Abstract
This chapter presents a particular problem of justice in the sanction system of the World Trade Organization. After a brief description of the functioning of sanctions in the WTO, I explain (based on the example of the EU) why WTO rules have no direct effect in the member states. The combination of the rules on sanctions and the absence of direct effect implies that sanctions are not suffered by those who benefit from the violation of WTO rules. In practice, this mechanism is unjust: even if we assume that the benefit conferred to some economic agents by violating WTO rules is justified by legitimate wealth redistribution, the burden associated with such benefit falls on other economic agents, chosen independently of distributive justice in the violating state. I finally attempt to generalize my findings by showing that this justice problem can be seen as a consequence of legal personality.
I acknowledge the financial support provided by the European Community’s Human Potential Programme under contract HPRN-CT-2002-00231, Applied Global Justice. I would like to thank Pr. Philippe Coppens for his helpful comments, all participants in the conference on Social Justice (Zurich, 21–24 October 2004) and members of the Chaire Hoover d’éthique économique et sociale for their challenging questions and comments. Any remaining errors or omissions are mine.
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Notes
- 1.
This paper only addresses one justice problem of the WTO. A consequence of such a limited approach is obviously that many questions related to justice in international economic relations are not discussed here, including the most fundamental one of the justification of liberalization and free trade. I am not concerned here with the general design of a just economic order, but only with one particular injustice of relatively minor importance in the framework of the existing (albeit imperfect) international trade system.
- 2.
See, Carmody, C. 2002. Remedies and conformity under the WTO agreement. Journal of International Economic Law : 307–329; Charnovitz, S. 2001. Rethinking WTO trade sanctions. American Journal of International Law 95(4): 792–832; Grané, P. 2001. Remedies under WTO law. Journal of International Economic Law : 755–772; Pauwelyn, J. 2010. The calculation and design of trade retaliation in context: what is the goal of suspending WTO obligations? In The law, economics and politics of retaliation in WTO dispute settlement, eds. Brown, C.P., and J. Pauwelyn, 43–56, 64. Cambridge,: Cambridge University Press; Ruiz Fabri, H. 2000 Le contentieux de l’exécution dans le règlement des différends de l’OMC. Journal du Droit International : 632. Contra: Palmeter, D., and S.A. Alexandrov. 2002. ‘Inducing compliance’ in WTO dispute settlement. In The political economy of international trade law—essays in honor of Robert E. Hudec, eds. Kennedy, D.L.M., and J.D. Southwick, 646–666. Cambridge: Cambridge University Press.
- 3.
However, intra-branch trade also exists in international economics. See Rainelli, M. 2003. La nouvelle théorie du commerce international, 3rd ed., 45–60. Paris: La Découverte.
- 4.
Jackson, J.H. 1997. The world trading system-law and policy of international economic relations, 2nd ed. Cambridge, MA: MIT Press, 127.
- 5.
European Court of Justice [E.C.J.], 5 February 1963, Van Gend & Loos, 26/62, Rec., 1963, 3; E.C.J., 17 December 1970, SACE, 33/70, Rec., 1970, 1213; E.C.J., 30 September 1987, Demirel, 12/86, Rec., 1987, 3719, 14.
- 6.
Van Gend & Loos, 26/62.
- 7.
See E.C.J., 22 June 1989, Fédération de l’industrie de l’huilerie de la CEE (Fediol), 70/87, Rec., 1989, 1781; E.C.J., 7 May 1991, Nakajima All Precision Co. Ltd, C-69/89, Rec., 1991, I-2069.
- 8.
For a discussion of this issue in U.S. law, see Jackson, J.H. 2000. The jurisprudence of GATT & the WTO, 297 sq. Cambridge: Cambridge Univeristy Press and Matsushita, M., T.J. Schoenbaum, and P.C. Mavroidis. 2003. The world trade organization—law, practice, and policy, 97 sq. Oxford: Oxford University Press.
- 9.
E.C.J., 23 November 1999, Portugal v Council, C-149/96, Rec., 1999, I-8395; E.C.J., 9 September 2008, FIAMM & FIAMM Technologies v Council, C-120/06 and C-121/06, Rec., 2008, p. I-6513. Some authors criticize this case law: for instance, Griller, S. 2000. Judicial enforceability of the WTO law in the European Union—annotation to case 149–96, Portugal v. Council. Journal of International Economic Law : 441–472; van den Broek, N. 2001. Legal persuasion, political realism and legitimacy: The European Court’s recent treatment of the effect of WTO agreements in the EC legal order. Journal of International Economic Law : 411–440. Others are more indulgent (for instance, Eeckhout, P. 2002. Judicial enforcement of WTO law in the European Union—some further reflections. Journal of International Economic Law : 91–110).
- 10.
Portugal v Council, C-149/96, 36.
- 11.
Portugal v Council, C-149/96, 43.
- 12.
On the question of reciprocity in this context, see S. Griller, op. cit.: 455 sq.
- 13.
