I. Introduction
During the last two decades, the world has experienced an intense growth in the number and usage of international courts. These quantitative changes in the global judicial scenery have been intertwined with equally notable qualitative changes in the nature and powers of international adjudicative bodies. Footnote 1 An ever-widening range of issue areas now falls under the jurisdiction of international courts. Furthermore, in many cases this jurisdiction is no longer contingent upon the specific consent of states, but is rather compulsory in nature – meaning that the jurisdiction of many international courts may now be invoked unilaterally against those subject to their authority, in a manner quite similar to that prevailing in domestic legal systems. Footnote 2
Whereas in the past, the primary, if not the sole role of international courts was that of settling disputes, Footnote 3 in their modern legalised reincarnation, these empowered international institutions – as the case of the WTO dispute settlement system (DSS) discussed here illustrates – have come to be seen primarily as enforcement mechanisms. Footnote 4 Mechanisms that have been put in place by states in order to secure compliance with their originally negotiated commitments, preserve their rights and obligations as allocated in numerous international instruments, and hold states (or other entities) accountable for the international rules agreed upon through the interpretation and application of those rules to the cases coming before them. Footnote 5
Within this prevailing enforcement-centred discourse of international courts, in turn, the natural tendency has so far been to think of ‘justice’ mainly through its ‘legal’ or ‘rule of law’ dimension. Footnote 6 Thus, justice is often assumed to be delivered by an international adjudicatory system like the WTO DSS, when – following legal procedures that offer equal access to justice Footnote 7 and meet proper standards of procedural fairness Footnote 8 – the responding WTO Member discontinues its violative act and brings itself into compliance with WTO rules, so that the original order of rights and duties as enshrined in the WTO agreements is preserved.
In the spirit of this rule of law conception of justice, indeed, a former member of the WTO Appellate Body (AB) noted, ‘there is one goal which is a goal of all law, which is to dispense justice; that if you accept rules, then you have to act according to the rules’, and the WTO DSS ‘helps you to do that’. Footnote 9 Under this conception of justice, then, law and judicial mechanisms are perceived as means to deliver justice by controlling non-compliant behaviour that reveals itself in a conflict. Notably, this rule of law vision of justice closely corresponds with one of the justice categorisations identified long ago by Aristotle – that of ‘legal justice’ or ‘justice as law-abidingness’, under which the legal or the lawful is the just. Footnote 10
The great emphasis placed on the rule-enforcement role of international courts in current scholarship and the legal justice conception attendant thereto, coincides, of course, with the common narrative of the judicialisation of international law over the last two decades as signifying a ‘shift from a power-based to a rules-based international system’, Footnote 11 and as representing the creation of a ‘new world order based on the rule of international law’; Footnote 12 that is, a world order ‘based on compliance with international law’ Footnote 13 and ‘the application of rule of law principles to relations between States and other subjects of international law’. Footnote 14
In this respect, the legalised WTO DSS, which came to replace in 1995 the diplomatic-oriented dispute settlement procedure of the old GATT, is no exception. As noted by Petersmann, ‘[t]he WTO’s quasi-judicial, mandatory dispute settlement procedures are also an ambitious attempt at strengthening the “international rule of law”’. Footnote 15 In fact, Petersmann added, ‘[i]n contrast to many UN bodies the WTO has gone far beyond a multilateral arena “for power politics in disguise”’ Footnote 16 with the adoption of the Dispute Settlement Understanding (DSU) Footnote 17 – an instrument that provides for an elaborate enforcement mechanism ‘by which WTO Members can seek the full implementation of previously negotiated trade concessions’. Footnote 18
While enforcement is surely a pivotal role of the legalised and empowered international judiciary, the article submits, the current enforcement-centred debate of international courts, and the WTO DSS in particular, is lacking in several aspects. First, it overshadows other important roles expected to be performed and actually played by the WTO DSS (such as its renegotiation, redistribution and conciliation roles), and consequently eclipses the diverse social outcomes – beyond rule-compliance – generated by this adjudicatory system.
