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Afterword: The Question of Linkage

Published online by Cambridge University Press:  27 February 2017

Jagdish Bhagwati
Jagdish Bhagwati*
Affiliation:
Columbia University
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Extract

Commenting on the papers in this symposium is paradoxically a difficult task. The authors are remarkably distinguished and one can only learn from what they write. Indeed, I have learned much from them (especially from Dean David Leebron’s splendid clarification of several aspects of linkage, a paper that shows that he should have been an Oxford philosopher if only he had not been such a successful legal scholar). Yet it is easy for an invited commentator to be overwhelmed by despair because the authors write for the most part as if in a research vacuum. There is little attempt at relating what they write to the enormous literature on the problem of linkage.

Type
Symposium: The Boundaries of the WTO
Information
American Journal of International Law , Volume 96 , Issue 1 , January 2002 , pp. 126 - 134
Copyright
Copyright © American Society of International Law 2002

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References

1 David Leebron, Linkages, 96 AJIL 5 (2002).

2 Fair Trade and Harmonization: Prerequisites For Free Trade? (Bhagwati, Jagdish & Hudec, Robert E. eds., 1996)Google Scholar.

3 At a minimum, the reader may look at chapter 20 of my latest collection of policy essays, Bhagwati, Jagdish, On Thinking Clearly About the Linkage Between Trade and the Environment, in The Wind of the Hundred Days: How Washington Mismanaged Globalization 189 (2000)Google Scholar [hereinafter Thinking Clearly]. It is addressed to the question of linking trade and environmental issues and provides a clear analytical taxonomy and substantive discussion of the issues raised by the two subject matters. It also contains a detailed bibliography to other writings on the subject since publication of the Bhagwati-Hudec volumes.

4 Howse, Robert, From Politics to Technocracy—and Back Again: The Fate of the Multilateral Trading Regime, 96 AJIL 94 (2002)CrossRefGoogle Scholar. Perhaps the most compelling and brilliant writings in several legal reviews on the issue are by Professor Gregory Shaffer of the University of Wisconsin Law School. See particularly Shaffer, Gregory C., The World Trade Organization Under Challenge: Democracy and the Law and Politics of the WTO’s Treatment of Trade and Environment Matters, 25 Harv. Envtl. L. Rev. 1 (2001)Google Scholar [hereinafter Shaffer, WTO Under Challenge]. See also Shaffer, Gregory C., WTO Blue-Green Blues: The Impact of U.S. Domestic Politics on Trade-Labor, Trade-Environment Linkages for the WTO’s Future, 24 Fordham Int’l L. J. 608 (2000)Google Scholar.

5 Bhagwati, Jagdish, The World Trading System at Risk (1991)Google Scholar (based on the 1990 Harry Johnson Lecture delivered in London).

6 Some middle-level countries such as India do produce some intellectual property (IP), especially in software and movies, so they may well see an interest in the TRIPS regime, which addresses the IP question at the WTO. There are different questions to be distinguished here: is IPP (i.e., IP protection) good for the poor countries? Is it good for world efficiency? Is more IPP usually better than less IPP (an assertion that seems to underlie the exorbitant twenty-year patents introduced into the TRIPS Agreement at the WTO at the insistence of the rich countries led by the United States)? If it is good for the poor countries, and for world efficiency (matters that are in doubt at the economic-theoretical level), should we use trade sanctions to promote and sustain it? And even if trade sanctions are all right, should they be introduced into self-standing treaties like the multilateral environmental agreements, or should they be deployed by putting IPP into the WTO as we did with the TRIPS Agreement? In the public debate, these questions have not been sufficiently distinguished.

7 Thus, the Third World Intellectuals and NGOs’ Statement Against Linkage (1999) (TWIN-SAL), issued by nearly a hundred prominent intellectuals and NGOs from around the Third World prior to the Seattle WTO Ministerial Conference, pointedly noted that the “capital” complained about by die unions was their own corporations; and mat it was ironic and self-serving to say that, because one injustice was done to the poor countries, others were legitimate and must follow suit! The TWIN-SAL is available online at <http://cuts.org/twin-sal.htm> (visited Nov. 7, 2001).

