WTO Guru

On Tuesday (January 15, 2008), a special visitor spoke in my International Business Transactions class at SMU Law School. His background and speech are so interesting that they warrant a special post here.

Hon. James Bacchus was the guest speaker. If you haven’t heard of him, he served two terms on the appellate body of the WTO. The following is an excerpt of his bio:

He was a founding Member, and remains the longest-serving Member, of the highest global trade tribunal. He was twice appointed by consensus of the Members of the WTO, and was twice elected Chairman by his six colleagues. During his eight years of service to the WTO, he was the only American, and the only North American, on the Appellate Body.
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His final decision for the WTO was as the presiding judge in the appeal in the complaint by the European Union, Japan, China, Brazil, and other WTO Members against a safeguard measure by the United States restricting imports of steel. Following the decision by the United States to comply with the ruling by Bacchus and his colleagues on the Appellate Body, The New York Times concluded that "this case was the rough equivalent of Marbury v. Madison, the 1803 decision that established the Supreme Court as the final arbiter of the constitution, able to force Congress and the executive branch to comply with its rulings." (Page 25, December 5, 2003). According to the American Lawyer, "James Bacchus, as much as anyone, can lay claim to being the John Marshall of the World Trade Organization." (March, 2004).

He commenced his lecture with a short pithy discussion on the relationship between trade and freedom. In his opinion, economic freedom generally precedes political freedom, and he stated that is why he supported granting China the “Most Favored Nation” trade status while he was representing Florida in the United State Congress. In his own words, “sooner or later, people are going to ask for political freedom.” Not to put words in his mouth, but a corollary of free trade is ultimate political freedom. (A highly disputed topic, which I won’t get into.)

Then, he posited that the WTO does not try to influence any sovereign nation’s politics, and that it has power over a certain nation only when the member country (countries) chooses to give such authority. In the WTO dispute resolution mechanism, there is no private right of action. In plain English, only member countries, not individual corporations in the countries, can sue. Thus, if a country does not agree to sue the company in another country, the grieved company is out of luck. Simply put, the WTO’s compulsory jurisdiction is only good when a sovereign nation complains about another country.

Further, he shed light on how a judge makes a decision on a WTO case. Generally, a judge undertakes a three-step process. First, she examines the defendant country’s WTO obligations in a certain area at bar, which are laid out in WTO accession agreements. For example, intellectual property obligations would be governed by the TRIPs agreements. Then, she explores the measures that the defendant country has taken to fulfill the WTO obligations. Third, she scrutinizes the facts and circumstances in their totality, and analyzes whether the defendant country’s measures indeed fulfill its compulsory WTO obligations. If a shortfall exists, the defendant country is “guilty,” and it will be required to adjust its measures accordingly. If it does not comply, penalties will follow in the form of withdrawn WTO benefits, i.e. higher tariffs. (Writing a WTO legal opinion is a totally different matter. Those opinions go for hundreds of pages, if you think the U.S. Supreme Court opinions are long. For example, Panel report out on Mexico-US anti-dumping dispute.)

Unlike the International Monetary Fund (IMF) or the World Bank, the WTO is not an independent legal entity. It cannot own real estate, nor can it enter into other business transactions.

During the Q & A session, questions about the U.S. WTO action against China regarding intellectual property was raised, but he did not go into details. I think it is because that he is a counsel (or maybe an advisor) of one of the involved parties.

Another point of interest is that he would like to see a WTO specific legal code of ethics for those attorneys practicing at the WTO, but he sees the difficulty of it ever coming into fruition, since that would be giving the WTO too much power.

He was thoroughly enjoyable and extremely knowledgeable about WTO-related matters. What a treat!