputes, which involve national policies in areas such as health and environment, and invoke the persisting friction between trade liberalization and ‘non-trade’ societal values. Other disputes reflect the tension between the WTO and proliferating regional trade arrangements. The DSS caseload also includes several perennial conflicts between major economic powers, particularly transatlantic disputes with systemic implications for the stability of the cooperative WTO regime. Finally, the north‒south divide is also felt in the DSS arena, asking it ‘to apply law and technicalities to a tremendously charged social‒political relationship, as it has in the other fields of tension’ (Broude, Reference Broude2004: 27–28).
Despite their commonalities, then, these and other types of WTO disputes have different characteristics, confronting the DSS with distinct legal, political, and institutional challenges. These challenges, as the horizontal goal-shifting concept suggests, shift the relative weight ascribed to the multiple goals pursued by the DSS, including its compliance objective, and trigger the conflicts latent among them. Such goal-shifting tendencies, overlooked in existing literature, are therefore crucial for understanding the DSS operation and for critically analyzing its effectiveness and outcomes.
Taking a case study approach, below we explore this horizontal goal-shifting phenomenon while looking at two of the dispute categories mentioned above, ‘trade-and’ and ‘perennial’ disputes. As these dispute categories present the WTO and its DSS with different sets of problems and pressures, their investigation provides the variation needed by the study to examine whether the relative weight ascribed to the various DSS goals indeed changes across WTO disputes, depending on their type and features.Footnote 21 The choice of the two categories of disputes was also guided by their relevance to our research objective.Footnote 22 As seen below, each category challenges in certain ways the convention that perceives compliance with WTO rules and decisions as the primary desired end of the DSS, and thus as the key outcome variable by which its effectiveness should be measured. Finally, each category touches upon central institutional, political, and legal issues concerning the DSS and the WTO operation nowadays, thereby offering a useful perspective of the ties between the DSS and its institutional environment, and of the manner in which the latter shapes the DSS goal-attainment efforts and instigates conflicts between its multiple goals.
We analyze two WTO cases in each category of disputes. In trade-and disputes, we analyze the US–Shrimp Footnote 23 and US–Clove Cigarettes Footnote 24 cases, and in the perennial disputes category, the EC–Hormones Footnote 25 and EC–Bananas Footnote 26 conflicts.
The research design implemented herein – consisting of both within-case analyses and cross-case comparisons (across each pair of disputes, and across the two dispute categories considered) – may enhance our ability to draw inferences from the research.Footnote 27 First, within-case analyses of two trade-and disputes, for example, allow making cross-case comparisons and examining whether similar goal-attainment patterns are manifested in both disputes. Common patterns, if observed in both cases, may produce more compelling evidence and improve our ability to make broader claims on the DSS goal-attainment patterns in the dispute category to which the case studies belong.Footnote 28 Second, juxtaposing the two categories of trade-and and perennial disputes, in turn, makes possible comparisons between different types of WTO cases and helps identify variations in the DSS goal-attainment efforts. Comparisons across distinct dispute categories that reveal diverse goal-attainment patterns may enable us to draw wider inferences, beyond the categories investigated here, about the DSS operation and the way in which its goals shift in the move from one dispute category to another.
In each class of disputes examined below, the discussion first addresses the distinctive features and challenges pertaining to this category. Thereafter, the unique goal-attainment patterns to which these challenges give rise and the conflicts they spark within the DSS goals are described, as they have emerged from a broad qualitative empirical research conducted by the author elsewhere (Shlomo-Agon, Reference Shlomo-Agon2013). The research consists of about 40 semi-structured interviews with WTO practitioners with first-hand knowledge of the four case studies examined,Footnote 29 including Appellate Body (AB) members, panelists, WTO Secretariat staff members, WTO ambassadors, legal counsel in trade delegations, and private attorneys.Footnote 30 The interviews were conducted between March and September 2012 and lasted an average of one hour. Among other things, the interviews served to illuminate the challenges facing the DSS in the dispute categories investigated, and provided a revealing insider's perspective on how such challenges are experienced from within and subsequently shape the DSS goal-attainment patterns and judicial choices. Likewise, the interviews helped explore the diverse outcomes generated by the DSS and the manner in which these outcomes are interpreted by participants and immediate onlookers. Unlike most legal writing about the DSS, the interviews have thus enabled this research to supplement the analysis of relevant legal instruments, rulings, and secondary materials with important knowledge about WTO dispute settlement as it is experienced and practiced in the real world.
