Navigating the turbulent waters connecting the World Trade Organization and corporate social responsibility.(Symposium on Operationalizing Global Governance)

Introduction

A fisherman has been seen navigating two different seas for many years: the World Trade Organization (WTO) and Corporate Social Responsibility (CSR). He built two different vessels because he could not figure out a way to cross from one sea to the other. Finally, he envisioned a strait that could provide the necessary connection. For decades, the myth of monsters along the way had terrorized those who dared into the strait. He climbed aloft nevertheless.

He could see the strait and thought that, in due course, he would be able to feed on the many species said to be found in those waters--tuna, turtles, shrimp, sardines, and salmon. He began the journey looking for lights from the beacon on the other side. Some said that his quest would be endless, and his vessel would go down.

If you can immediately grasp the sense of the story above, you may find another port as your best departure point. (1) If you are still wondering what this story is all about, you are in the right place. This is an introductory article for those interested in the debate linking the WTO with CSR. If this is your first journey into this topic, this article is your compass. Welcome to the vessel. Prepare to meet sea creatures forming the relevant jurisprudence and to seek the lights of the beacon. (2)

Your journey will be divided into five short trips. The first two constitute overviews of the WTO and CSR. The third and fourth parts steer the vessel to the possible confluence of the topics and the relevant law involved. Finally, the fifth part presents reactions to recent accounts on the topic.

I. The World Trade Organization

A. Background

We begin in the sea of the WTO. While embarking on this journey, it is important to note that the WTO is an intergovernmental organization created at the end of the Uruguay Round (1986-1993) after almost five decades of operation of the General Agreement on Tariffs and Trade (GATT 1947). (3) The signatories of the GATT 1947 are referred to as Contracting Parties, while the WTO signatories are referred to as members. (4)

The GATT 1947 is one of the chapters of the so-called "Havana Charter." The charter was meant to establish an intergovernmental organization, the International Trade Organization (ITO), which, for many reasons, never came into existence. (5) Instead, the GATT 1947 was applied provisionally, and in the view of some commentators, it became a de facto international organization after decades of operation.

The GATT 1947 is said to be part of the Bretton Woods system, which is comprised of the International Monetary Fund (IMF) and the World Bank. The WTO is not part of the United Nations system in any formal way. However, it does intersect with the United Nations through institutional cooperation, joint studies, and other activities among the WTO and U.N.-related bodies. As of July 2008, the WTO had 153 members. (6)

B. Trade Barriers

Overall, the WTO aims at trade liberalization through the elimination of trade barriers among its members. The WTO relies on the premise, largely supported by economic theory, that trade liberalization generates economic growth and better standards of living worldwide. (7) Trade barriers exist for many reasons, some of which are legitimate and genuine. The problem is that trade barriers may also simply serve protectionist purposes. This concern highlights the central purpose of the WTO, which is to distinguish, by agreed-upon rules, situations of legitimate discriminatory behavior from situations of illegitimate protectionism.

Trade barriers are implemented in many ways and are often part of legislation, resolutions, or decrees that emanate from governmental bodies. Trade barriers are inserted in trade measures which are adopted by governments. A traditional trade barrier is a tariff (a tax on the importation of a good), but currently, many other non-tariff barriers (NTB) exist.

The WTO has at least three main features in place to deal with trade barriers. The first is a set of rules or treaties referred to as the "covered agreements." (8) These norms embrace the multilateral rules establishing the principles of nondiscrimination central to WTO membership. Two of the central clauses are the Most Favored Nation (MFN) and the National Treatment (NT) clauses, which are found in the GATT 1994 Articles I and III, respectively. (9) Second, the WTO is also a negotiating forum where members, through their diplomats, meet to negotiate for, among other things, enhanced market access. Finally, the WTO also provides a "tribunal" for member-to-member disputes by establishing a two-level proceeding that operates as follows: first, disputes are analyzed by a panel of experts; second, the panel's findings may be appealed to the Appellate Body (AB) of the WTO. The idea of two-tier proceedings (panels and the AB) is analogous to levels of jurisdiction in domestic courts. The Dispute Settlement Body (DSB) is the administrative organ that selects disputes upon request and monitors the proceedings. (10) The WTO expects that members will abide by the decisions, and in the event of non-compliance, the WTO may authorize trade retaliation.

