The World Trade Organisation: Less Legalised and More Political than Assumed?

Since the reform of its Dispute Settlement Mechanism (DSM) in the Uruguay Round that led to the establishment of the World Trade Organization (WTO), the world trading system is often called the most legalized or judicialized multilateral regime. This paper will challenge, or at least nuance, this claim. First, it will be argued that the effect of WTO DSM rulings is neither direct, nor automatic. For WTO rulings to have an impact on Member States’ policies, these states have to positively decide to comply with the ruling. The (threat of) retaliation sanctioned by DSM decisions may contribute to the decision to comply and reform, but is neither a necessary nor a sufficient condition. Second, it will be argued that the WTO in its rulings has to take into account the legitimacy of Member States’ policies that are put before it. If it decides to condemn a measures that has much domestic support, it risks non-compliance and loss of support within the Member State, both affecting its (external and internal, respectively) legitimacy. The outcome of this interaction is a play between (and among) Member States and the WTO DSM on the interpretation of its vague rules. Member States can push the boundaries of what the WTO allows, while complainants and the WTO DSM can restrict them. We will look at this interaction between the European Union (EU) and the WTO in recent years. We will discuss two recent EU decisions in particular: the EU’s trade in seal products ban and its decision to include aviation in its emissions trading scheme. We will show how these measures seemed unthinkable in the last decade of the previous millennium but how WTO rulings (and reports) have made them look legitimate, and will consider their impact on the interpretation of WTO rules in the future.