World Trade Organization Governance Research Articles

Strengthening multilevel governance of public goods through democratic and republican constitutionalism*

Russia’s invasions of Ukraine confirm the historical experience that governance of public goods (PGs) demanded by citizens (such as human rights, democratic peace, and the sustainable development goals (SDGs) as universally confirmed by the United Nations General Assembly) depends on defending principles of democratic constitutionalism (such as citizenship, democratic governance, ‘mixed government’, and courts of justice), republican constitutionalism (such as separation of power, the rule of law, and jus gentium since ancient Rome), and common law constitutionalism (such as parliamentary and judicial protection of fundamental rights and property rights) against abuses of power. The United Nations (UN) and its 2030 Sustainable Development Agenda recommend these constitutional principles also for multilevel governance protecting the SDGs and related PGs. Yet constitutionalism depends on multilevel legislative, administrative and judicial implementing measures transforming the SDGs into concrete duties of governments and corresponding rights and remedies of citizens. The global health, environmental, energy, security, economic and human rights crises reveal the systemic ‘market failures’, ‘governance failures’, and ‘constitutional implementation deficits’ undermining UN and World Trade Organization governance of PGs. Liberal order can only survive as ‘militant constitutional demoi-cracy’ if citizens defend freedom against tyranny at home and abroad, notably in authoritarian States which, notwithstanding their formal constitutions, suppress democratic constitutionalism.

ПРИСОЕДИНЕНИЕ К СГЗ ВТО В СВЕТЕ РЕФОРМ В СФЕРЕ ГОСУДАРСТВЕННЫХ ЗАКУПОК

The article focuses on highlighting the extent to which the World Trade Organization Government Procurement Agreement (WTO GPA) accession contributes to reforming the public procurement (PP) sector and whether the GPA accession is an outcome of the inte

Briefing: Brexit and UK construction law: past, present and future

The UK left the EU on 31 January 2020, widely referred to as ‘Brexit’. However, the country is currently in the transition period and remains a participant in the EU customs union and single market, with the majority of EU law continuing to be applicable. Furthermore, the UK government’s aim is a trade and economic partnership and free trade agreement with the EU. Therefore, knowledge of the EU’s development, institutions and sources of law remains relevant to civil engineers. The EU–UK political declaration incorporates provisions significant to the UK and EU construction industries, including workers’ rights, environmental protection, ending the freedom of movement of people between the EU and the UK, integrated supply chains and the intention of the UK to accede to the World Trade Organization government procurement agreement. This briefing outlines the expansion of the EU and the UK’s joining the EU. The EU’s institutions, sources of law, former supremacy of European Community law and the Brexit process are explained, along with the terms ‘EU customs union and single market’ and ‘free trade agreement’.

The Politics and Economics of the U.S.-China Trade War

The United States declared trade war after substantial defections from the internationalist (in geo-strategy and economics) lobby in U.S. politics to a new coalition between conflict-is-inevitable activists and anti-globalization proponents. Many internationalist businesses changed sides after experiencing disappointments on economic fronts including China's non-compliance with some of its World Trade Organization (WTO) obligations, China's acquisition of foreign technology at lower-than-expected prices, and the serious inadequacies in the WTO's governance of global trade. Many of the disillusioned internationalists have given too much weight to the contribution of globalization to negative developments in the U.S. labor market, and too little weight to the role of powerful capital-biased technological changes and to the inadequacies of state-provided programs for social insurance and human capital formation. Resolution of the trade war and prevention of its frequent occurrence will become more likely when (a) China adopts much greater reciprocity in its economic engagement with the advanced countries despite its status as a developing country under WTO rules; and (b) the United States stops equating geo-strategic competition with economic competition, recognizes that economic dynamism and economic resilience comes from strengthening indigenous innovation capability rather than from holding China back technologically, and institutes social programs to significantly reduce the trauma that is created by frequent job changes. Deep reform of the WTO is urgently needed but is unlikely to happen in the medium run. For the medium run, the United States should mobilize country cooperation in regional settings (like the Trans-Pacific Partnership [TPP]) to introduce policy innovations to serve as templates for a re-designed WTO architecture, and to harness collective market power to be used in future negotiations on WTO reform.

How Should WTO Members React to Their WTO Crises?