4.1 Trade-and disputes
Main features and underlying challenges
The extended reach of the multilateral trade regime in the post-Uruguay Round era, and its influence on non-trade policy domains provoked strong public criticism against the WTO soon after its establishment in 1995, portraying it ‘as a ruthless vehicle of economic globalization, oblivious … of other values … of the international community’ (Abi-Saab, Reference Abi-Saab2010: 14). Such criticism was a primary source of what by the turn of the millennium came to be known as the WTO legitimacy crisis (Esty, Reference Esty2002). The WTO judicial arm could not have escaped this source of tension. Indeed, it found itself at the forefront of the thorny trade-and debate, as cases involving non-trade values repeatedly reached its docket (Kulovesi, Reference Kulovesi2011: 5, 59; Broude, Reference Broude2004: 27), from the early days of US–Gasoline,Footnote 31 US–Shrimp, and EC–Asbestos,Footnote 32 to the present era of US–Clove Cigarettes, EC–Seal Products,Footnote 33 and Australia–Plain Packaging.Footnote 34
Such trade-and disputes raise unique challenges before the DSS, a mandatory adjudication system nested within the multilateral trade regime and granted a limited mandate to decide disputes based on WTO agreements. Among other challenges, trade-and disputes invite international scrutiny of acts of sovereign states in policy areas traditionally left for national regulation, and where countries often differ substantially. Also, these cases require the DSS to engage in delicate balancing of competing values, while facing the expectations of diverse audiences in and outside the multilateral trade arena. Finally, trade-and disputes raise sensitive questions of allocation of authority at the global level, as the linkage problems they address are often located at the seam line between the WTO and other international legal regimes.Footnote 35
For these and other reasons, trade-and disputes have been continuously challenging both the internal legitimacy of the WTO and its DSS among Member states, and their external legitimacy among stakeholders such as NGOs, domestic interest groups, the general public, and other international institutions. With the intensification of certain trade-and problems (e.g., climate change) and the low prospects that legislative solutions will materialize through the WTO political arm, the flow of trade-and disputes is expected to persist, fueling further challenges to the legitimacy of the WTO and its DSS. As a WTO practitioner put it:
[W]e are moving into a phase … where the Appellate Body has to face nontrade concerns that impact on trade, and it's more and more the case … [Those disputes] move to the forefront of WTO litigation, and maybe for a while the WTO was hoping that this would go away, but I don't think it will … [And] if as a court you start moving into this field and making decisions on issues that people feel about in terms of values, and they might differ from one country to the next, then that's dangerous territory because … once a judgment is made, you will get the reaction: ‘Who are they to decide? … How come they know? And shouldn't that be in a democracy? Shouldn't that be decided by a majority, not by a bunch of judges … in a faraway country?’Footnote 36
In this spirit, a current AB member noted, ‘the issue of legitimacy … gets raised in a much more general level and … much broader throughout society with regard to these disputes’ that involve non-trade values and interests.Footnote 37
Due to the significant part trade-and disputes have come to play in WTO adjudication, and the intensified legitimacy challenges confronting the DSS in such cases, this category is ideal for examining the manner in which external and internal pressures shape the DSS goal-attainment patterns, motivate shifts in the emphasis placed on its goals, and impose trade-offs between them. Such examination is conducted below through a comparative analysis of the early case of US–Shrimp concerning the WTO-consistency of an import ban on shrimp harvested by methods harmful to sea turtles, and the recent US–Clove Cigarettes dispute, where an anti-tobacco regulation prohibiting flavored cigarettes, aimed at reducing youth smoking, was challenged.
Case selection
US–Shrimp and US–Clove Cigarettes were selected as case studies under the category of trade-and disputes for several reasons. First, they involve different WTO Agreements: US–Shrimp addresses claims under the GATT Agreement, whereas US–Clove Cigarettes concerns the Technical Barriers to Trade Agreement (TBT). Second, the cases represent different periods in the life of the DSS and the WTO. US–Shrimp was launched in 1996, soon after the WTO establishment. It was one of the first trade-and disputes filed with the DSS, when the WTO legitimacy crisis was emerging, and has become a landmark trade-and dispute. US–Clove Cigarettes arrived in 2010 to a well-oiled adjudication machine, nested within an organization trapped in a prolonged political stalemate. It thus represents another stage in the life of the WTO and its DSS, characterized by old and new challenges to their legitimacy. Finally, the two cases deal with distinct non-trade values: US–Shrimp addresses environmental protection and US–Clove Cigarettes concerns public health. Hence, while the cases share important characteristics, particularly the friction between trade and non-trade interests, the differences between them allow examining the judicial choices and goal-attainment efforts of the DSS in trade-and disputes over time and across agreements and subject matters.
