Bob Hudec had the great good fortune to witness – and make important contributions to – the full evolution of the focus of his life's work, namely the GATT/WTO legal system. When he began, the GATT had what he called a ‘diplomat's jurisprudence’, a state of affairs perhaps best exemplified by the fact that the member countries did not allow the Secretariat to have a formal Legal Division (or even a formal legal advisor) until 1983, 35 years after the GATT was established (the IMF had a General Counsel and a Legal Division the day it opened for business). By the 1980s the authority of legal obligations was playing a much more important role. Then, with the successful conclusion of the Uruguay Round, came the bold changes we are living with today: the automatic right to bring legal complaints before a dispute settlement tribunal, automatically binding legal rulings, appellate review, and an automatic right to impose retaliatory trade sanctions when the defendant government fails to comply with a legal ruling.

This special issue of the World Trade Review marks the 10th anniversary of the creation of the World Trade Organization as part of the agreements reached during the Uruguay Round of trade negotiations. The Editorial Board is pleased to present the reflections of all the former Director-Generals of the WTO on the organization's achievements and shortcomings over the past decade, as well as their thoughts on its future direction.

The following announcement may be of interest to World Trade Review readers.

Depending on how one classifies market intervention, trade liberalization disciplines can be lenient or strict. Perhaps the most important distinction in this respect is that between government intervention labeled as a ‘market access restriction’ and that defined as ‘domestic regulation’. Both the GATT and the GATS declare market access restrictions (such as import quotas or limitations on the number of service suppliers) to be, in principle, prohibited. In contrast, domestic regulations (such as internal taxes, health standards, and safety requirements) are treated with much more deference. They are, in essence, only prohibited when discriminatory or more trade restrictive than necessary. Notwithstanding these major legal consequences, the distinction between market access and domestic regulation remains unclear. Based on a recent WTO dispute condemning the United States for banning online gambling, this article is an attempt to clarify the distinction. Starting from broad similarities, it finds crucial differences in this respect between GATT and GATS. For both, however, the paper's basic point is that a domestic regulation should not be regarded as a market access restriction simply because it has the effect of banning certain imports. To do otherwise risks seriously undermining the regulatory autonomy of WTO Members beyond anything imagined by the drafters of the WTO treaty.

The first significant GATT case regarding the principle of trade discrimination was ‘Belgian Family Allowances,’ a complaint by Denmark and Norway against Belgium. This 1952 decision expounding the meaning of the unconditional ‘most-favoured-nation’ principle is often cited for the proposition that origin-based conditions are inconsistent with that core principle. This article reconsiders ‘Family Allowances’ through the window of Professor Hudec's classic case study written in 1975. In particular, the article considers whether the panel and Professor Hudec correctly interpreted the term ‘unconditionally,’ in light of the pre-1947 international trade law practices. In addition, the article explores the status of ‘Family Allowances’ as the first GATT case holding that a governmental social program violated trade rules. Although Belgium did not invoke GATT Article XX as a defense, this paper assesses how current WTO jurisprudence would be applied to the facts in ‘Family Allowances,’ and concludes that Belgium would still lose the case.

In reflecting on the record of the World Trade Organization during its first ten years of existence I have chosen to take a ‘political’ view. In doing so, I am aware that other observers might well draw quite different conclusions from my own. However, it is often the political perceptions that count. Indeed, in the past few years, as the WTO has gained recognition in the public consciousness, the work of the institution has sometimes been deflected from what strict economic or legal analysis might suggest as the ‘best courses’ for the overall public good.

At the end of April 2005 we celebrated the 10th anniversary of the World Trade Organization (WTO).

The paper deals with regional policies towards temporary labour migration (or the movement of natural persons) with specific reference to the liberalization of trade in services. The paper deals with policies towards labour migration, and progress in related Mode 4 negotiations within the GATS framework, among the Association of Southeast Asian Nations, or ASEAN. It finds that unilateral, national policies rather than regional or multilateral commitments dominate in policies towards temporary foreign workers. Despite advances on administrative issues, little progress has been made towards achieving ‘GATS-Plus’ outcomes, partly because of the lack of a strong political commitment among member countries to liberalizing the entry of foreign workers and partly because of real or imagined shortcomings in the ‘architecture’ for Mode 4 negotiations. Weak political will has led to relatively shallow commitments with a focus on skilled workers over unskilled migrants. With regard to architectural issues, we draw attention to the weaknesses of the ‘positive list’ approach in services trade negotiations, specifically with regard to the case of labour migration. However, the interpretation of the relationship between different modes of supply has also tended to inhibit regional negotiations for Mode 4. In particular, we point to the neglect of the potential importance of independent suppliers of services. It is concluded that the ASEAN countries need to place more emphasis on regional priorities and problems in seeking more open worker flows within the region.

A diplomat's jurisprudence, as Bob Hudec characterized the early GATT legal system, was a compromise between jurisprudence as understood by lawyers and the reality of the limited influence trade negotiators had over national trade policy decisions. A diplomat's economics was a parallel compromise between economics as understood by economists and the reality of the many objectives that governments hoped the GATT would serve. As the GATT evolved into the WTO and took on more complicated areas of economic policy, its jurisprudence evolved with it, but its economics remained the same. When the bargain was tariff concessions versus tariff concessions, the difference between mercantilist economics and real economics did not matter, but in the new areas the WTO took on at the Uruguay Round it does matter. There is such a thing as comparative advantage among institutions, and in the new areas the WTO is at a comparative disadvantage relative to the international development banks.