AbstractSince 2017, the United States (US) and other World Trade Organization (WTO) members have been violating their legal duties and democratic mandates given by national parliaments to maintain the WTO Appellate Body (AB) as legally prescribed in Article 17 of the WTO Dispute Understanding (DSU). Article 17 defines the AB as being ‘composed of seven persons’, with vacancies being ‘filled as they arise’. Sections 2 and 3 explain why none of the reasons offered by the US for its blocking of the (re)appointment of AB candidates – on grounds unrelated to the personal qualifications of the candidates – can justify the illegal disruptions of the WTO legal and dispute settlement system. EU trade diplomats must exercise leadership using the existing legal powers and duties of the WTO Ministerial Conference and General Council under Article IX WTO – if necessary, based on ‘a majority of the votes cast’ – to complete the WTO selection procedures for filling AB vacancies and protect the AB as legally defined in Article 17 DSU. Sections 4 and 5 explain why the competition, social policy, and rule-of-law principles underlying European ‘ordo-liberalism’ offer coherent strategies for overcoming the WTO governance crises by limiting hegemonic abuses of both US neo-liberalism and Chinese state-capitalism.

How Should the EU and Other WTO Members React to Their WTO Governance and WTO Appellate Body Crises?

Since 2017, the United States (US) and other World Trade Organization (WTO) members violate their legal duties and democratic mandates given by national parliaments to maintain the WTO Appellate Body (AB) as legally prescribed in Article 17 of the WTO Dispute Understanding (DSU), i.e. as being ‘composed of seven persons’, with vacancies being ‘filled as they arise’. This contribution argues that none of the reasons offered by the US for its blocking of the (re)appointment of AB candidates - on grounds unrelated to the personal qualifications of the candidates - can legally justify its disruptions of the WTO legal and dispute settlement system. Also the European Union (EU) has offered no convincing justification of its failure to protect ‘strict observance of international law’ in it external relations, as required by Article 3 of the Lisbon Treaty on European Union (TEU) and by Article IX:1 WTO Agreement (‘where a decision cannot be arrived at by consensus, the matter at issue shall be decided by voting’). The 2018 ‘Concept Paper’ prepared by the EU Commission on ‘WTO modernization’ indicates no strategy for the obvious problem that the EU objective of ‘preserving and deepening the rules-based multilateral system’, including ‘more effective and transparent dispute settlement including the Appellate Body’, is inconsistent with the US strategies underlying US blocking of the AB jurisdiction by preventing the appointment of AB judges, a strategy which was previously applied by the US for blocking third-party adjudication under Chapter 20 of the North American Free Trade Agreement (NAFTA). Trade diplomats have no democratic mandate for disrupting the AB jurisdiction by illegally reducing the number of AB members to one single judge by December 2019 and, thereby, undermining the WTO legal and dispute settlement system. EU trade diplomats must exercise leadership for using the existing legal powers and duties of the WTO Ministerial Conference and General Council under Article IX:1 WTO – if necessary, based on ‘a majority of the votes cast’ - to initiate and complete the WTO selection procedures for filling AB vacancies and protect the AB as legally defined in Article 17 DSU. Article IX.2 could be used for authoritative interpretations ‘taken by a three-fourths majority of the Members’ confirming the collective duties of WTO members to fill AB vacancies in case of illegal blocking of AB nominations. WTO law foresees similar majority decisions for the appointment of the WTO Director-General; such majority decisions are necessary for preventing illegal de facto amendments of the WTO legal system, and do not set a precedent for future WTO majority voting on discretionary, political issues, which most WTO diplomats reject as a ‘nuclear option’. As suggested by European ordo-liberalism, citizens and democratic institutions must hold trade politicians democratically and legally more accountable for complying with their legislative mandates to implement and modernize, but not to destroy WTO law and dispute settlement.

Does the WTO Government Procurement Agreement Deliver What It Promises?