8 In addition to the TRIPS Agreement, the legs are the General Agreement on Tariffs and Trade (GATT) and the General Agreement on Trade in Services (GATS).

9 I leave out, for reasons of economy, the question of “trade and the environment.” That issue has many aspects that cannot be treated adequately in a short space. Besides, as distinct from the labor linkage question, environmental issues are already in the WTO in a big way, often from dispute settlement cases that have catapulted the GATT and then the WTO into the center of environmentalist storms. Moreover, my own views on trade and the environment have been spelled out many times elsewhere and are readily available in an essay, Thinking Clearly, reprinted in my collection of public policy essays, The Wind of the Hundred Days, supra note 3.

10 Robert Hudec calls the former “offensive” and the latter “defensive.” Of course, one could be reduced to the flip side of the other; but the distinction is practical and useful, as I hope to show in the text.

11 In particular, their approach is somewhat narrow, in myjudgment, in confining itself to Article XXIII:1 (b) and thus to how changes in domestic commitments regarding labor and environmental standards would affect market access and hence how countries should be allowed under Article XXIII; 1 (b) to “compensate” with trade policy changes for the consequences of such changes in commitments. But this is surely a very limited way to view the problem of linkage: the complex and difficult questions raised by it relate to objections to mere differences in (average) standards, not just changes in them. See General Agreement on Tariffs and Trade, Art. XXIILl (b), Marrakesh Agreement Establishing the World Trade Organization, Annex 1A, in World Trade Organization, The Legal Texts: The Results of the Uruguay Round of Multilateral Trade Negotiations 17 (1999).

12 European Community—Payments and Subsidies on Oilseeds and Animal-Feed Proteins, Dec. 14,1989, GATT B.I.S.D. (37th Supp.) at 86 (1991); Mar. 31, 1992, id. (39th Supp.) at 91 (1993).

13 This is not to deny that there are differences between the Office of the United States Trade Representative (USTR) and the Antitrust Division of the Justice Department on whether to pursue competition policy outside or inside the WTO. Joel Klein and Charlene Barshefsky did not see eye to eye on this question. The European Union was with the USTR on this, however.

14 I use the word “proximately” deliberately. For almost anything will indirectly, i.e., not proximately, affect trade.

15 See , in particular, the several op-ed pieces and articles that I wrote at the time on Japan, and reprinted in my two public policy collections, Jagdish Bhagwati, A Stream of Windows: Unsettling Reflections on Trade, Immigration and Democracy (1998) and The Wind of the Hundred Days, supra note 3.

16 See in particular The World Trading System at Risk, supra note 5.

17 See in particular Bhagwati, Jagdish & Srinivasan, T. N., Trade and the Environment: Does Environmental Diversity Detract from the Case for Free Trade? in Fair Trade and Harmonization, supra note 2, at 159 Google Scholar. That essay deals with the linkage issue as it pertains to the environment. The issue of values-related PPMs that I discuss below with reference to labor standards, see text following note 23 infra, arises also with environmental standards, though not with the same moral force.

18 I have written several papers on this issue. The latest was an op-ed article, Bhagwati, Jagdish, Break the Link Between Trade and Labour, Fin. Times (London), Aug. 29, 2001, at 15 Google Scholar (longer version on file with author). Other articles of mine on the subject are reprinted in my essays in The Wind of the Hundred Days, supra note 3, and in the earlier collection, A Stream of Windows, supra note 15.

19 See Bhagwati, Jagdish, Play It Again, Sam: A New Look at Trade and Wages, in The Wind of the Hundred Days, supra note 3, at 131 Google Scholar.