The DSS goal-attainment patterns in trade-and disputes
Asked what distinguishes US–Clove Cigarettes from other disputes filed with the DSS, a staff member of the AB Secretariat answered: ‘Number of things and nothing at the same time’.Footnote 38 This answer aptly captures the story of trade-and disputes and the DSS goal-attainment patterns in such cases. On the one hand, in this type of cases, as in all WTO disputes, the DSS appears to be engaged in the routine legal exercise of law application and interpretation, while pursuing its multiple goals, including rule compliance and dispute resolution. On the other hand, as noted by a WTO practitioner when alluding to the legal interpretative exercise carried out by the DSS in trade-and disputes:
[U]ltimately … you're interpreting words … and you face choices, even within the structure of the Vienna Convention analysis you have choices of which words you choose to put meat on the words in the treaty. And [in trade-and disputes] … that's when the adjudicators are most aware of their need … to maintain legitimacy, to build up [the] legitimacy and credibility of the system.Footnote 39
A qualitative empirical account of US–Shrimp and US–Clove Cigarettes shows indeed how the intensified legitimacy concerns invoked in trade-and disputes were translated into a heightened quest by the DSS after its legitimization goals. A quest that took place along two parallel and at times conflicting trajectories: the first revolved around the DSS ultimate end as a ‘regime court’ to confer legitimacy on the WTO among internal and external constituencies; the second concerned the DSS intermediate goal of legitimizing its own exercise of public authority as an international tribunal amidst relevant audiences outside the WTO, while sustaining the internal support of WTO Members.
The shift in emphasis toward these two legitimization goals manifested itself in both the ratio decidendi and obiter dicta of trade-and rulings, taking the form of a unique collection of substantive, procedural, and rhetorical legitimacy-enhancing strategies uncommon in general WTO jurisprudence.Footnote 40 These strategies include the following distinctive elements.
The first is a notable move toward teleological and contextual construction methods in trade-and disputes, in contrast to the strict textual interpretation generally associated with the DSS, in order to grant the latter greater interpretative leeway and ability to embed the interest of free trade in a broader context of societal values. Thus, in US–Shrimp, recourse to contextual-teleological interpretations allowed the AB to read the exception in GATT Article XX(g) in a manner that leaves more room for trade-restrictive environmental policies,Footnote 41 which may reinforce the legitimacy of the WTO and its DSS among regulating WTO Members, and increase the social acceptance of these institutions outside the WTO.Footnote 42 In the recent US–Clove Cigarettes case, a similar effort to build a legitimation mechanism into the TBT Agreement is noticeable. On this occasion, the AB resorted to contextual-teleological interpretations in order to introduce ‘GATT Article XX flexibilities’ into the national treatment rule of the TBT Agreement, which lacks a general exception clause.Footnote 43 As several commentators have noted, such moves away from strictly textual interpretations toward contextual-teleological ones, which allow for less intrusive interpretations of WTO rules, help reduce public pressure on the DSS and secure a basic level of legitimacy for the WTO (DiMascio and Pauwelyn, Reference DiMascio and Pauwelyn2008: 65; Zhou, Reference Zhou2012: 1082–83).
Another strategy employed by the AB in its quest for legitimacy in trade-and disputes has been to incorporate a discernible balancing discourse into the reading of particular WTO provisions, juxtaposing the objective of trade liberalization and states’ right to regulate for non-trade values. This balancing discourse, first introduced in the AB analysis of GATT Article XX chapeau in US–Shrimp,Footnote 44 was lately extended to the TBT Agreement in US–Clove Cigarettes.Footnote 45 Yet, neither GATT nor the TBT Agreement has a specific language authorizing a balancing test (WTO, 2005: 135–41). Furthermore, as a WTO official indicated, although a balance between competing interests essentially underlies all WTO agreements, the balancing discourse has been prevalent mostly in trade-and disputes.Footnote 46 This propensity appears to rest in part on the legitimating quality ingrained in the balancing concept,Footnote 47 and the import of a balancing act, when competing trade and non-commercial values are involved, for the WTO and the DSS to win public acceptance (Esty, Reference Esty2002: 18–19). In this spirit, Lang noted, the introduction of the balancing analysis to trade-and rulings formed ‘a response’ to ‘the WTO's internal and external legitimacy crisis’ described above (Lang, Reference Lang2011: 321, 323).