AbstractWe examine the impact of the World Trade Organization (WTO) Government Procurement Agreement (GPA) on government procurement practices in the European Union (EU). We analyse empirically whether the WTO GPA is effective in promoting non-discriminatory, open, transparent, competitive, and cost-effective government procurement. To study this question, we use a unique data set recently released by the EU, covering more than three million tenders conducted in the European Economic Area, Switzerland, and Macedonia during the years 2006–2016. We find that the WTO GPA promotes competition by increasing the probability of awarding a contract to a foreign firm. In addition, the WTO GPA significantly lowers corruption risk by decreasing the number of contracts with single bidders, and by decreasing total number of wins by a single firm. Finally, the WTO GPA fosters cost-effective public procurement by lowering the probability that the procurement price is higher than estimated cost.

Legal Issues of Economic Disintegration: Government Procurement and BREXIT

This article examines some of the European Union (EU) and World Trade Organization (WTO) legal issues that emerge for the United Kingdom’s (UK) public procurement law and policies following Brexit. It analyses the consequences and sequencing of international negotiations that must now take place since the UK triggered Article 50(2) of the Treaty on the European Union (TEU). Once the UK revokes the European Communities Act 1972, it will no longer be obligated to follow either the Treaty on the Functioning of the European Union (TFEU) or the EU Procurement Directives. Nor will the UK be subject to the commitments the EU has signed up to on behalf of the UK in the WTO Government Procurement Agreement (GPA) and in its Regional Trade Agreements (RTAs). After examining the legal issues concerned with sequencing, the article moves on to assess the domestic, centrifugal forces that will also impact the UK’s public procurement law post-Brexit. Under the Devolution Settlement of 1998, the competence for public procurement was devolved down to the regions of Scotland, Northern Ireland, England and Wales. The article postulates that the legal issues of disintegration that have surfaced under Brexit could potentially fragment a coherent UK wide procurement policy, competition and value for money internally; as well as externally towards the WTO GPA, the EU and other regional procurement agreements. The article puts forward a competition approach to address some of the potentially negative consequences of Brexit undermining value for money, transparency and integration in the UK’s lucrative markets for government procurement. It concludes with the limited hope that the legal and economic issues and challenges resulting from the UK’s referendum on membership of the EU will be a salutatory lesson for all other nations.

Between ‘Member-Driven’ WTO Governance and ‘Constitutional Justice’: Judicial Dilemmas in GATT/WTO Dispute Settlement

The power-oriented General Agreement on Tariffs and Trade (GATT)/World Trade Organization (WTO) traditions of ‘member-driven governance’ risk undermining the dispute settlement system of the WTO and its judicial administration of justice. US President Trump, the ‘Brexit’, and non-democratic rulers challenge multilateral treaties and judicial systems by ‘populist protectionism’ prioritizing ‘bilateral deals’. This contribution uses the example of the US blockage of the WTO Appellate Body system for illustrating the ‘republican argument’ why public goods (PGs, res publica) cannot be legitimately protected without judicial remedies, rule of law and democratic governance. Adversely affected governments, citizens, and courts of justice must hold power politics more accountable and publicly challenge illegal WTO practices so as to protect transnational ‘aggregate PGs’ (like the WTO trading and legal system) for the benefit of citizens. WTO members should use their power of majority voting for authoritative interpretations of WTO law supporting ‘judicial administration of justice’ in multilevel governance of the world trading system. Multilevel judicial control of trade regulation legitimizes ‘member-driven governance’ by protecting rule of law as approved by parliaments when they authorized ratification of the WTO Agreement and its legal implementation for the benefit of citizens, their equal rights and social welfare.

Does the World Trade Organization Government Procurement Agreement Deliver What It Promises?

The revised World Trade Organization (WTO) Government Procurement Agreement (GPA), which came into force on April 6, 2014, provides a limited number of WTO Members with a framework for ensuring that the tenders scheduled under the Appendix to WTO GPA are conducted in a competitive, non-discriminatory, and transparent manner satisfying the conditions on integrity. The purpose of this paper is to analyze empirically whether the WTO GPA is effective in promoting non-discriminant, open, transparent, competitive and efficient government procurement. To study this question, we make use of the micro-level data set released recently by the European Union (EU) covering more than 3 million tenders conducted in the European Economic Area (EEA), Switzerland and Macedonia during the years 2006-2015. We have four major results. First, the likelihood that the contract is awarded to a foreign firm is significantly higher when the contract is covered by the WTO GPA. Second, number of bidders are significantly higher in WTO GPA covered procurements. Third, we find that corruption risk is lower in WTO GPA covered tenders. We use two measures to assess corruption risk: procurements that receive only one bid, and the connection strength of a winning firm in the network of suppliers. We find that single bid procurement is significantly lower in tenders covered by the WTO GPA. Additionally, we conclude that the WTO GPA provides the opportunity for less connected firms to win contracts. Finally, we find that the WTO GPA does not have a significant effect of procurement costs.

