Wednesday, June 27, 2012

Joel Trachtman on the WTO, Legitimacy and Development

The WTO has often been criticised in terms of its legitimacy and democratic deficit - legitimacy in terms of it being equitable and representational of diverse interests. Critics argue that the multilateral system favours the developed world as well as powerful trading countries and is to the detriment of the least developed countries. They also argue that the WTO structure that permits only formal participation of the States is not entirely representational and thus suffers from a "democratic deficit". Further, it is said that decision making on vital policies affecting a country is transferred from "democratically" elected national representatives to "non-elected", international technocrats.

Joel Trachtman has provided a brilliant understanding of this debate in a Special editorial titled "The WTO, Legitimacy and Development" in the Trade, Law and Development Journal where he has argued that the criticism must move beyond the "generic" legitimacy debate into specifics of what the actual problems are. Arguing that criticism should be backed by strong empirical tools of data analysis, he avers:
"There is no doubt that the WTO has many faults. The problem is that different observers claim different faults, and one observer’s fault is another’s merit. So, instead of claiming illegitimacy, we should explain with greater precision what the problem is. In this context, actionable problems must be of one of two main related types, known in the literature as output legitimacy and input legitimacy, but I believe that calling them legitimacy only clouds the issue. Let’s call them instead “inadequate welfare” and “inadequate accountability”.   

Public policy, including rules of the WTO, can be attacked for failing to maximize welfare. It is easy to see that the claim of inadequate welfare requires a great deal more analysis than a claim  of illegitimacy. It will often require a comparison, using theoretical and/or empirical tools, of the effects of different proposed legal rules or institutions. Professional grade knowledge about what increases welfare and what does not, will  increasingly be viewed as essential to public policy discourse. Those who criticize professionalism and expertise as fundamentally illegitimate have selected ignorance as their guide to public policy formulation."
It is also often argued that the role of multiple interests, especially of civil society and non-State actors must be increased in decision making at the WTO, both at the time of negotiations and dispute resolution. The States "legitimacy" to represent all its citizens is the common refrain. How representative is the Government is the provocative question. Representational democracy is often dismissed as an adequate response.

Questioning the "representational character" of non-State actors, Joel Trachtman is cautious about the argument that non-State actors increase accountability and transparency and hence is more legitimate.
"Given this framework, it cannot simply be assumed that WTO dispute settlement should be more transparent than it is, or should allow greater participation by NGOs or other private actors. From a welfare standpoint, there are costs and benefits to transparency, and there may be circumstances in which the costs outweigh the benefits. We might establish a presumption that transparency in the strict sense – greater knowledge of governmental processes – is often welfare-enhancing, simply because it allows those interested to know, about decision-making and to express their preferences.   

But can we presume that allowing greater participation by NGOs promotes either welfare or accountability? Indeed, arguments for transparency that include NGO voice or control often pit representative democracy in the form of the state against a proposed discursive democracy, empowering organizations that may pejoratively be referred to as “special interests”. The argument for special NGO voice or control, like the argument for legitimacy, attacks agreed methods of doing procedural justice, assuming that there  is something deficient in representational terms about our agreed governmental processes. It would take a good deal of very specific analysis in order to determine whether the special interests add to the welfare analysis or to the quality of participation.  Presumably, they would add to the welfare analysis through expertise. At the WTO, developing countries have often argued that greater roles for NGOs may impair welfare from their standpoint."
Commenting on the efficacy of the "Special and Differential Treatment" (S&DT) provisions in the WTO, he concludes by proposing that though it is difficult to provide redistributive justice in a consent based multilateral system, international trade could provide some answers:
If there were more consensus regarding the problem of what to do, it would be politically easier to do it. The problem of how to do it is, in part, dependent on the problem of what to do. But the problem of how to do it – politically – is crucial. As suggested above, it is difficult to find in a consent-based international legal system the possibility for strong redistributive action. However, in a consent based legal system, it is possible to find ways to share in the benefits of liberalization in such a way as to promote liberalization in favour of exports of goods, services and labour of the poor. This liberalization is a way to allow the poor to compete side-by-side with the wealthy, and is the key to wage convergence.  
Not every action urged in the name of development is beneficial to poor people, just as not every action urged in the name of legitimacy promotes either welfare or participatory values. On the other hand, measures that increase welfare, that enhance participation in a way that increases welfare, and that narrow distributive differences, will be attractive. Critics of the WTO, and others interested in public policy, would do well to focus on these parameters, and to develop analytical skills that will allow  them to frame their arguments in these terms, rather than in terms of legitimacy, or in terms of unverified assumptions about development or poverty reduction, like many of those involved with S&DT." 
A thought provoking editorial indeed! Throws open myriad questions about the criticism of the WTO, the high moral ground that "developmental" theorists take regarding their theories of poverty alleviation and role of international institutions, role of the WTO in an inequitable world order, globalisation and equitable growth as well as looking at addressing inequity in a refreshingly innovative way. When stereotypes are questioned and cliches are broken, there is always a lot of food for thought.

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