C. Relevant Covered Agreements: The GATT 1994, the TBT, the SPS, and the GPA

Among the WTO covered agreements, the following four are of special relevance to this article's journey: the GATT 1994, the Agreement on Technical Barriers to Trade (TBT), the Agreement on the Application of Sanitary and Phytosanitary (SPS) Measures, and the Governmental Procurement Agreement (GPA).

The GATT 1994 is the cornerstone of the multilateral trade system. Essentially, it incorporates the text of the GATT 1947 with necessary modifications. For instance, the references to "Contracting Parties" in the provisions of the GATT 1947 are read as "members" in the GATT 1994. (11)

The SPS and TBT have their origin in the Standards Code (1979). As Gabrielle Marceau and Joel Trachtman explain, after the Kennedy Round (1964-1967), the Contracting Parties expressed their concern that the "increasing multiplicity of standards was seen as a potential barrier to trade and [the Contracting Parties] pointed towards a need to consider harmonization of standards." (12) The concern was twofold. First, if a standard exists, exchange is facilitated because incompatibility of products can be reduced. In addition, standards can be harmonized by many countries, which further facilitate trade. Second, the Contracting Parties called attention to the fact that anything to be agreed upon should not interfere with the "responsibility of governments for safety, health and welfare of their people or for the protection of the environment in which they live." (13) With those two sets of concerns in mind, forty-three Contracting Parties signed the Standards Code in the Tokyo Round (1973-1979). The Standards Code covered mandatory and voluntary technical specifications, mandatory technical regulations, and voluntary standards for industrial and agricultural goods. In the 1980s, nonetheless, a consensus emerged that the Standards Code did not avoid protectionism related to the proliferation of technical regulations. Furthermore, it appears that technical specificities on agricultural issues required the Contracting Parties to establish different disciplines for agriculture and general standards. Thus, during the Uruguay Round, the Standards Code served as the basis for two new agreements: the TBT and the SPS. (14)

The GPA, on the other hand, deals with procurement of products and services by governments (and their respective agencies). (15) Procurement generally accounts for an important share of government expenditures, and many governments impose a requirement that their suppliers be domestic corporations. (16) As with the TBT and SPS, the roots of the GPA preceded the establishment of the WTO. Annet Blank and Gabrielle Marceau, in fact, acknowledge that attempts to negotiate an agreement of procurement began in the 1940s. (17) However, government procurement provisions were explicitly excluded from the GATT 1947 framework, and an agreement was possible only during the Tokyo Round. (18) With the establishment of the WTO, a revised GPA was proposed and entered into force in 1996. Currently, it is in force for thirty-nine members. (19)

D. Recent Trends

Thirteen years have passed since the WTO was established. Three major trends are significant to the discussion in this article. First, the establishment of the WTO resulted in a more comprehensive range of topics covered by the organization. As such, the WTO became more visible to civil society and often a target of anti-globalization activists. A classic example is the Seattle protests in 1999, where non-governmental organizations (NGOs) and civil society groups unleashed harsh criticisms of the WTO and blamed the organization for the detrimental effects of globalization.

Second, because of the high-profile trade interests involved (and, one could say, for the benefits provided by its litigation proceedings), the DSB has been frequently called upon not only by developed nations, but also by developing and, though less frequently, least-developed countries. (20) Formally, as an intergovernmental organization, the WTO provides a dispute forum for members (in other words, state-to-state litigation). However, it is hard to deny that governmental interests can be entangled with corporate interests. Some disputes at the WTO are even referenced by their corporate nicknames. In one prominent example involving governmental subsidies to the air industry, Brazil and Canada litigated over supports to their respective air industries, which became notorious as the Embraer-Bombardier dispute. (21) Similarly, the EC-Biotech case revealed Monsanto's interest in the outcome because Monsanto's market access to genetically modified corn in the European market was in jeopardy. (22) In addition, it has been argued that the Banana War dispute, involving the United States as complainant and the European Community (EC) as defendant, has been backed by Chiquita, Dole, and Del Monte. The United States brought the dispute to the WTO despite the fact that it does not export any bananas to the European market; however, U.S. multinational corporations supported the dispute because they export to the European market from their Latin American production platforms. (23)

Finally, as Thomas Cottier explains, the traditional GATT modus operandi (negotiation of tariff concessions) has been in transformation. In a process that started in the Kennedy era, the …