20 See Robert C. Feenstra & Gordon H. Hanson, Productivity Measurement and the Impact of Trade and Technology on Wages: Estimates for the U.S., 1972–1990 (Nat’l Bureau of Econ. Research, Working Paper No. 6052, 1997). This much-cited study shows a rise in real wages of unskilled labor as a result of the outsourcing; but the wages of skilled labor rise even more, so that the skill premium is shown to increase thanks to outsourcing in the last two decades of U.S. experience. The Feenstra-Hanson study is always cited as showing that the unions’ claims of immiseration due to trade with poor countries are justified. But, as Feenstra has clarified in personal correspondence, the study shows the opposite. The problem is that the published study focuses only on the effect on the wage premium, and does not highlight in anyway the effect on absolute real wages of the unskilled workers.

21 See Drezner, Daniel W., Who Rules? State Power and the structure of global regulation (forthcoming 2003)Google Scholar; Drezner, Daniel W., Bottom Feeders, Foreign Pol’y, Nov./Dec. 2000, at 64 Google Scholar; Drezner, Daniel W., Globalization and Policy Convergence, Int’l Stud. Rev., Spring 2001, at 53 CrossRefGoogle Scholar. In addition, of course, there is much econometric evidence of the absence of a race to the bottom. See Smarzynska, Beata K. & Shang-Jin, Wei, Pollution Havens and Foreign Direct Investment: Dirty Secret or Popular Myth? (World Bank Policy Research Working Paper No. 2673, 2001)Google Scholar (and the many references therein); Bhagwati & Srinivasan, supra note 17; Levinson, Arik, Environmental Regulations and Industry Location: International and Domestic. Evidence, in Fair Trade and Harmonization, supra note 2, at 429 Google Scholar.

22 See the recent report by Human Rights Watch, Unfair Advantage: Workers’ Freedom of Association in the United States Under International Human Rights Standards (2000), at <http://www.hrw.org/reports/2000/uslabor/>.

23 Of course, as Robert Hudec reminds me, this argument of resource shortage is applicable to all new tasks that may be put on the WTO’s shoulders and therefore applies equally, for instance, to competition policy. For some years now, others, including the Canadian economist Sylvia Ostry, and I have agitated for the WTO budget to be augmented, with a number of ideas, but nothing has transpired.

24 The famous cattle concession was granted by Germany to Switzerland in the Swiss-German Commercial Treaty of April 12,1904. For the German text of the concession and its translation, see Gerard Curzon, Multilateral Commercial Diplomacy 60 n. 1 (1965).

25 This viewpoint is prevalent among Indian NGOs, to my certain knowledge. See also Shaffer, WTO Under Challenge, supra note 4 (citing the important Indian environmental NGO, Center for Science and Technology, precisely to this effect).

26 See United States—Import Prohibition of Certain Shrimp and Shrimp Products, WTO Doc. WT/DS58/R (panel report May 15,1998), excerpted in 37ILM 832 (1998); United States—Import Prohibition of Certain Shrimp and Shrimp Products, WTO Doc. WT/DS58/AB/R (Appellate Body Oct. 12, 1998), 38 ILM 118 (1999); United States—Restrictions on Imports of Tuna, GATT B.I.S.D. (39th Supp.) at 155 (1993), 30 ILM 1594 (1991) (unadopted panel report Aug. 16, 1991); United States—Restrictions on Imports of Tuna, 33 ILM 839 (1994) (unadopted panel report June 16, 1994).

27 My lawyer friends disagree on whether preambles are to be taken as binding; nor do they agree on whether the insertion of the phrase “sustainable development” in the Marrakesh preamble should be interpreted as a nod in favor of shifting Article XX in a more environmentally friendly direction, as the Appellate Body did. My point simply is that few of the poor countries can have been aware that the preamble mattered. In short, the bureaucrats and the politicians signing these agreements have simply no idea what they are getting into, and we need to take cognizance of that.

28 I know that Steve Charnovitz thinks otherwise, that Article XX was drafted so as to include the preservation of wildlife and fisheries. But I do not believe that we can rely on that to use Article XX (f) to drive far bigger elephants through the door.