Robert Z. Lawrence argues that the WTO should serve as an umbrella organisation for plurilateral agreements on behind-the-border measures — the so-called “variable geometry” approach.

FT:

A method known as “zeroing” used by the US in anti-dumping investigations and reviews was slapped down on Wednesday by the top court of the World Trade Organisation.

In a case brought by Mexico against punitive US duties on imports of Mexican steel, the WTO’s appellate body ruled that zeroing was illegal in all types of anti-dumping action. It was the latest in a series of similar rulings against Washington.

The issue has set the US against the rest of the 151-strong WTO membership in the Doha global trade talks, where Washington is pushing for zeroing to be legitimised in changes to anti-dumping rules.

It has also sparked a debate over the role of the appellate body, which the US claims is making rather than interpreting WTO rules. Thus the dispute panel that first considered Mexico’s complaint argued that current rules did permit zeroing in some circumstances, flouting an earlier appeals ruling. The panel’s decision has now been struck down.

Washington on Tuesday responded angrily, accusing the appellate body of over-reach “by inventing new obligations” and of undermining the proper functioning of the dispute settlement system.

Why does Charles Rangel think that the number of complaints filed at the WTO is a good measure of the quality of our trade policy?

Former GATT DG Peter Sutherland says that the WTO has transformative powers:

The power of the WTO to aid national transformation is easily forgotten. All too often, many developing countries measure their success in the WTO’s Doha Round of trade negotiations by the extent to which they avoid obligations to open up their economies. And in polite conversations in Geneva, the potential of WTO disciplines to encourage radical market, institutional, and regulatory reform is a politically incorrect topic. It is the countries that have joined the WTO over the past decade that have drawn the most benefit from global trade rules. Older members, which did not need to negotiate their entry, have probably gained the least.

The WTO has changed the world in the past decade by welcoming China. And if it has changed national fortunes, in Cambodia and Saudi Arabia, for example, it is thanks to its accession procedures. Compared with the terms of bilateral free-trade areas, the terms of WTO membership amount to a revolution. The process is now lengthier than ever. China applied to the WTO’s predecessor (the General Agreement on Tariffs and Trade, or GATT) in 1986 and joined the WTO in 2001, Cambodia applied in 1994 and joined in 2003, and Saudi Arabia joined in 2005 after 12 years of preparation and negotiation.

Why do governments put themselves through such trials to enter what was once tagged a rich man’s club? The answer might simply be to get rich. This is trite, and it cannot explain the efforts by China or Saudi Arabia, where the opportunities for getting rich have long existed. In fact, a better explanation is that at a certain point political leaders understand that fundamental change is necessary, or unavoidable, and that it cannot be achieved without support from the outside. They need a catalyst; the WTO provides it. Change often means confronting vested interests, reducing the role of the state, reforming institutions, and taking on corruption. Change also means shaking up the private sector by encouraging competition, setting entrepreneurs free from government controls, and ensuring efficient and affordable services. In an era of broadening and deepening globalization, small or struggling economies thrive only in an environment that generates opportunity and supports entrepreneurship. Much of what the WTO does is, in fact, about helping achieve good or better governance.

Nowhere is the WTO’s power to transform nations more evident than in its accession process.

Former GATT DG Peter Sutherland says that the WTO has transformative powers:

The power of the WTO to aid national transformation is easily forgotten. All too often, many developing countries measure their success in the WTO’s Doha Round of trade negotiations by the extent to which they avoid obligations to open up their economies. And in polite conversations in Geneva, the potential of WTO disciplines to encourage radical market, institutional, and regulatory reform is a politically incorrect topic. It is the countries that have joined the WTO over the past decade that have drawn the most benefit from global trade rules. Older members, which did not need to negotiate their entry, have probably gained the least.

The WTO has changed the world in the past decade by welcoming China. And if it has changed national fortunes, in Cambodia and Saudi Arabia, for example, it is thanks to its accession procedures. Compared with the terms of bilateral free-trade areas, the terms of WTO membership amount to a revolution. The process is now lengthier than ever. China applied to the WTO’s predecessor (the General Agreement on Tariffs and Trade, or GATT) in 1986 and joined the WTO in 2001, Cambodia applied in 1994 and joined in 2003, and Saudi Arabia joined in 2005 after 12 years of preparation and negotiation.

Why do governments put themselves through such trials to enter what was once tagged a rich man’s club? The answer might simply be to get rich. This is trite, and it cannot explain the efforts by China or Saudi Arabia, where the opportunities for getting rich have long existed. In fact, a better explanation is that at a certain point political leaders understand that fundamental change is necessary, or unavoidable, and that it cannot be achieved without support from the outside. They need a catalyst; the WTO provides it. Change often means confronting vested interests, reducing the role of the state, reforming institutions, and taking on corruption. Change also means shaking up the private sector by encouraging competition, setting entrepreneurs free from government controls, and ensuring efficient and affordable services. In an era of broadening and deepening globalization, small or struggling economies thrive only in an environment that generates opportunity and supports entrepreneurship. Much of what the WTO does is, in fact, about helping achieve good or better governance.

Nowhere is the WTO’s power to transform nations more evident than in its accession process.

If Antigua imposes its retaliatory damages against the United States for banning internet gambling, it’s going to get really messy. Cato’s Sallie James explains:

Antigua has strongly rejected the WTO arbitrators’ decision about the level of damages — a decision that is made especially controversial given that one of the three panelists dissented from the opinion, a rare occurrence in WTO jurisprudence, and by their own admission that they were on “shaky grounds” in determining the level of damages. According to Antigua, by basing their analysis on the “most likely scenario of compliance” by the United States rather than the export opportunities foregone, the arbitrators were showing unfair sympathy to the American case. The Americans were pleased that the $21 million in annual damages was well below the figure sought by Antigua ($3.4 billion), but expressed concern over the form of retaliation authorized. The United States had originally argued that their restrictions were worth only $500,000 in damages.

Notwithstanding the back-and-forth over the amount of sanctions, a couple of problems remain. First, who is to say how much it is worth to, say, download illegally a new CD or movie. Is it equivalent to the market value of buying a legal copy of the material? Or is it worth the cost of the download itself (less than a penny, I imagine). That is important because the WTO would limit Antigua to $21 million fairly strictly, and the U.S., under instruction from Hollywood and the software industry, would be expected to pounce if they saw the limit violated. There is also the question of whether Antigua would be able to export the fruits of its copyright violation to other countries and “earn” the $21 million that way.

Previous coverage of this case: background, the ruling, WTO credibility

Dani Rodrik says the WTO is amazing because it forces the United States to eventually act on cotton subsidies. Ben Muse reminds him that the recent WTO ruling was criticizing the United States for its failure to comply. It’s interesting that the WTO has enough institutional legitimacy and clout to eventually force the United States to give in, but keep in mind that this dispute has been ongoing for years.

The United States is moving towards negotiated settlements with Europe, Japan, and Canada over internet gambling to keep its markets closed, but Antigua and Barbuda may still pursue its complaint.

Canada and Brazil are working to get a World Trade Organization dispute panel to hear their respective complaints about American agricultural subsidies at the same time.

The Newsday editorial board describes what’s on the line in the Antigua gambling case:

The organization’s credibility is on the line. It can’t risk the rap that it aggressively enforces trade rules against small nations but timidly allows the world’s economic powerhouse to skate. The integrity of the United States is also at issue. This country can’t respect trade rules that benefit us and ignore those that don’t without undermining valuable free trade agreements.