The intensified pursuit by the DSS for its legitimization goals in trade-and cases such as US–Shrimp and US–Clove Cigarettes took the form of other distinctive legitimating techniques. These included the expression of vertical institutional sensitivity toward national governments, the manifestation of horizontal institutional sensitivity toward adjacent international regimes,Footnote 48 and the engagement of WTO adjudicators in a rare justificatory discourse, at times through special ‘explanatory paragraphs’ at the end of the AB report,Footnote 49 clarifying to audiences inside and outside the WTO the limited political implications arising from its ruling for the respondent, and signaling that the trade-and dispute at hand may be solved without the elimination of the trade-restrictive policy found to be WTO-inconsistent.Footnote 50 This infrequent AB technique of going out of its way to elucidate the ‘limits of the political implications’ of its rulingsFootnote 51 and to signal that compliance may take place without sacrificing important state interests,Footnote 52 appears as another strategy harnessed to the DSS legitimacy pursuit in trade-and disputes; a strategy aimed not only at manifesting a sympathetic stance toward the non-trade value at stake, but also at conciliating the respondent and appeasing compliance-related concerns among its constituencies (Garret and Smith, Reference Garret and Smith2002: 20–26).Footnote 53 Indeed, it has been noted, the AB conciliating attitude in disputes involving non-trade values, often to ease somewhat the burden of compliance on losing defendants, ‘represents a tacit acknowledgment by the Appellate Body’ of the political constraints placed on its ‘authority and perceived legitimacy’ in such cases (Garret and Smith, Reference Garret and Smith2002: 33); that is, a tacit acknowledgment by the AB of the need, at times, for some ‘give’ on compliance with WTO trade commitments in order to promote other organizational goals, among them, sustaining the overall legitimacy of the DSS and the WTO.
Notably, the various jurisprudential and rhetorical legitimating strategies enumerated above, generally absent from other WTO disputes, form part of a larger arsenal of judicial means and choices available to the DSS, recourse to which may have better promoted other institutional objectives. Yet, particular choices were made that accorded greater weight to some DSS goals: those related to the legitimation of the WTO and the DSS itself. Thus, alluding to the prominence of the legitimacy-oriented DSS goals in cases such as US–Shrimp and US–Clove Cigarettes, and the attempt of the adjudicators in both cases to craft ‘a decision that is designed to gain some degree of public acceptance’, a WTO practitioner stressed:
All of these decisions could have been decided the other way … In … Shrimp they could easily have reverted to the old [GATT] jurisprudence … but they did not. And I think they tried to develop a line of reasoning that is going to be appreciated from the environmental perspective … And in … Clove Cigarettes … they wanted to develop a line that is going to be appreciated from the public health perspective, and they did so … [A]ll these cases could have been decided the other way, and, well, that the decisions that have been written.Footnote 54
Yet, while in rendering these decisions the DSS has often tried to pursue two parallel legitimation objectives – conferring legitimacy on the WTO regime and sustaining the DSS own legitimacy, particularly within the inner circle of WTO Members – occasionally, the two objectives have come into conflict. This was the case in US–Shrimp, where the precedential decision regarding amicus curiae briefs, aimed at bolstering the external legitimacy of the WTO and the DSS within the civil society, caused challenges to the DSS internal legitimacy among WTO Members.Footnote 55 The amicus curiae episode resulted in a complex legitimacy quandary, with conflicting internal and external pressures pulling in opposite directions (Steger, Reference Steger2004), illustrating the limits placed on the DSS ability to concurrently attain its multiple goals, and the inevitable trade-offs imposed between them.
A goal-based reading of the category of perennial disputes exposes a somewhat different set of systemic pressures and challenges, and consequently different goal-conflict instances and goal-attainment patterns by the DSS.
4.2 Perennial disputes
Main features and underlying challenges
The DSS caseload includes, among others, several complex, lengthy, contentious, and recurring disputes, some of which go back to the old GATT. These ‘perennial’ disputes often implicate large trade volumes and/or national policies of great economic, political, and symbolic importance, asking the respondent not only for a complex legislative change, but also for ‘a large shift in ideology or resources’.Footnote 56 Also, these disputes usually involve major trade partners (Taylor, Reference Taylor2007: 334–335), whereas many of them are transatlantic in nature, involving the world's largest economies and main users of the DSS: the US and the EU. Furthermore, perennial disputes often reach the DSS with charged pre-history and former failures to settle the conflict in other forums (ibid.: 337–338). Consequently, such conflicts usually result in prolonged non-compliance. In fact, frequently they appear already at the outset to be more susceptible to non-implementation of an adverse DSS ruling.
