World Trade Organization
The issue of precedent and the expansion of WTO law take us into the second set of problems with the DSU, namely the process of legalization itself. International trade lawyer John Jackson points out that in international law, stare decisis, or the common law concept of precedent, does not apply. In practice, however, reference to precedent was frequently used in the dispute settlement process in the GATT, including the formal dispute settlement panel findings. The same remains true of the DSU under the WTO, and in fact permeates even other aspects of institutional process such as decision-making procedures. Rulings become part of the ‘practice’ – if not formal precedent – under the agreement and influence subsequent decisions of the panels and the Appellate Body. Gregory Shaffer thus writes, ‘Individual WTO cases involve more than the judicial resolution of an individual dispute. WTO panel and Appellate Body decisions also produce systemic effects for future cases.’ This becomes a problem when developing countries are involved. Those governments that are active participants in the DSM can effectively shape WTO law to their advantage. Such governments are seldom from developing countries, as illustrated in the next section. In addition to the above, the de facto tendency of the Appellate Body to engage in far-reaching interpretation, precedent-creation, and jurisprudence is also problematic. Aspects of contested issues on which negotiations have proven difficult have been brought to the DSB for adjudication. Once the DSB has made a pronouncement on such an area, contested rules that had never been agreed upon manage to make a legal, backdoor entry into the WTO. Given the intrusive scope of WTO rules, it is particularly important that they are carefully negotiated, and countries are fully aware of what they are signing up to and its implications. By effectively substituting negotiation with adjudication, the WTO runs the risk of undermining the legitimacy and longer-term sustainability of its agreements.
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