The Order That Was Built Instead

In one line

The trade round concluded in 1994 created an organisation with compulsory binding dispute settlement covering goods, services and intellectual property, and thousands of investment treaties gave foreign investors direct access to arbitration against host States, so the obligations that became enforceable were obligations to open markets and protect property.

The trade system

The tariff and trade agreement of 1947 was provisional, covered goods, and settled disputes by panels whose reports could be blocked by the losing party.

The round concluded in 1994 changed all three. It created a permanent organisation from 1995, extended the rules to services and to intellectual property, and replaced blockable panel reports with binding dispute settlement.

The dispute settlement understanding is the decisive instrument. Panels, an appellate body, adoption of reports unless there is a consensus against, and, where a member does not comply, authorised suspension of concessions by the complaining member. Compliance is therefore backed by lawful retaliation.

Compare every mechanism in Module III. A treaty body issues views; a regional court's judgment is executed by a political committee; the Security Council is subject to a veto. This is the only general international regime whose ordinary remedy is authorised economic retaliation, and it protects trade obligations rather than human rights.

The intellectual property agreement of 1994 deserves separate mention, because it is the reverse of principle (p). It sets minimum standards of protection for patents, copyright and related rights across almost the whole membership, enforceable through the same dispute machinery.

Principle (p) asked for transfer of technology on terms suited to recipients; the agreement raised and enforced the rights of holders, subject to flexibilities including compulsory licensing that were clarified in a Ministerial declaration on public health in 2001.

The investment regime

Thousands of bilateral investment treaties, concluded in very large numbers from the late 1980s, together with investment chapters in regional and free trade agreements.

The typical content: fair and equitable treatment, full protection and security, national treatment, most-favoured-nation treatment, free transfer of funds, and expropriation only for a public purpose, on a non-discriminatory basis, under due process and against compensation, usually prompt, adequate and effective at fair market value.

And the mechanism: the host State's advance consent to arbitration at the instance of the investor, so a private company sues a State directly before a tribunal, without needing its home State to espouse the claim and without exhausting local remedies unless the treaty requires it.

Set that against the human rights system. An individual alleging torture may reach a committee that issues views, if the State has accepted an optional protocol. An investor alleging an unfair regulatory change reaches a tribunal that can award enforceable damages, because the State consented in advance. [Individual Communications].