Perennial disputes, in turn, place serious pressures on the DSS and its credibility (ibid.: 341–343). These pressures may be long-lasting, since the conflicts are likely to remain unsettled for years and return to the DSS in different forms. Because of the key players involved in these cases and the importance of the disputed measure, the disputes also hold systemic implications for the trading relationship of the parties and more broadly, for the stability of the WTO regime. For these reasons, perennial disputes, which ‘begin, proceed, and/or end by being overly contentious, difficult, or complex’, and carry heightened risks of non-compliance, have been labeled ‘impossible’ (ibid.: 316–317) or ‘wrong’ cases (Hudec, Reference Hudec1980: 159–166) that should have never been brought before the DSS (Tayor, Reference Taylor2007: 316). While under the GATT DSS such ‘wrong’ cases could indeed be blocked (Alter, Reference Alter2003: 788), the ‘reverse consensus’ rule under the WTO DSS has made such blocking practically unfeasible. Consequently, perennial disputes have been with the WTO DSS since its inception, from the early disputes of EC–Bananas and EC–Hormones, to US–FSC,Footnote 57 US–Softwood Lumber,Footnote 58 and US–Zeroing,Footnote 59 and continue with the ongoing transatlantic conflicts of EC–Airbus Footnote 60 and US–Boeing.Footnote 61
Given their complex features and systemic challenges, perennial disputes form another instructive site for examining whether and how these features and challenges shape the expectations from the DSS, shift the emphasis placed on its goals, and stimulate conflicts and trade-offs between them. Furthermore, because of the susceptibility of perennial disputes to result in prolonged non-compliance, they provide a valuable opportunity for challenging the tendency to consider compliance as the fixed, primary goal to be achieved by the DSS, and as the main yardstick for gauging its effectiveness. Below we examine the two illustrative perennial conflicts of EC–Bananas and EC–Hormones.
Case selection
[T]here's some category of [WTO] disputes that is different from the others … [And] I … think [in this regard] Bananas and Hormones are the ones that are most frequently cited.Footnote 62
The Bananas and Hormones disputes, often depicted as ‘wrong cases’ that enmeshed the DSS in long and abashing non-compliance (see, e.g., Taylor, Reference Taylor2007; Pollack, Reference Pollack, Petersmann and Pollack2003: 596; Brimeyer, Reference Brimeyer2001: 133–134), constitute probably the most paradigmatic perennial disputes to arrive at the WTO. They are therefore informative for tracing the DSS goal-attainment patterns and the diverse roles, beyond inducing compliance, the system plays in this class of cases.Footnote 63 Furthermore, whereas these conflicts date back to the GATT, they both only recently ended with mutually agreed – not yet fully WTO-compliant – settlements,Footnote 64 after recurrent legal proceedings and countermeasures. The two cases thus illustrate the trade-offs imposed between the multiple goals and outcomes of the DSS. Finally, EC–Hormones and EC–Bananas also represent suitable case studies for the current research because of the differences between them, including the distinct WTO agreements invoked and trade measures challenged, and the diverse parties involved in these cases (the US and the EU in both disputes, Canada in EC–Hormones, and the competing groups of Latin American and ACP countries in EC–Bananas). These differences allow examination and comparison of the judicial attitudes and goal-attainment patterns manifested by the DSS in perennial disputes across different WTO agreements, subject matters, and rival political contexts.
The DSS goal-attainment patterns in perennial disputes
EC–Bananas and EC–Hormones – the subject of repeated WTO litigation and enduring EU non-compliance (not fully alleviated by the settlements concluding the disputes) – have been regularly invoked as failures and instances of ineffectiveness of the DSS (see, e.g., Horlick and Coleman, Reference Horlick, Coleman, Janow, Donaldson and Yanovich2008; Brimeyer, Reference Brimeyer2001; Keisuke, Reference Keisuke2004; Alter, Reference Alter2003; Davey, Reference Davey2005; Busch and Reinhardt, Reference Busch, Reinhardt, Petersmann and Pollack2003: 475–479). This often-told version of these conflicts exemplifies the propensity to conceptualize the DSS effectiveness through the narrow, static lens of compliance, and to perceive this concept as the key desired end to be attained by the DSS across disputes, regardless of their type and nature.
An in-depth, interview-based analysis of these two perennial disputes, however, discloses a more complex picture of the DSS goal-attainment efforts. It recounts a story of an adjudicating system that in certain disputes is not geared primarily to mechanically enforce WTO rules, but rather plays an enhanced role in the cleft between law and politics, where the prominent function of the DSS revolves around two main paths.Footnote 65 First, through its successive rulings, the DSS serves to facilitate the mutual settlement of the dispute and the re-establishment of the bilateral balance of concessions between the parties, by continually framing renegotiating environments and constructing focal points around which the parties can coordinate.Footnote 66 Second, as long as the perennial dispute endures, the DSS further plays a pivotal function in sustaining the operation of the cooperative WTO regime by containing the dispute within defined legal parameters, preventing unilateral actions, and forestalling the escalation of the conflict into uncontrolled trade war.
