The interpretation of WTO Agreements

The role of the WTO as a multilateral trading body focusing on negotiations and the politico-economic dimensions of trade vis a vis a judicial body (Panels and Appellate Bodies) adjudicating on the rights and obligations of sovereign members states has been a subject of intense debate over the years.

 This aspect has been brought to light recently by Lucasz Gruszczynski in his paper titled "Customary Rules of Interpretation in the practise of WTO Dispute Settlement Bodies" which discusses, inter alia,  the principles of interpretation adopted by the panels and Appellate Bodies of the WTO in multilateral trade agreements.

Referring to the over-reliance on a "textual interpretation" of the agreements as against a "broader" contextual interpretation, the article succinctly notes,

"The occasional over-reliance by the WTO dispute settlement bodies on the text of a treaty (to the exclusion of other elements) should not come as a surprise. The WTO, as a relatively young international organisation, is particularly vulnerable to the accusation of overstepping its mandate. The establishment and maintenance of authority (of the AB as an international adjudicating body in trade matters and WTO law as system of reference for such controversies) seem to be more important in the early years of a particular organisation than later. If one adds to this that a considerable number of disputes which emerge in the WTO context relate to highly sensitive issues, the caution expressed by the panels and the AB is even more understandable.

...

 An additional difficulty is added by the fact that the WTO system remains to great extent a type of unfinished contract. Specific provisions are formulated in general language, while the system as such has numerous gaps that have to be filled in by the WTO dispute settlement bodies. Employment of strictly textual methods may be seen as a way which helps to defend against charges of having exceeded their authority to act, particularly if a dispute is highly politicised. At the same time, the interpretative results obtained through such a method seem to be more easily acceptable by WTO Members as compared to other methods. As expressly admitted by the former member of the AB, ‘the heavy reliance on the “ordinary meaning to be given to the terms of the treaty” has protected the Appellate Body from criticism that its reports have added to or diminished the rights and obligations provided in the covered agreements’.

In other words, deciding disputes at a technical level, with text playing the central (or even exclusive) role in the interpretative process, allows, at least on its face, to depoliticise the controversy. Such an approach denies the relevance of policy considerations in the dispute settlement process, since it assumes that a particular issue is decided on the basis of a neutral text and does not require the dispute settlement bodies to make difficult normative decisions. The logical consequence of strict textualism is to deny any policy-making role to dispute settlement bodies. In consequence, textualism acts as a shield against the governments of WTO Members. A similar observation is made by Van Damme, who notes the AB’s ‘excessive use of dictionaries ... was probably instigated by the need to assert its judicial function against the backdrop of a not fully-developed institutional model and under-developed procedural rules in the DSU’.One may also expect that once the WTO becomes more mature, its dispute settlement system will depart more and more from strict textualism, openly accepting the existence of a political dimension to its decisions, and becoming more receptive to other rules of international law.

There is indeed some evidence of movement in this direction. As has been noted by one scholar, ‘since the very beginning of its mandate, the Appellate Body has been very adamant in strengthening its legitimacy underpinnings (eg, by adopting the very narrow textualist approach to treaty interpretation from which it is now trying to emancipate).’This is also reflected in the more recent practice of the AB, where the reference to dictionaries, although present, is not as frequent as previously. The practice of the panels still seems to fall behind, but also here changes are visible."

The WTO Dispute Settlement mechanism is generally positioned as an important element of a rule-based system of enforcing trade rules as against a system where the economic power of a member country prevails. The interpretation of agreements in Dispute Settlement Bodies are supposed to be "neutral", "independent" and devoid of politico-economic considerations or ideological underpinnings. This approach of a strict legalistic interpretation "legitimises" the decisions of the Dispute Settlement Bodies in a highly political world. To what extent member countries, especially the big economic trading powers, accept this "independent" judicial mechanism against continuing challenge to domestic interests will be a test of the multilateral institution itself in the coming years.