Second, the prevalent rule-enforcement discourse further works, in turn, as to mask the multiple and complex challenges of justice encapsulated in international disputes reaching the DSS docket, and obstructs the need to explore other conceptions of justice – beyond its legal-procedural meaning – through which the diverse roles and social outcomes of the DSS may (and should) be evaluated. Such conceptions, the article shows, may include global distributive, corrective or transformative justice, which look not only to rules and procedures, but also ask what would be a just allocation of the international rights and duties in a given case, what might recompense for past wrongs, or what would assist the parties in conflict to move toward an amicable settlement that accommodates their competing interests and fashions long-term cooperative international relations.
Finally, the dominant enforcement-centred discourse, by capturing justice mainly through legal and procedural terms, also falls short of addressing the manner in which the various dimensions of justice that come into play in WTO adjudication complement or rather contradict one another, due to the tensions latent among them. Prominent in this regard is the tension associated with the rule of law dimension of justice, which in its preference for order, stability and equal enforcement of the law, may hinder change and the promotion of justice, construed as reallocation of pertinent international benefits and burdens, or as redress of injuries suffered in the context of past or present bilateral relationships.
Against this backdrop, the present article first seeks to unfold a more complex functional account of the judicialised WTO DSS, which goes beyond the prevalent view of the system as primarily an enforcement instrument, designed to dispense justice in the legalistic sense of upholding the rule of law and preserving previously agreed-upon international commitments and entitlements. Instead, the article views the compulsory WTO DSS – a judicial system nested within a major edifice of global economic governance – as a system of multiple, conflicting and shifting institutional roles. Footnote 19 Among them, providing an orderly mechanism of renegotiation, redistribution, and settlement. Roles that essentially allow WTO Members to readjust their original WTO commitments and reallocate their burdens and benefits of international cooperation, and thereby to arrive at new – at times not fully legally compliant – but not necessarily ‘unjust’ cooperative and sustainable social outcomes. In putting forward this broad and dynamic functional account of the WTO DSS, the present contribution thus strives not least to call attention to several descriptive and normative questions concerning the roles played by this global governance institution, the social goods it generates, as well as its potential contribution to and actual influence on different aspects of justice at the global level – questions that merit further academic reflection and investigation.
The article is a modest inductive exploration of these questions, carried out through a qualitative empirical analysis of the perennial conflict over trade in bananas Footnote 20 launched against the European Union (EU) in the 1990s. Footnote 21 Rooted in ex-colonial ties, transatlantic rivalry, and splits among competing groups of developing countries, the famous EC–Bananas dispute entangled the EU in enduring non-compliance with WTO law. Ultimately, the dispute came to an end in 2012 with a mutually agreed (not yet fully WTO-compliant) settlement, after several rounds of WTO litigation and negotiation. Being the dispute that most aptly illustrates the intertwining between adjudication and negotiation in the WTO, Footnote 22 and given the long-lasting non-compliance featuring this case, EC–Bananas provides an informative site for probing the manifold institutional roles played and outcomes produced by the WTO DSS; particularly, the DSS role in generating settlement-renegotiations and in shifting the allocation of rights and duties between WTO Members (rather than merely enforcing the originally agreed-upon distribution of entitlements enshrined in the WTO treaty). In light of such roles and outcomes, and against the various political, economic and moral intricacies underlying the dispute, EC–Bananas further forms an instructive case for exploring the complex challenges of justice invoked in WTO adjudication, and for illuminating the need to develop a broader grammar of justice for assessing the institutional roles played and social effects actually generated by the juridified WTO DSS.
Following this introduction, the article thus proceeds in Section II with a brief recollection of the Bananas dispute, laying down its basic facts, while delineating the politico-economic intricacies and multifaceted challenges of justice underling the dispute, as unfolded through the lens of WTO practitioners involved in the case. Section III then turns to present the common reading of the Bananas dispute as it is often portrayed through the prevalent enforcement-centred perspective of the WTO DSS. This traditional narrative is thereafter contrasted with an alternative, multifunctional reading of EC–Bananas, informed by empirical evidence generated through in-depth semi-structured interviews with professionals with first-hand knowledge of the case. Footnote 23 As Section III illustrates, the interviews serve not only to illuminate the complexities underlying the perennial Bananas dispute; they also provide a revealing insider’s perspective on how such intricacies constructed the prominent role the DSS came to play in this conflict as a forum of renegotiation, redistribution and settlement, and shaped the mixed non-compliant outcomes ultimately brought about in the case. Finally, in light of the broader account of the DSS roles and outcomes unfolded through the alternative reading of EC–Bananas, Section IV moves to address several (complementary and conflicting) dimensions of justice that have so far been marginalised in the enforcement-oriented debates of the case. On this basis, this section stresses the need to widen the lens of justice – beyond the rule of law – in writing on the WTO DSS so as to more truly assess the actual functions served and social impacts produced by this global judicial system. Section V concludes.