International Protection of Free Trade in Procurement Under NAFTA’s Chapter 10 on Public Procurement: The Pathway from NAFTA to WTO Government Procurement Agreement to a Potential European-US Transatlantic Trade and Investment Partnership

The North American Free Trade Agreement (NAFTA), which entered into force on 1 January 1994, is an agreement between Mexico, Canada and the United States to ensure that covered goods and services fall under a comprehensive free trade agreement among the three countries. NAFTA included, in Chapter 10, provisions opening up many aspects of the parties’ procurement markets. As a practical matter, however, NAFTA’s procurement-related provisions have largely been overshadowed by the World Trade Organization (WTO) Agreement on Government Procurement (GPA), which includes the United States, Canada, and many other member parties, but not Mexico. Perhaps in part because Canada has a long history of integration with the U.S. industrial base for defense production, with regard to public procurement the United States’ trading relationship with Canada under the GPA has played a more prominent role. The importance of the GPA in framing future procurement agreements is being borne out in current negotiations, between the European Union and the United States, on a comprehensive free trade agreement, known as the Transatlantic Trade & Investment Partnership (T-TIP). European negotiators have made it clear that their negotiations with the United States will be based on the GPA – in fact, that the T-TIP agreement may set a benchmark for future changes to the GPA, which is rapidly becoming the central agreement in international efforts to promote free trade in procurement. In the process, the procurement provisions of NAFTA are proving less important, as cooperation in trade and procurement regulation centers on the much more broadly adopted GPA. Whether through the T-TIP agreement (known as “TTIP” in Europe), or through the GPA, the international free trade agreements are likely to ease cross-border cooperation in framing procurement law. Part II of this chapter reviews NAFTA’s procurement-related provisions in detail, and discusses some of the protections built into that agreement. Part III describes the launch of the T-TIP negotiations between the European Union and the United States, and notes that those negotiations – based not on NAFTA, but on the GPA – demonstrate that the GPA has become an important instrument (more important than NAFTA) in framing free trade agreements in procurement. Part III describes how the T-TIP agreement might be used to open greater European access to public procurement markets in the United States, especially at the sub-central (state) level. Part III also discusses one option to open that access – to require states, when spending the billions of dollars of federal grants distributed every year, to afford European vendors the same “national treatment” they afford U.S. vendors – and describes some of the hurdles that face that approach. Finally, Part III discusses how the T-TIP agreement could be used to establish an ongoing mechanism -- specifically, an administrative structure to coordinate European and U.S. federal procurement regulations -- for the “transnationalization” of public procurement law.

English

The Multilateral Trading System (MTS) has faced challenges in streamlining the flow of goods and services around the world. The World Trade Organization (WTO) has aimed, as had its forerunner, the General Agreement on Tariffs and Trade (GATT), to create a rules-based forum that oversees global trade. The WTO governance structure, which is based on some basic principles and rules, including the adoption of decisions by consensus (capacity of any Member to veto a deal), the rule of “One Nation, One Voice” (although voting has never been resorted to in the WTO), the fact of being a member-driven organization, the use of the variable geometry, the concept of single undertaking, have been considered. The objectives of this article are twofold: first, to understand the strategies developed and implemented by WTO members to achieve their trade policy objectives; second, to analyze the participation of the Sub-Saharan African countries in WTO negotiations and in general in the MTS.  In that regard, a distinction was drawn between WTO Open Diplomacy and the WTO Hidden Diplomacy with a view to identifying tools used by countries in trade negotiations. Given the absence of any coherent diplomatic approach to the WTO negotiations and the lack of information on the models developed by countries and groups, a model of assessment and audit of the economic diplomacy. The conclusions drawn have enabled empirical work to be undertaken. For any country, the strategies of negotiation developed in the WTO are the reflections of the nature of its external trade and the level of its Economic Diplomacy. Thus, countries advocate their interests and build negotiating systems composed of at least 2 structures: a Back Office Negotiation (BON, in their Capital) and a Front Office Negotiation (FON that leads the negotiations in Geneva). The organization functioning and communication between these 2 structures have direct impacts in WTO negotiations. However, the range of the products and the size of a country's market could also have a bearing on WTO negotiations. Key words: Negotiation, economic diplomacy, WTO, GATT, GATS, game theory, strategy, variable geometry, single undertaking, Africa, trade.