This shift in emphasis towards the goals of settlement facilitation, rebalancing, and regime maintenance is learned from the views and experience of practitioners with first-hand knowledge of EC–Bananas and EC–Hormones. Thus, a former WTO official involved in EC–Hormones observed that ‘in the usual case, the goal [of the DSS] is to clarify the rules … and in most cases, the goal is … through that clarification to seek compliance with the rules’.Footnote 67 In certain cases, however, other goals come to play a greater role in the DSS operation. Thus, this practitioner added:
[E]specially in very … hard cases, such as Hormones … everyone almost knows that at best the WTO ruling would play a role in pushing the defendant in one or the other direction, that it would be quite hard [for the system] to … force the[] countries to change those fundamental rules. But at the same time … [the DSS] plays a role to defuse the whole political dispute, to avoid unilateral retaliation, and then to clarify the situation as to is there a breach? To what extent? [And] how much compensation should follow.Footnote 68
A state official involved in EC–Bananas similarly stated that in this type of complex case the DSS does not discharge the ‘classical straightforward’ function of ‘finding the truth, declaring the truth and then having everybody complying with the truth’; rather, it serves ‘as a tool to find the solution elsewhere’, outside the formal judicial process.Footnote 69 Elaborating further on this point, a WTO official involved in EC–Bananas noted that in such cases the DSS plays two main roles. On the one hand, ‘it provides a non-negotiated solution to the dispute’, i.e., legal answers to the disputed issues. On the other hand, it continues to play a role in the post-litigation bargaining between the parties, as the latter renegotiate on the basis of the findings and clarifications provided in the DSS rulings. Those were the roles played by the DSS in EC–Bananas, this official stressed, and those are the roles currently being played in the ongoing transatlantic Aircraft disputes.Footnote 70
Indeed, alluding more generally to a series of perennial disputes, including US–FSC,Footnote 71 US–Softwood Lumber, US–Zeroing, and the ongoing Aircraft sagas, a WTO legal officer observed that ‘in these cases in particular you have to think of the dispute settlement process as part of a broader [political] process’. With the ‘breakdown of that political process’, the parties resort to the DSS as a means to move negotiations forward and facilitate a politically feasible solution. In such instances, the official explained, the DSS, through its successive judgments, ‘help[s] the parties settle their dispute because … when they negotiate … they … have a better understanding of what are the legal rights and obligations … a better understanding of what … the status of their [claims] is in the WTO, and that [is] … an important element in the negotiation’.Footnote 72
Explaining more concretely how these settlement facilitation and renegotiation roles of the DSS played out in perennial cases such as EC–Bananas, a WTO official involved in the case noted:
[B]y making successive findings of inconsistencies … [the DSS] helped [the] parties to negotiate an agreement … [T]his [dispute] was so political that it had to be done through negotiation. But [following] … each of the [WTO] cases … the successive negotiations brought [the] parties closer to a better solution, one which guaranteed [the Latin American countries] better conditions of access to the European market, less discrimination, and more development assistance for the [ACP] countries which were affected.
…
[E]ach successive decision helped narrow and narrow … the problem and led to successive modifications of the EU measures.Footnote 73
Accordingly, a US official concluded as follows when discussing the recent (noncompliant) agreements reached in EC–Bananas and EC–Hormones in the shadow of the DSS, granting the complainants improved market access to the EU in exchange for settling the cases: ‘the EU … never would have done anything to provide additional access on bananas, and they never would have done anything to open their beef market if it wasn't for the dispute settlement system … [T]hat was the entire mechanism that prompted the change, even though the change wasn't … done’ by the respondent revoking its WTO-inconsistent measure, ‘which is the standard way for most disputes’. ‘But still’, the official stressed, ‘without the disputes … there would've been no way’ for the EU to have ‘accommodated the concerns of any of the other parties’ in the Bananas and Hormones disputes.Footnote 74
These testimonies of WTO practitioners illustrate well the shift in emphasis taken in perennial disputes towards the DSS goals of settlement facilitation, rebalancing through renegotiation, and regime maintenance. Yet, this goal-shifting is also apparent in WTO jurisprudence and the distinctive judicial choices, interpretations, and techniques used by WTO adjudicators in the perennial conflicts of EC–Bananas and EC–Hormones.