II. EC–Bananas: The basic pieces of the complex puzzle
The origins of EC–Bananas trace back to the creation of a common EU regime for trade in bananas in 1993, as part of the implementation of the Single European Act. The unified EU banana regime, replacing the patchwork of banana import policies previously employed by EU Members, was established after four years of hard-fought negotiations. In devising this regime, some EU Members – particularly France and the United Kingdom – sought to maintain the preferential trade arrangements that had long been accorded under the Lomé Conventions to ACP countries (i.e. ex-European colonies in Africa, the Caribbean, and the Pacific). The fear was that absent these preferential trade arrangements, small-scale banana growers in the ACP countries would be completely eliminated from the EU market by highly competitive Latin American banana producers, leading to the destruction of the ACP countries’ economies and possibly their political systems. Footnote 24
As a result, in an attempt to preserve the special position of ACP bananas vis-à-vis the EU market, the single EU banana regime introduced in 1993 – against the will of some other EU Members such as Germany, the Netherlands, and Belgium – put in place a complex interventionist system of tariff, quota and license requirements. This system benefited the ACP countries and firms that traditionally traded in EU and ACP bananas, while imposing heavy costs on countries in Latin America, where banana production was largely dominated by US-based multinational companies. Substantial costs were also inflicted by the EU banana regime on consumers in some EU Member states with loose colonial ties (e.g. Germany), which under the new regime were required to replace their previous liberal market of low-cost Latin American bananas with more expensive EU and ACP bananas.
The single EU banana regime fell afoul of basic GATT/WTO rules. Particularly, the preferences accorded by the EU to one group of banana exporters (ACP producers) but not to other exporters (Latin American producers), constituted a violation of the basic most-favoured nation (MFN) obligation, which requires WTO Members to treat all their trading partners equally.
Legal challenges on the part of the Latin American countries were thus launched against the EU already under the WTO predecessor, the GATT, where two panels ruled in favour of the complainants. Footnote 25 Yet under the GATT dispute settlement mechanism, where emphasis was on flexibility and diplomacy and all decisions were made by consensus, Footnote 26 the EU and the ACP countries blocked the adoption of the panel reports, leaving them with no binding legal effect.
Upon the transition from GATT to the WTO, in 1995, and the shift to compulsory, two-level adjudication, with quasi-automatic adoption of panel reports, Footnote 27 litigation against the EU banana regime was renewed. This time around, the US joined in the proceedings following massive pressures from multinationals invested in the Latin American banana sector, thereby giving rise to a lengthy WTO dispute in which the US teamed up with the Latin American complainants, while the EU lined up with the ACP countries (some of which assumed the role of third-parties in the dispute). EC–Bananas was thus a transatlantic struggle infused with charged north-south tensions. At the same time, it was also a south-south quarrel in which ‘developing countries with conflicting interests’ were found ‘beating themselves on different sides of the table’. Footnote 28
The complex Bananas dispute rambled on in the legalised WTO DSS for almost two decades, testing almost every corner of the system until the formal resolution of the dispute in 2012. Throughout the years several litigation rounds, including special arbitrations and several DSU Article 21.5 compliance proceedings were held under the DSS auspices. In all of these proceedings WTO adjudicators sided, in one form or another, with the US and the Latin Americans, declaring the EU banana policy to be WTO-inconsistent. Such legal rulings were further accompanied by the authorisation of two of the complainants, Ecuador and the US, to retaliate (i.e. to suspend trade concessions) against the EU – a right ultimately exercised by the US alone.