Looking beyond accession: Challenges to implementing the world trade organization government procurement agreement in china

Much of the literature on China's ongoing attempts to accede to the World Trade Organization (“WTO”) Agreement on Government Procurement (“GPA”) focuses on which Chinese entities will ultimately be covered by the Agreement. While coverage issues are, no doubt, important, this paper argues that China will face an even greater number of challenges when implementing and harmonizing the requirements of the GPA with its own domestic procurement laws. In particular, the GPA's Article XVIII requirement for an effective domestic review mechanism may be especially difficult for China to achieve. In light of these challenges, this paper argues that current GPA members should address problems with China's domestic legal framework for procurement now, not look to the domestic review device to resolve problems after accession.

Transforming Vietnam: a quest for improved efficiency and transparency in central government procurement

This case study on Vietnam investigates how a country's institutional framework can determine its participation in the World Trade Organization's Government Procurement Agreement (GPA). Using a cost-benefit approach, this article explores the relationship between institutional framework and procurement liberalisation, and examines how effective institutional reforms can trigger liberalisation. Findings show that the critical success factors for institutional reform are political commitment, the ability to craft an appropriate agenda, and eventual compliance with rules. There is an inverse relationship between costs and benefits of institutional reform, suggesting that Vietnam might prefer employing GPA observer status as a means for procurement liberalisation.

Sustaining Trade Reform: Institutional Lessons from Peru and Argentina

This paper examines trade policies in Peru and Argentina since the reforms of the 1990s. Peru provides a valuable example of sustaining reform. Leaders have used negotiations and other international instruments to disseminate among Peruvians a positive vision of Peru in the international economy and to extend the application of World Trade Organization-based governance principles. Peru has introduced few new restrictions and all of them have been through World Trade Organization-sanctioned policy instruments. Argentina, by contrast, has introduced multiple restrictions, through procedures that eschew World Trade Organization governance principles. Moreover, leaders there have returned trade politics to the dependencia philosophy that sees the international economy as an exploitive environment. The paper brings out the weakness of international obligations to limit Argentina's return to import substitution and the pains at which Peru has gone to maintain the management of its economy within the same rules that Argentina has so easily violated.

The Judicialization of Governance in the WTO: ‘Strategic Litigation’ as an Explanatory Factor?

While negotiations in the World Trade Organization (WTO) linger in gridlock, the WTO’s Appellate Body has become a strong international court in all but name. Over the years, increasing relative judicial power has lead to a judicialization of governance in the WTO: Appellate Body decisions have become increasingly authoritative and determinative not only for the solution of individual disputes but also for changes in the WTO’s overall legal and institutional setup. Offering explanations, some find an ‘activist’ Appellate Body that engages in inappropriate and illegitimate judicial lawmaking. Others observe a ‘capitulation’ of the WTO’s membership as a result of intractable collective action problems; like that the judicialization of governance in the WTO occurs because the members have handed over norm-creation powers to the judiciary. While both explanatory approaches add a number of valuable insights, they remain unsatisfactory.Starting from there, the present paper argues that ‘strategic litigation’ may be another factor for the increasing judicialization in the WTO: WTO members pursue, it is argued, long-term, systemic goals towards WTO governance (also) in the rather unlikely forum of WTO dispute settlement and in their capacities as litigants. After clarifying core concepts and introducing the setting in which strategic litigation takes place, the paper illustrates two incidents of successful strategic litigation on the part of the European Union (EU), which have both preserved and even strengthened the trend of a judicialization of governance in the WTO. Rather than judicial activism or member state passivity, a convergence of preferences and strategies between the EU and the Appellate Body can explain the outcomes in the incidents described. Compared to the United States (US), the EU is found to be a more likely and more successful strategic litigant, due to factors at the level of trade policy making within the US and the EU.

