The EU Institutions and Their Modus Operandi in the World Trading System

Abstract

This article is a comparative institutional analysis of the European Community's (EC) decision-making process in trade policy by focusing on three variables, i.e., competence (whether national or EC competence in EC trade policy), control (who controls the EC's position in international trade negotiations: the Commission or the European Union's (EU) Member States?) and efficiency versus accountability (technocratic versus democratic trade policy) at the national and supranational levels. The empirical background is the World Trade Organization, to which the EC and its Member States belong. The EU institutions and their interaction with EU Member States' institutions and trade policy is the core of this article. The problems that the enlarged EU will face in its internal decision-making process (such as transparency, efficiency, accountability) can be paralleled to the World Trade Organization's (WTO) decision-making process, and thus the European experience can be used as a role or guidance in the WTO forum so that we can learn from the EC's benefits and, more importantly, avoid the mistakes of the European experience in the decision-making process of international trade fora.

Particular attention is given to the role of the European Court of Justice in international trade. The EC's specific problems and challenges for the ECJ are partly related to the EC's position in the WTO. The new mechanisms introduced by the WTO Dispute Settlement Understanding are not perhaps comparable to the full judicial system within the EU, but they have changed both the rules and the legal culture concerning the adjudication and enforcement obligations. Although the WTO is still an intergovernmental organization, powerful private actors have already learned to manipulate the system to reach legal adjudication under the guise of intergovernmental disputes.

This article concludes that the EC wants to deny "direct effect" to the WTO. We must aim at the creation of new standards to judge the applicability of international agreements, otherwise it will be a risk to the EC legal order by allowing policy makers to decide rather than ECJ. The article also concludes that EC trade policy, as well as WTO rules and policies, need to change to become more efficient and accountable at the same time as they address the issue of lack of transparency and legitimacy of the current system of governance, denounced by the Laeken European Council. Thus, more leadership is needed.

Keywords: negotiation, conclusion, ratification, judicial enforcement of international trade agreements

JEL Classification: K33