October 2005 Vol. 104 No. 1 THE REVIEW

The Transformation of World Trade

Joost Pauwelyn

Conventional wisdom holds that the world trade system evolved from a power-based to a rules-based regime. “To a large degree,” one of the pioneers of the academic study of international trade notes, “the history of civilization may be described as a gradual evolution from a power oriented approach, in the state of nature, towards a rule oriented approach.” In a steady, unidirectional process of legalization, the argument goes, trade law has gradually replaced trade politics. In particular, the creation ten years ago of the World Trade Organization (“WTO”) is commonly portrayed as a constitutional moment when the stability of the rule of law finally eclipsed the caprices of politics and diplomacy. In support of this theory, proponents invariably point to the WTO’s new dispute settlement mechanism, which, unlike that of its predecessor, the General Agreement on Tariffs and Trade (“GATT”), is compulsory and fully automatic. Combined with the WTO’s expansion into a host of new regulatory areas, such as health and safety standards, services, trade, and intellectual property protection; and its single package approach (all but two of the more than thirty WTO agreements are binding on all 148 member countries); the conclusion that the WTO possesses a thickened legal-normative structure is, indeed, inescapable. The common perception is, therefore, that at the expense of member countries’ sovereignty (less politics), the authority of the WTO gradually expanded (more law).

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