While this series of adverse legal rulings and authorised sanctions generated some incremental changes to the EU banana regime over the years, discrimination against Latin American banana exports – and therefore non-compliance on the part of the EU with WTO rulings and rules – persisted all along. Footnote 29
Explaining the enduring EU non-compliance in the perennial Bananas dispute and the ‘impossibility to solve’ the case for nearly two decades, Footnote 30 a former EU official involved in the case stated:
[The problem in this case was rooted in the] conflicting trade commitments … . The EU’s problem was the commitment to the ACP countries, which is founded on historical relations, which is of a very special nature, and which is not such that you can just dump it, basically … . It was not that the European market itself was being protectionist … . It was really about the ACP countries. So it was basically the EU defending the interest of the ACP countries against other developing countries for equally legitimate concerns. And how do you want to solve that? I mean, the WTO in a sense decided each time but it was just impossible to implement it like that. Footnote 31
A lawyer representing one of the Latin American complainants in EC–Bananas similarly emphasised that ‘it wasn’t just about changing EU protectionism’ in this case. ‘The real clients of protectionism were … the banana exporters from all the former colonies who had these preferential arrangements. And so, that made it … extremely complicated because, of course, the EU was arguing that … it couldn’t just abandon … all these programs for the benefit of these poor countries.’ Footnote 32
For the EU, then, the will to complete the single European market, while at the same time assuming responsibility for former European colonies in the ACP countries Footnote 33 and maintaining the Lomé Conventions commitments towards this group of developing countries, proved highly difficult to reconcile with its WTO obligations. Footnote 34 This difficulty was further aggravated by the pressures exerted by the ACP countries to retain their postcolonial trade preferences once legal action was taken against the EU banana regime in the multilateral trade framework. Footnote 35 EU recalcitrance, therefore, as Colares notes, resulted not so much from the EU outright indifference to compliance with its international commitments, but mainly because it valued certain commitments more than others. Footnote 36
That said, while the EU invoked its historical ties and long-standing commitment to the development of the ACP countries as the main justification for its prolonged non-compliance in EC–Bananas, amidst the Latin American complainants the preferential treatment accorded to the ACP countries as a means to remedy for past colonial wrongs, Footnote 37 gave rise not only to valid legal claims of trade discrimination, but also to vocal claims of ‘unfairness’, as the following statement of a former Latin American official makes clear:
[O]ur understanding is that … [the EU] wanted to protect the ACPs’ market … because they have historic relation with ACP countries, some of them are ex-colonies and they have this political commitment for the development of these Members, which we found unfair to the Latin American countries because we were also ex-colonies of … some of the Members of the European Union … . [T]his is something that [is] difficult … to understand but you will find that the preference of the EU will be always [be] … ACPs… instead of Latin American countries. Footnote 38
Note, however, that while the EU preference was accorded to the ACP countries, leading to the dependence of some of these economies on the continued sale of bananas at preferential prices in the EU market, Footnote 39 trade in bananas also involved the ‘livelihood of … many … constituents’ in the Latin American countries, Footnote 40 for some of which this was ‘their only or major export … opportunity’. Footnote 41
And so, despite the apparent legal simplicity of EC–Bananas, involving mainly straightforward arguments of trade discrimination, behind the legal veil and claims of WTO violations lay complex tensions of supranational EU politics, postcolonialism, and north and south, as well as splits among developing countries, all heavily dependent on bananas for their economic welfare. Beneath the surface of EC–Bananas, therefore, multiple questions of justice at the global level emerged, which included but went far beyond those pertaining to the WTO legal breaches involved.
After several rounds of WTO litigation, embedded in enduring diplomatic attempts to resolve the case in the shadow of the law, the prolonged Bananas dispute finally came to an end with a negotiated settlement in late 2012. Under this settlement – which takes the form of two complementing ‘Geneva Agreements on Trade in Bananas’ (concluded between the EU and the Latin American countries, and the EU and the US) – the complainants agreed to terminate the WTO dispute. The EU, in return, committed to maintain a tariff-only regime for the importation of bananas, and to substantially lower its MFN banana tariffs in the WTO schedules over a fixed period of time. Footnote 42 Yet, while under the Geneva Agreement the complainants were granted improved market access rights to the EU, upon the entry into force of the agreement, and in fact until this very day, bananas originating in ACP countries keep on entering the European market on preferential terms. The preferential tariffs still accorded to the ACP countries, however, are currently not covered by any relevant WTO waiver or exception, such as the free trade agreements (FTAs) exception enshrined in GATT Article XXIV. Footnote 43
Hence, while a satisfactory negotiated settlement was achieved to one of the most acrimonious international trade disputes, reallocating the rights and duties of international economic cooperation between the numerous parties and third-parties with interest at stake, Footnote 44 the state of non-compliance with WTO obligations as originally anchored in the WTO treaty was not fully alleviated by the Bananas settlement, and it essentially continues to persist long after the settlement has been concluded.