Sanctions raise other issues of justice linked to their cost and differentiated effects according to the (economic) size of the countries involved (see S. Charnovitz, op. cit.: 814 sq.; Mavroidis, P.C. 2000. Remedies in the WTO legal system: Between a rock and a hard place. European Journal of International Law : 807; Morgan, T.C., and N.A. Bapat. 2003. Imposing sanctions: States, firms, and economic coercion. International Studies Review 5(4): 66, stressing that costs are born mainly by individuals and companies, not by the government).
- 14.
United States—Sections 301–310 of the Trade act of 1974, Report of the Panel, 22 December 1999, WT/DS152/R, 7.73 sq.
- 15.
European Communities—Measures concerning meat and meat products (hormones), WT/DS26 and WT/DS48; European Communities—Measures Affecting the Approval and Marketing of Biotech Products, WT/DS291, WT/DS292 and WT/DS293.
- 16.
About these strategic considerations in the application of sanctions, already before the WTO, see Boisson de Chazournes, L. 1992. Les contre-mesures dans les relations internationales économiques, 128 sq. Paris: Pedone. See also Goldstein, J., and L.L. Martin. 2000. Legalization, trade liberalization, and domestic politics: A cautionary note. International Organization : 616 sq.
- 17.
O’Connor, B. 2004. Remedies in the World Trade Organization dispute settlement system—the Bananas and Hormones cases. Journal of World Trade : 260; S. Charnovitz, op. cit.: 810 sq.; Dam, K.W. 1970. The GATT—law and international economic organization, 357. Chicago: Chicago University Press (under GATT of 1947).
- 18.
FIAMM & FIAMM Technologies v Council, C-120/06 and C-121/06, 1.
- 19.
T.C. Morgan & N.A. Bapat op. cit.: 65.
- 20.
For example, E.C.J., 30 September 2003, Biret International, C-93/02, Rec., 2003, 10497; C.F.I., 20 March 2001, Cordis v. Commission, T-18/99, Rec., 2001, II-913; C.F.I., 20 March 2001, T. Port v. Council, T-2/99, Rec., 2001, II-2093; C.F.I., 12 July 2001, Banatrading v. Council, T-3/99, Rec., 2001, II-2123; FIAMM & FIAMM Technologies v Council, C-120/06 and C-121/06.
- 21.
“To a large extent, a decision by a WTO adjudicating body calling for an end to an illegal trade practice is a decision to redistribute wealth within a particular society” (P.C. Mavroidis, op. cit.: 807).
- 22.
This choice is of course a factual and not a legal one.
- 23.
Art. 22.1 and 22.2 DSU.
- 24.
In the present state of international relations, enforcement against the states raises serious difficulties. However, the rule of law in most democratic states implies that states pay damages when their own courts condemn them to do so.
- 25.
See Michoud, L. 1932. La théorie de la personnalité morale et son application au droit français, 3rd ed., 70, 97 (Paris: L.G.D.J.); Dabin, J. 1952. Le droit subjectif, 109 (Paris: Dalloz). The difficulty is sometimes overlooked even in philosophical arguments. When presenting the libertarian case in favour of free trade, Frank J. Garcia (Building a just trade order for a new millennium. George Washington International Law Review 33(3/4) (2001): 1015) uses such concepts as “free exercise of economic rights by private parties” or “people’s entitlements to their bodies and the fruits of their labor” (Ibid.: 1047). To prove that free trade can also be defended from a Rawlsian point of view, Garcia argues that free trade would accomplish the principle of equal liberty (i.e., of individuals) (Ibid.: 1047 sq.) while special and differential treatment (of states) is essential for the implementation of the difference principle: “The principle of special and differential treatment accomplishes this [the difference principle] by putting the wealthy markets of well-endowed states in the service of the economic development of the less fortunate states” (Ibid.: 1053). Beyond taking the state as morally granted, the difficulty here is doubled by the author shifting without much explanation from a reasoning based on individuals to one taking the states as the relevant units. Garcia, F.J. 2001. Building a just trade order for a new millennium. George Washington International Law Review 33(3/4): 1015–1062.
- 26.
As we are talking of legal entities in a very broad sense, the word “demos” should be taken in a similarly broad meaning. Of course, the argument does not contend that the demos is of the same kind in a state, a company or an international organization, nor that the same principles of justice apply.
- 27.
On the link between the state system and the “democratic deficit” of international society, see Zampetti, A. Beviglia. 2003. Democratic legitimacy in the World Trade Organization: The justice dimension. Journal of World Trade : 109 sq.
- 28.
See, for instance, Article 492bis of the Belgian Penal Code (fraudulent use of corporate property).
Bibliography
Garcia, F.J. 2001. Building a just trade order for a new millennium. George Washington International Law Review 33(3/4): 1015-1062.
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Culot, H. (2013). Are WTO Sanctions Unjust?. In: Merle, JC. (eds) Spheres of Global Justice. Springer, Dordrecht. https://doi.org/10.1007/978-94-007-5998-5_42
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