Richard Baldwin in his paper "21st Century Regionalism: Filling the gap between 21st century trade and 20th century trade rules" has brought out in great detail the new dimension of 21st century international trade fuelled by the "trade-investment-services" nexus. Explaining the concept of the internationalisation of the supply chain in 21st century international trade, he gives insights into how regionalism is having an impact on the world trading system.
I am not discussing the paper as such in this blog. An interesting insight the paper dwells on is the relationship between the Dispute Settlement Mechanism of the WTO and the "negotiating" role of the multilateral body. It states,
"Third, the WTO’s adjudication function is still working well, but any dispute settlement system must walk on two legs. The judges can connect the dots for particular cases, but the basic rules must be updated occasionally to match evolving realities. For example, the Appellate Body finds itself ruling on issues like “zeroing” where the negotiated consensus is disputed. If the basic rules applied by the Appellate Body are not updated, there is a serious danger that the judges will overreach themselves, basing decisions on previous decisions that were based on previous decisions. Similar challenges may arise when members ask the Appellate Body to rule on 21st century climate subsidies and taxes based on rules negotiated in the 1940s and last updated in 1994. The larger members may be tempted to take matters into their own hands, applying sanctions based on unilateral law, not multilateral law."
The dichotomy of a well functioning Dispute Settlement Mechanism vis a vis the failed negotiations is brought out here. The DSM is seen as one of the strongest points working in favour of the WTO. It establishes the "neutrality", "independence" and "rule-based" approach of the WTO as against the "politically" charged negotiations context. While the former adudicating the rights and obligations of member countries in the context of WTO obligations rather well (much to the chagrin of "domestic" voices), the latter has seen a setback in Doha. However, the ability for the DSM to work in a vacuum is debatable. Both the political and judicial mandates of the WTO must equally deliver for the multilateral institution to be relevant in an increasingly complex trading world.