Dispute Settlement in the WTO: Backbone of the Global Trading System or Delegation of Awesome Power?

I. INTRODUCTION Free trade is vital to an interconnected world. It creates jobs, promotes efficiency, and enhances wealth. Free trade also enables countries to better achieve non-economic objectives, such as protecting environment, funding social programs, and stemming illegal immigration and drug trafficking,(1) In a global economy, where challenges are rarely confined within borders, it naturally follows that nations can more effectively realize these goals through international cooperation. The original General Agreement on Tariffs and Trade (GATT), which went into effect in 1948, was an acknowledgment of these realities--nations were painfully aware of consequences of trade barriers, particularly in light of Great Depression and ensuing military aggression.(2) In most recent round of GATT trade negotiations, Uruguay Round, World Trade Organization (WTO) was formed,(3) and with it perhaps strongest, most ambitious dispute resolution procedure ever created in an international context.(4) In a global economy where dispute settlement is increasingly becoming the backbone of multilateral trade system,(5) WTO's dispute settlement process has been hailed as essential feature of WTO, creating best international tribunal in existence.(6) It creates binding legal obligations to adhere to WTO rules,(7) treats all WTO members as equals, and gives force and meaning to an international agreement that is essential to achieving global economic prosperity. But international agreements have no effect as law in United States if they conflict with U.S. Constitution.(8) Paradoxically, element of WTO that makes it most successful multilateral trade agreement to date(9) could be very element that renders it constitutionally infirm. To extent that obligations created by WTO's dispute resolution process are legally binding--and numerous factors, such as language and practice of agreement, suggest that they are--Congress has arguably assigned a boundless, de facto legislative power to a supranational, extra-constitutional body, raising a bevy of constitutional concerns. While United States concedes comparable power to other international bodies, such as United Nations, WTO's dispute resolution mechanism may uniquely deprive this country of its ultimate self-determination, something that other treaties and agreements do not do. Indeed, it appears as if United States, when it loses a dispute, is left with an unpalatable choice between permitting supranational legislating of domestic law, or abandoning WTO altogether and suffering through disaster that would likely follow. Part II of this Note describes WTO's dispute resolution process and nature of U.S. participation in that process. Part III analyzes legal force of obligations created by process. The majority position is that these obligations are non-binding and in no way jeopardize U.S. sovereignty. The minority opinion, which this Note supports, argues that these obligations are clearly binding. Finally, Part IV first presents constitutional problems raised by such binding legal obligations, analyzing potential implications of legislative delegation, constitutional values of accountability and full representation, and limitations to treaty power. Next, it compares WTO dispute resolution mechanism and its corresponding obligations to analogous duties under North American Free Trade Agreement (NAFTA), U.S.-Canada Free Trade Agreement (FTA), North Atlantic Treaty Organization (NATO), and United Nations. To demonstrate very real constitutional difficulties inherent to this issue, recent United States--Tax Treatment for Foreign Sales Corporations(10) decision of WTO Appellate Body is used as a case study. I. BACKGROUND: THE WTO's DISPUTE RESOLUTION MECHANISM AND U. …

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