One such technique is reflected in the willingness of WTO adjudicators in these conflicts to provide concrete pragmatic suggestions on how to move forward toward the settlement of the dispute. This willingness stands in sharp contrast to the general practice of WTO adjudicators of avoiding any such suggestions, which they are authorized to make under DSU Article 19.1. A recent example of this uncommon judicial choice can be found in US–Continued Suspension (the second round of EC–Hormones), where in an attempt to promote the positive resolution of the case, the AB concluded its report with an explicit recommendation to both the complainants and respondent ‘to initiate DSU Article 21.5 proceedings without delay in order to resolve their disagreement’.Footnote 75
Atypical suggestions of this type were also observed early on in EC–Bananas. Mindful of the fact that panels have rarely ‘made suggestions pursuant to Article 19.1’, and ‘with a view toward promptly bringing the dispute to an end’, the panelists in the first compliance panel in EC–Bananas found it appropriate to make concrete suggestions about possible steps that may be taken to settle the case.Footnote 76 Likewise, when sitting as arbitrators in the DSU Article 22.6 proceedings between the EU and the US, the same three panelists chose to open their arbitral award by encouraging ‘the parties to continue in their efforts to reach a mutually acceptable solution to this matter promptly’, noting that ‘the suspension of concessions is not in the economic interest of either of them’.Footnote 77 These pronouncements attest to the adjudicators’ conception in this perennial dispute of their enhanced role as facilitators of renegotiations and settlement between the parties. These statements, and the goal-attainment efforts they reveal, become even more significant when we consider how rare such pronouncements are in WTO dispute settlement practice. Thus, Porges noted, although ‘[i]n theory, WTO panels may actively encourage settlement … in practice none do’ (Porges, Reference Porges2004: 167).
The adjudicators in EC–Bananas and EC–Hormones, however, did not only take an uncommon active role in facilitating the resolution of the disputes, but also went out of their way to develop interpretations that would grant the DSS jurisdiction to address the perennial conflicts repeatedly, contain them within the WTO rule-based system, and thus prevent unilateral actions and destabilizing effects on the WTO regime. An example of such an interpretation may be found in the last round of EC–Bananas, where the AB rejected the EU claim that the 2001 Understanding on Bananas concluded between the EU, the US, and Ecuador precluded the latter two from initiating additional Article 21.5 proceedings under the DSU. According to the ruling, unless the parties to a mutually agreed solution explicitly renounced their right to have recourse to the DSU, they may not be precluded from initiating additional proceedings before the DSS.Footnote 78 In so ruling, a senior WTO official observed, the AB enunciated a fundamental principle whereby the DSS remains the forum to address disputes between WTO Members until their satisfactory resolution, and that matters can be brought to the DSS time and again, unless such right has been explicitly waived in an agreement between the parties.Footnote 79
A somewhat similar interpretation is found in EC–Hormones. In contrast to the long-standing understanding among WTO Members that only complainants may initiate compliance proceedings under DSU Article 21.5, in US–Continued Suspension the AB determined that both complainants and respondents may launch such proceedings, thereby expanding the DSS jurisdictional power to address recidivist WTO conflicts.Footnote 80
As in the case of trade-and disputes, the interpretations and choices of WTO adjudicators in the perennial Bananas and Hormones conflicts account for only some of the alternatives available to the DSS in its strategic judicial space. The particular choices made and the outcomes they sought reveal in turn the DSS goal-attainment efforts in these disputes, and the shifts in the relative weight accorded to some of its goals given the unique challenges and complexities of these cases.
Finally, alongside this goal-shifting, the perennial disputes of EC–Bananas and EC–Hormones also demonstrate one of the most conspicuous tensions underlying the DSS goals. This is the tension between the will to secure rule compliance and legal predictability, and the desire to preserve the reciprocal balance of trade concessions through amicable settlements and flexible rebalancing acts, which may sustain the long-term viability of the WTO. In theory, of course, these goals need not necessarily conflict, as the settlement of disputes by eliminating WTO-inconsistent measures may allow the simultaneous achievement of all. But in reality, in some cases political constraints may make such goal-conflicts inevitable. A WTO official involved in EC–Bananas stated:
[O]ne [goal of the DSS] … is … to achieve pragmatic solutions for disputes. Another goal would be to have … security and predictability in the system or to achieve compliance … Generally speaking, there shouldn't be any tension [between these goals]. But in specific cases, you may find a tension because you may find that parties are able to find a solution, but that solution is not necessarily, strictly in accordance with the agreements, and … what should you privilege – the fact that you find a solution to a longstanding dispute, or the fact that there isn't full compliance with the agreement?Footnote 81
The complex Bananas and Hormones disputes illustrate the materialization of this exact tension between the goals, and consequently outcomes of the DSS: while satisfactory negotiated settlements, informed by the successive DSS rulings, were found to the acrimonious disputes and restored the bilateral balance of concessions between the parties, the settlements still fall short of full compliance with WTO law.
From a perspective that perceives effectiveness through the lens of compliance, these non-compliant outcomes may be portrayed as the final – disappointing yet unsurprising – chapters of chronicles of enduring non-compliance, and, consequently, as instances of under-effectiveness of the DSS. As noted earlier, this is indeed the often-told story of EC–Bananas and EC–Hormones. From a broad goal-based effectiveness perspective, however, which considers the multiple, conflicting, and dynamic nature of DSS goals, the story of EC–Bananas, EC–Hormones, and the like becomes more complex. Following a goal-based approach, the story is no longer a binary one of failure or success, but rather a more intricate one of shifts and trade-offs between multiple competing institutional goals.
