The WTO's Increasing Challenge to National Sovereignty

The WTO's legislative authority over national laws and regulations is increasing with each round of trade negotiations. That is mostly because of the streamlined dispute settlement system, which declares all decisions by WTO panels to be final unless overturned unanimously by the panel's members. These existing WTO rules present a serious challenge to U.S. sovereignty.

Increased Democratic Legitimacy: Congressional Oversight

To increase the legitimacy of WTO decisions, national legislative bodies should become more involved. Barfield suggests the creation of a bipartisan commission to study the implications of WTO decisions on U.S. laws and regulations. The author also proposes a joint oversight committee to continually evaluate the impact on the United States of rules and regulations issued by other international organizations.

We Should Deny "Direct Effect" to Protect Our Domestic Laws

Under the doctrine of direct effect, a nation agrees that its domestic laws will be automatically bound by rules negotiated under a treaty or trade agreement. This enables private citizens to have recourse against foreign nationals in countries adhering to certain international agreements. Barfield recommends that Congress continue to deny "direct effect" and that our national legislatures continue to retain final determination over the content and applicability of domestic legislation.

The WTO--As an Institution--Is Jeopardized by the New Dispute Settlement System

The new dispute settlement system put in place in 1995 could be ruinous for the WTO. Because there is no real consensus among WTO members on many of the complex regulatory issues being decided upon by the various WTO panels, the new system is substantively unsustainable. In addition, intractable questions about democratic legitimacy are being raised because these WTO panels are often forced to "legislate" new rules. These new rules are a direct result of the imbalance between the highly efficient judicial mechanisms and the consensus-plagued rule-making procedures.

Proposed Constitutional Remedies

To remedy the WTO's constitutional defects, this study proposes major changes in the existing dispute settlement system:

A Blocking Minority: A decision would be set aside if at least one-third of the WTO members--or alternatively countries representing at least one-quarter of total trade among WTO members--register opposition to a panel decision. The issue would be resolved--and a consensus reached--at the next round of trade talks.

A Safety Valve: Conciliation, Mediation and Voluntary Arbitration: The WTO director-general would have the power to step in and encourage bilateral negotiations, outside arbitration, and mediation among disagreeing WTO member states.

Whose WTO Is It? Democratic Governments or Interest Groups?

Both the Left and the Right are demanding greater direct participation in the WTO rule-making and judicial procedures. On the Right, multinational corporations and international legal authorities would like the right to argue their cases directly before the WTO. On the Left, nongovernmental organizations (NGOs) such as Greeenpeace would like to have the same standing before the WTO as governments do. Barfield rebuts the arguments of both sides and argues that democratic legitimacy cannot be assumed by private parties, whether NGOs or corporations.

Proposed Democratic Reforms

Transparency: The study recommends that all documents submitted before WTO panels be published.

A Greater Diversity of Panelists: To increase participation, the WTO should expand the currently limited list of legal scholars and diplomats allowed to participate in the dispute settlement panels.

Formal Consultation: Instead of the present ad hoc system, the WTO should have regular consultations with outside groups and experts such as NGOs, various scientific and professional organizations, and corporate associations. This would foster better communication between the WTO staff and outside groups and would enable the staff to better explain the various WTO decisions.

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