Washington trade economist Claude Barfield's "Free
Trade, Sovereignty, Democracy" (The American Enterprise, 245 pages,
$20) is an irritating look at the World Trade Organization's legal machinery
for settling trade disputes, which he argues is "substantively and
politically unsustainable." That is why I liked it. What greater
tribute can you pay to an author than to admit that he forced you to re-examine
something you thought you had already understood?
Likewise, "China and the WTO" (Wiley, 251
pages, $21.95) will be an irritating read for protectionists in the United
States and Europe. This is because Mark Clifford's co-author is Supachai
Panitchpakdi, a former Thai deputy prime minister who will replace Mike
Moore as the WTO's director general in September. Mr. Supachai makes it
clear that he is on to the protectionist tricks that the rich countries
play on the poorer WTO members. While readers of the Clifford-Supachai
book will look ahead for any clues it provides on the direction of the
WTO's just-launched Doha round of trade liberalizing negotiations, Mr.
Barfield's focus looks back to the key deal struck during the Uruguay
round talks that set up the WTO in 1995. He argues that it hasn't worked.
The deal was that henceforth no country would be able
to ignore the rulings of the WTO's dispute settlement body. Rulings of
dispute panels were to be binding. No longer could WTO members refuse
to bring their trade laws into compliance with their obligations to treat
their trading partners equitably.
The reform was sought by the U.S., frustrated by the
European Union's repeated refusal to comply with adverse dispute-panel
rulings in the General Agreement on Tariffs and Trade, the predecessor
to the WTO. For example, despite the fact that several dispute panels
had found that the EU's refusal to accept U.S. beef treated with hormones
rulings was discriminatory, Brussels simply refused to comply.
Now the problem is that even though the WTO's dispute-settlement
body has yet again found the EU's discrimination against American hormone-treated
beef to be WTO-illegal, Brussels is still stonewalling. Moreover, in another
celebrated case, the U.S. has refused to bring its WTO-illegal Foreign
Sales Tax subsidy into compliance.
Mr. Barfield argues that in these and other highly charged
political controversies where the U.S. and Europe have dug in their heels,
the WTO should back off. The Geneva-based trade body, he contends, "is
overextended and in danger of losing authority and legitimacy." He
believes that it is useless to expect the WTO's dispute panels to force
legal reforms, as long as the political consensus among WTO members to
abide by the rule of law is lacking.
"If a substantial minority of WTO members clearly
oppose a decision, a blocking mechanism should be used to set aside that
decision until further negotiations produce a consensus," Mr. Barfield
concludes. Toward that end, Mr. Barfield would like to see the WTO's director
general, or perhaps a special standing committee of the dispute settlement
body, have the authority "to step in and direct the contending WTO
members states to settle their differences through bilateral negotiations,
mediation or arbitration by an outside party."
Not everyone will agree. Some prominent legal authorities
who believe Mr. Barfield has diagnosed the problem correctly call instead
for more energetic efforts to strengthen political support for the WTO.
I think Mr. Barfield's critics have the better approach. If Washington
and Brussels won't abide by the rule of law, how can we expect Beijing
to do so? Still, his polemic deserves credit for opening a lively debate.
Neither does "China and the WTO" shy from
live controversies. Co-author Mark Clifford, a veteran BusinessWeek correspondent
who covers Asia from Hong Kong, has a keen journalist's eye for details
of the history of the protracted U.S.-China negotiations; the book is
handy to keep nearby just on that account.
The authors are clearly optimistic about what China's
WTO membership means for the Middle Kingdom's modernization prospects.
But they don't pull punches, laying out a roadmap of the tortuous road
ahead for a country that will see many struggles over the difficult bureaucratic,
financial and legal reforms associated with WTO membership.
"It's hard to be optimistic" that China will
quickly modernize its present ineffective legal and judicial machinery,
Mr. Supachai and Mr. Clifford write. "Officials talk too often of
rule by law. Only the most enlightened talk of the rule of law, a system
that in the courtroom puts a citizen on equal footing with the government."
There has been concern in Washington that as head of
the WTO Mr. Supachai will perhaps be too much of a Third Worlder, tending
to be too tolerant of developing countries' protectionist impulses. To
judge from his book, Mr. Supachai will indeed be a Third World advocate
-- but for the right reasons. "The problem is that freer trade hasn't
delivered on its promise for the poor world, in large part because of
continuing protectionism in the rich world, especially its farmers and
its textile and clothing industries," Mr. Supachai declares.
Mr. Supachai is well aware that the poorer countries
enter the Doha negotiations with deep frustrations. For years, trade officials
in Washington and Brussels have incessantly demanded that African, Latin
American and Asian politicians summon the political will to dismantle
their domestic protectionist barriers to trade. At the same time, the
rich countries have remained unwilling to summon the political will to
fully open their own markets.
Now, the poor countries are demanding that the Doha
round give them fuller access to Western markets. "It's clear,"
Mr. Supachai writes, "that the next major task of the WTO is to ensure
that the next trade round benefits the poorer nations as much as possible."
In Washington and Brussels, well-heeled lobbyists for
the usual list of protectionist rackets -- sugar, steel, textiles and
apparel, peanuts, citrus, etc. -- will find the preceding sentence a considerable
irritation. The rest of us will find reason for cheer.
