How Strategic Can Ambiguity Be? The Role of Ambiguity in the Quest for Legal Certainty and the

Myth of the Toothless Tiger

A presentation for the SLSA 2016 Annual Conference Economic Law in Context Theme

5th April 2016

By Dr. Mervyn Martin and Dr. Maryam Shadman-PajouhSchool of Social Sciences, Business and Law, Teesside University, , Middlesbrough TS1 3BA United

Kingdom, e-mail:-m.shadmanpajouh@tees.ac.uk, m.martin@tees.ac.uk

Context• 8th Round of Multilateral Trade Negotiations was the

Uruguay Round which launched negotiations for the establishment of the World Trade Organisation

• In January 1995 the WTO was established• According to the WTO, the push for the

establishment of the WTO was 3 fold:- Reorienting of policies of developing countries

from import substitution- Adoption of market oriented reforms - Fall of communism

Context• According to academic writers and civil servants

from developing countries:- need to include new players- globalisation- the large gap in wealth and power between countries in the international trading system

Evidence that WTO is rule-based• Shift from the GATT 1947 (Power based to rule

based) • Unified dispute settlement• Single undertaking (single body of law)• Paragraphs 3:3 and 4:3 of the Marrakesh Agreement

Establishing the WTO• Annex 2, the DSU

Nature of the WTO• Rule-based• Forum for negotiations (talk through problems first)• Room for negotiations maintained within the DSU

Objectives of the DSUArticle 3:3 Prompt settlement

3:2 Rulings cannot add or diminish rights or obligations under the Agreements

3:4 Rulings are aimed at achieving a satisfactory settlement in accordance with rights and

obligations under the covered Agreements3:7 In the absence of a mutually acceptable solution,

to secure the removal of the measure if found to be inconsistent with provisions of the covered

Agreements

Recommendations of the DSBArticle 19:1 :- bringing measure into conformity, in addition may

suggest ways to implement recommendations

Methodology• Analyse the objectives of the DSU as per

provisions in Article 3 and 19• Applied the objectives to WTO case law, in

particular the US Shrimp case• Derived empirical evidence on whether the

objectives of the DSU are being met through WTO jurisprudence

AnalysisIf the DSU is meant to provide a prompt settlement, without adding or diminishing rights or obligations, and securing the removal of the measure if found to be inconsistent with provisions of the covered Agreements is the first objective, where the DSB may suggest ways to implement recommendations.

Rulings of the DSB stop at recommending that the measure found to be inconsistent with a member’s obligations be brought into conformity. There are never any suggestions on how this conformity is to be implemented

Concept of Strategic Ambiguity• This declaratory view: use of the plural

“recommendations” in Article 19 of the DSU, suggesting that a panel might make more than one recommendation supports the strategic theory from the use of bringing the measures “into conformity” in that “conformity” is ambiguous enough to achieve the objective of strategic ambiguity.

• Which is to bring parties to the negotiating table

Concept of Strategic Ambiguity• The problem is that at some point, talking will need

to end especially where a solution cannot be reached, and adversarial litigation begins

• This is provided for by Article 4 DSU • This is also what the rule based system seeks to

achieve; off-setting the power imbalance between members

Effects of Strategic AmbiguityUnited States-Import Prohibition of Certain Shrimp and Shrimp

Products: Decision:- Negotiating on a multilateral Turtle Conservation Agreement was deemed sufficient to “bringing the inconsistent measure into conformity”

Empirical observations from the Shrimp outcome

• The settlement was not prompt but protracted taking up a number of years• The ruling diminished the rights and added obligations on to the complainant• The ruling made for a settlement outside the covered agreements• Removal of the measure found to be inconsistent with the Agreement was not

achieved• The DSB did not suggest that removal could be a method of complying with

conformity• The implication of the decision has extracted all the “teeth” the WTO DSU has

been described as having, leaving the WTO a toothless tiger when it comes to enforcing the breach of a covered agreement in the rule based system