4.3 Trade-and and perennial disputes: a comparative view and lessons for the WTO DSS effectiveness analysis
When confronting trade-and, perennial, or other categories of WTO disputes, the DSS faces a range of choices concerning its various organizational goals and the efforts invested in their realization. At each junction of the disputes addressed above, therefore, the DSS could have made other judicial choices in pursuit of its goals. Yet, specific choices were made that ascribed greater weight to some goals than to others, in the face of the challenges and expectations presented to the system.
A comparative look at the diverse goal-attainment patterns revealed by trade-and and perennial disputes, in turn, demonstrates the goal-shifting concept advanced in the article. It shows how the emphasis placed on the DSS goals and the prominent roles it plays vary across different types of cases given the changing modalities in which the system operates. In trade-and disputes, internal and external pressures on the WTO push the DSS pendulum in the direction of its legitimation goals; in perennial disputes, however, the pendulum swings toward the DSS regime maintenance, rebalancing, and settlement facilitation objectives.
If indeed the relative weight of the DSS goals changes from one dispute category to the other, it follows that a nuanced effectiveness assessment of the DSS must also account for these shifts and the diverse outcomes generated by the system. Whereas in trade-and disputes such outcomes may affect the legitimacy of both the WTO and its DSS, in perennial disputes these outcomes may include prevention of uncontrolled trade wars, conclusion of mutually satisfactory (albeit not fully WTO-compliant) settlements, and assurance of long-term international economic cooperation. Static, one-dimensional effectiveness models, which treat all WTO disputes as monolithic and consider the desired end of compliance as their key effectiveness benchmark, fall short of capturing this variety of outcomes. Moreover, they fall short of capturing the trade-offs such outcomes represent between the compliance objective and other goals of the DSS (among them, its traditional dispute settlement goal or more systemic objectives such as sustaining the legitimacy and viability of the WTO regime as a whole).
5. Conclusion: the promise and limits of a goal-based approach to the study of the WTO DSS effectiveness
Extensive discussions in the growing body of research on the effectiveness of international law, and international courts in particular, have revolved around the notion of compliance. This focus has been especially prominent in writing on the WTO DSS, triggered by the juridified nature of the system, compared to its predecessor under GATT.
Yet despite its juridification, the WTO DSS, as shown here, is not solely a mechanism for inducing compliance with WTO rules. It is a forum of litigation, negotiation, and struggle, where conflicts are fought not only about adherence to formerly agreed rules – though this is certainly a significant element of the system – but over broader political, economic, and social interests. It is a mechanism devised by WTO Members to pursue numerous goals, in a dynamic environment of changing practices, actors, and constraints, which often require the DSS to adapt its goal-attainment efforts and shift the relative emphasis placed on its various goals.
Against this backdrop has emerged the need for a broader, more nuanced and dynamic framework for analyzing the effectiveness of the WTO DSS. Building on the goal-based approach developed in the social sciences, the article has laid down the foundations for such a framework, under which the multiple, conflicting, and shifting goals of the system serve as key effectiveness benchmarks. The goal-based approach, together with the notions of goal-multiplicity, goal-conflict, and goal-shifting, the article has suggested, promises a more complete understanding of the DSS operation and outcomes.
A richer and more nuanced understanding based on the goal-based effectiveness model, however, also requires a more complex analytical process, which raises in turn methodological challenges of its own. Most notably, a comprehensive goal-based effectiveness analysis requires assessing the DSS performance against multiple benchmarks. Also, whereas some DSS goals, such as promoting compliance or prompt settlement of disputes, may be more amenable to quantitative measurement, others, especially open-ended ultimate ends, such as legitimizing the WTO, may be more difficult to assess. Finally, the tensions latent in DSS goals and goal-shifting trends over time and across disputes may impose substantial constraints on the ability to engage in an overall assessment of the system's effectiveness.
Yet, even if such an assessment is too ambitious, the rich goal-based approach provides a fertile ground for a range of more defined and nuanced research projects on the effectiveness of the DSS. For example, future research may examine the DSS functioning with respect to particular organizational goals, while exploring how their achievement promotes or hinders the realization of other interrelated or conflicting objectives. Future research can also focus on the DSS goal-attainment in different stages or specific categories of WTO disputes, consistent with our goal-shifting concept. The multidimensional goal-based framework thus opens valuable research possibilities for studying judicial effectiveness at the WTO. It also establishes the foundation for insightful comparisons of judicial performance across different types of WTO disputes, different institutional goals, or along different points in the DSS process and life cycle.