Potential Accession to the WTO Government Procurement Agreement: A Case-Study on India

The World Trade Organization (WTO) Government Procurement Agreement (GPA) is a voluntary plurilateral agreement applicable to WTO members that choose to be Parties to the Agreement. Most developing countries, including India, are not members of the GPA. This case study presents an insight into India’s current procurement framework, evaluates the prospects for, and comments on the principal constraints and challenges to India’s GPA accession. The findings suggest that, though the Indian procurement system is evolving and aims to align the regime with the GPA, there are considerable policy issues, capacity constraints, corruption and transparency failures in procurement practices that will need to be addressed before India can join the WTO GPA.

Gender outcomes of labor market policy in Israel

PurposeThis paper maps gender‐related outcomes of the World Trade Organization Government Procurement Code (GPC) by highlighting the role of deskilling in changing labor market rewards for women employed in traditionally feminine service occupations.Design/methodology/approachThe emergence of the “contract state” is examined as a major response to the GPC, one, that generates fragmentation and promotes deskilling in public service jobs. Fragmentation is examined by comparing average income in direct public employment and in public procurement contracts.FindingsIn the context of service procurement, previous collective agreements recognizing skill and experience are circumvented generating precarious employment for skilled employees.Originality/valueThe analysis unveils the ways in which the contract state through its prioritization of low‐cost bids, promotes women's deskilling in public services. It contributes to a better understanding of the importance of employees' representatives' active participation in tender committees as well as in long‐term auditing of service contractors.

China's Accession to the WTO Government Procurement Agreement--Challenges and The Way Forward

Government procurement, whilst important for international trade,1 has been largely excluded from the reach of multilateral regulation under the World Trade Organization (WTO).2 In the absence of multilateral rule, China's trade partners have made considerable efforts, before and after China's WTO accession, to persuade China to become party of the plurilateral WTO Agreement on Government Procurement (GPA). After 5 years of intensive discussion, on 28 December 2007, China finally submitted a formal application to become party to the GPA.3 This included an offer of GPA coverage (the so-called ‘Appendix I offer’) and signaled the initiation of China's GPA accession process.4 However, China's initial offer has been regarded as ‘very limited’ and ‘deeply disappointing’ by China's trade partners.5 It is safe to argue that China's GPA accession poses significant challenges for negotiators due to a number of factors. Firstly, the GPA itself, even after its recent revision, is not fully equipped to deal with acceding countries with a large state sector6 and existing GPA Parties have made little progress in extending the coverage commitments following the revision. Secondly, so far as the position of China is concerned, Chinese government structure is complicated and the problem has been aggravated by a new round of central government reorganization completed after the application and the division between the Chinese government and state enterprises is difficult to ascertain, especially with regard to investment, which make coverage negotiations problematic. Furthermore, the legal and institutional frameworks underlying current Chinese public procurement regime remain fragmented and incoherent whilst it is also evident that China has in recent years intensified the use of government procurement as a policy instrument to promote national industrial and environmental policies. These add to the lack of political supports for speeding up the GPA accession and complicate the negotiation and adaptation of domestic legislation. Finally, the structural link between administrative tribunals/judiciary and the local government gives rise to the concern of local protectionism and put the effectiveness of a GPA-compliant supplier review system in question.

Confronting the WTO: Intervention Strategies in GMO Adjudication

The World Trade Organization (WTO) has been the target of social justice activists since its inception in 1994, with many seeking to reshape or rescind the WTO agreements. This article instead explores possible interventions into WTO adjudication by compelling the reinterpretation of existing WTO documents. Such an approach can take several forms: mobilizing professional expertise, engaging technical standards, and constructing companion regimes. Using the recent United States/European Community genetically modified organisms (GMO) case as a reference point, this article explores opportunities for implementing the last two strategies. The Codex Alimentarius, an international food standards regime, seems to provide a particularly promising location for reconstructing WTO risk and governance procedures. The Cartagena Biosafety Protocol, an international environmental regime, deeply challenges narrow readings of WTO texts but may not have enough legal force in the WTO. These alternative locations for intervention hold promise and risks for activists seeking international justice in environment, food, and trade.