The Generalized System of Preferences (GSP), authorized by the 1979 Enabling Clause under GATT, allows importing nations to extend preferential tariff treatment to the products of developing countries. India recently brought a successful WTO complaint challenging aspects of the EC preference scheme, claiming that it impermissibly discriminated among developing countries. We analyze the law and economics of discrimination within GSP schemes, assessing the implications of the Appellate Body decision in the case brought by India, and noting the economic costs and benefits of imposing tight nondiscrimination obligations on trade preferences for developing countries. We conclude that the case against discriminatory preferences is at best an uneasy one, both in legal and in economic terms. We also note that the ostensible justification for GSP schemes in the fist instance – to promote growth and development – is unlikely to be served terribly well by existing GSP policy.

This year the World Trade Organisation (WTO) celebrates its tenth year of existence. That celebration is also an opportunity to review, audit, and evaluate its place, progress, and evolution. I am aware that this issue of the World Trade Review is carrying several articles about the 10th Anniversary. This contribution is targeted at the populist perception that the WTO is undemocratic. It also accepts that there are great injustices in the world trading system, but the answer to that is not the rejection of multilateralism but to conclude the Doha Development Round. The problem of poor nations is never too much trade; it is not enough trade. The WTO is unique among the international institutions and plays a vital role in the international architecture.

In this dispute, Canada attacks Section 129(c)(1) of the US trade legislation as a result of the entry into force of the Uruguay Round Agreements [Uruguay Round Agreements Act (URAA), hereinafter “Section 129”] which provides that a new antidumping or countervailing duty determination made by the Department of Commerce (DOC) or the International Trade Commission (ITC) to bring a previous antidumping, countervailing duty or injury determination into conformity with an adverse WTO panel or Appellate Body report applies only to imports that enter the United States on or after the date that the United States Trade Representative (USTR) directs implementation of the new determination.

The following four articles are revised versions of papers presented at the symposium ‘Why Have a WTO? Focusing on the Welfare Effects of WTO Law’, hosted jointly by the Institute for International Business, Economics, and Law at the University of Adelaide and the Sydney Centre for International and Global Law at the University of Sydney in February 2004. All of the articles went through the World Trade Review's standard refereeing process.

Over the past decade, the United States (US) and the European Union (EU) have implemented widely divergent regulatory systems to govern the production and consumption of genetically modified (GM) agricultural crops. In the US, many GM varieties have been commercially produced and marketed, while in the EU few varieties have been approved: a de facto moratorium limited EU production, import and domestic sale of most GM crops from late 1998 to April 2004, and since then strict labelling regulations and a slow approval process are having a similar effect. The EU policies have substantially altered trade flows and led in September 2003 to the WTO establishing a WTO Dispute Settlement panel to test the legality of European policy towards imports of GM foods. This paper seeks to better understand the economic forces behind the different regulatory approaches of the US and the EU. It uses a model of the global economy (GTAP) to examine empirically how GM biotechnology adoption would affect the economic welfare of both adopting and non-adopting countries in the absence of alternative policy responses to this technology, and in their presence. These results go beyond earlier empirical studies to indicate effects on real incomes of farm households, and suggest the EU moratorium on GM imports helps EU farmers even though it requires them to forego the productivity boost they could receive from the new GM biotechnology.

The multilateral trading system has been an astonishing achievement in international economic cooperation. The power of trade to raise living standards is widely recognized and so too is the capacity for trade tensions to escalate with severe economic consequences and also repercussions that go way beyond economics. As many have observed, when trade cannot cross boarders, then armies will. For these reasons, the World Trade Organization (WTO) is one of the most indispensable international organizations that exists today. It is a system based upon the rule of law and not the law of the jungle, equipped with appropriate legal instruments to defuse and resolve trade conflicts as well as providing a forum for Member governments to negotiate trade rules and trade liberalization.

Nondiscriminatory treatment at its border of a like product coming from another WTO signatory (Article I on Most Favored Nation Treatment), and of domestic and foreign suppliers of like or similar products within its borders (Article III on National Treatment) are widely held to be the fundamental principles of GATT/WTO. Yet GATT included significant exceptions to nondiscriminatory treatment, for example, in its articles relating to customs unions and free trade areas, antidumping and safeguards. I argue that these exceptions have become dominant over time so that not much nondiscrimination remains in the global trading system. With the recent inclusion of services, intellectual property and trade-related investment measures, traditional GATT issues of tariff and non-tariff barriers at the border to market access have become less important compared to regulatory barriers inside the border. It is an open question whether nondiscrimination per se is a salient issue in thinking about multilateral disciplines in these new areas.

Some of the legal analysis in this study derives from joint work between Robert Howse and Susan Esserman on this ruling, “Trade disputes quire fairer arbitration,” FT.com, Sep 12, 2002

This chapter discusses the decision by the arbitrator on suspension of concessions (“retaliation”) in the dispute between the US and the EU regarding the tax treatment of offshore corporate income under US legislation. By way of background, the first part of the chapter (section 2) describes the operation of the US scheme, including as revised after the first round of WTO rulings.