The World Trade Organisation (WTO) was created in the early 1990s as a component of
the Uruguay Round negotiation. However, it could have been negotiated as part of the
Tokyo Round of the 1970s, since negotiation was an attempt at a ‘constitutional reform’
of the General Agreement on Tariffs and Trade (GATT). Or it could have been put off to
the future, as the US government wanted. What factors led to the creation of the WTO in
the early 1990s? One factor was the pattern of multilateral bargaining that developed late
in the Uruguay Round. Like all complex international agreements, the WTO was a
product of a series of trade-offs between principal actors and groups. For the United
States, which did not want a new organization, the disputed settlement part of the WTO
package achieved its longstanding goal of a more effective and more legal dispute
settlement system. For the Europeans, who by the 1990s had come to view GATT
dispute settlement less in political terms add more as a regime of legal obligations, the
WTO package was acceptable as a means to discipline the resort to unilateral measures
by the United States. Countries like Canada and other middle and smaller trading
partners were attracted by the expansion of a rule-based system and by the symbolic
value of a trade organization, both of which inherently support the weak against the
strong. The developing countries were attracted due to the provisions banning unilateral
measures. Finally, and perhaps most important, many countries at the Uruguay Round
came to put a higher priority on the export gains than on the import losses that the
negotiation would produce, and they came to associate the WTO and a rule-based
system with those gains. This reasoning – replicated in many countries – was contained
in U. S. Ambassador Kantor’s defence of the WTO, and it announced to a recognition
that international trade and its benefits cannot be enjoyed unless trading nations accept
the discipline of a negotiated rule-based environment. A second factor in the creation of
the WTO was pressure from lawyers and the legal process. The dispute settlement
system of the WTO was seen as a victory of legalists but the matter went deeper than
that. The GATT, and the WTO, are contract organizations based on rules, and it is
inevitable that an organization creating a further rule will in turn be influenced by legal
process. Robert Hudee has written of the ‘momentum of legal development’, but what is
this precisely? Legal development can be defined as promotion of the technical legal
values of consistency, clarity (or certainty) and effectiveness; these are values that those
responsible for administering any legal system will seek to maximize. As it played out in
the WTO, consistency meant integrating under one roof the whole lot of separate
agreements signed under GATT auspices; clarity meant removing ambiguities about the
powers of contracting parties to make certain decisions or to undertake waivers; and
effectiveness meant eliminating exceptions arising out of grandfather-rights and
resolving defects in dispute settlement procedures and institutional provisions. Concern
for these values is inherent in any rule-based system of co-operation, since without these
value rules would be meaningless in the first place, therefore, create their own incentive
for fulfilment. The moment of legal development has occurred in other institutions
besides the GATT, most notably in the European Union (EU). Over the past two decades
the European Court of Justice (ECJ) has consistently rendered decisions that have
expanded incrementally the EU’s internal market, in which the doctrine of ‘mutual
recognition’ handed down in Cassis de Dijon case in 1979 was a key turning point. The
court is now widely recognized as a major player in European integration, even though
arguably such a strong role was not originally envisaged in the Treaty of Rome, which
initiated the current European Union. One means the Court used to expand integration
was the ‘teleological method of interpretation’, whereby the actions of member states
were evaluated against ‘the accomplishment of the most elementary goals set forth in the
Preamble to the (Rome) treaty. The teleological method represents an effort to keep
current policies consistent with slated goals, and it is analogous to the effort in GATT to
keep contracting party trade practices consistent with slated rules. In both cases legal
concerns and procedures are an independent force for further co-operation.
In the large part the WTO was an exercise in consolidation. In the context of a trade
negotiation that created a near-revolutionary expansion of international trade rules, the
formation of the WTO was a deeply conservative act needed to ensure that the benefits
of the new rules would not be lost. The WTO was all about institutional structure and
dispute settlement: these are the concerns of conservatives and not revolutionaries, that
is why lawyers and legalists took the lead on these issues. The WTO codified the GATT
institutional practice that had developed by custom over three decades, and it
incorporated a new dispute settlement system that was necessary to keep both old and
new rules from becoming a sham. Both the international structure and the dispute
settlement system were necessary to preserve and enhance the integrity of the
multilateral trade regime that had been built incrementally from the 1940s to the 1990s.
In the method of interpretation of the European Court of Justice:

• Actions against member states needed to be evaluated against the said community goals.

• Enunciation of the most elementary community goals needed to be emphasized

• Current policies need to be consistent with stated goals.

• Current policies need to be consistent with stated goals.