III. Beyond enforcement: An empirical account of EC–Bananas and the multiple roles and outcomes of WTO adjudication
While equipped with compulsory jurisdiction, elaborate implementation procedures, including the power to authorise trade sanctions against recalcitrant Members in cases of continued non-compliance, the juridified WTO DSS fell short of delivering a fully legally-compliant outcome in the perennial Bananas dispute. In other words, it failed to preserve the rights and obligations of WTO Members as originally distributed in the WTO agreements – a function explicitly prescribed for the DSS in DSU Article 3.2; this is due to the maintenance of the EU tariff preferences for the ACP countries in the absence of a WTO waiver or WTO-compatible FTAs that may absolve the continuing infringement of the fundamental MFN rule.
From a static perspective focused on the ‘primary’ rule-enforcement function of the WTO DSS, the non-compliant outcome ultimately produced in EC–Bananas may be portrayed, of course, as the final – disappointing yet unsurprising – chapter of a chronicle of enduring non-compliance, and thereby as a blatant instance of injustice, in which the EU effectively negotiated and bought its way out of compliance with WTO rules. Nourished by the view of the legalised WTO DSS as principally an enforcement mechanism and the prevalent conception of justice attendant thereto – under which in cases of violation justice operates to maintain the distribution of expectations articulated in the WTO agreement through the withdrawal of the non-compliant measure Footnote 45 – this is, indeed, the common reading of the Bananas case. A case that over the years has been repeatedly depicted by commentators as the poster boy of non-compliance, and as an abject failure of the DSS to hold the EU accountable for the WTO obligations it originally committed to. Footnote 46
Within this legalistic and enforcement-oriented discourse of EC–Bananas, another pivotal concern of justice often flagged by commentators when addressing this case has been the problem of unequal access to justice featuring the current WTO DSS. In this respect, the hurdles faced by Ecuador in implementing its retaliatory rights against the EU in EC–Bananas have been aptly invoked as an illustration of the inability of many developing countries (given their small markets and dependence on exports) to have effective recourse to the DSS remedies mechanism – a mechanism that relies almost exclusively on the suspension of trade concessions vis-à-vis the respondent as a means to elicit compliance. Footnote 47 In terms of procedural justice, it has been argued that the incapacity of small developing countries like Ecuador to put sufficient pressure on larger, more developed WTO Members, runs the risk that they will be marginalised in the WTO judicial process, Footnote 48 and makes their access to the existing WTO enforcement mechanism unequal to that of developed states. Footnote 49
While this common reading of EC–Bananas, unfolded through the enforcement-oriented perspective of the WTO DSS, illuminates important aspects of the roles played and outcomes produced by the system, and brings to the fore pertinent issues of justice associated therewith, this reading is only partial. As shown below, an in-depth empirical legal analysis of EC–Bananas discloses a more complex story of the manifold shifting roles served and outcomes generated by the DSS, and consequently highlights (in Section IV) other critical aspects of justice pertaining to the Bananas conflict and the DSS operation more generally.
This analysis of EC–Bananas recounts a story of an international judicial system that in certain disputes – and contrary to the conventional wisdom – is not geared primarily toward the mechanical enforcement of WTO rules, but rather plays an enhanced role in the interstice between law and politics. In this framework, as the following discussion demonstrates, the prominent role played by the DSS in the perennial Bananas dispute seems to have revolved around two main paths. Footnote 50 First, throughout the conflict and until its final resolution, the mandatory DSS played a systemic role in containing the charged dispute within defined legal parameters and providing an outlet for the claimed interstate injustices, thereby allowing the parties to keep cooperating on other fronts and deflecting destabilising effects on the WTO regime. Second, through its successive legal rulings and clarifications in the various rounds of the recidivist Bananas dispute, the DSS further served a pivotal function in stimulating renegotiations and constructing focal points around which the parties could coordinate toward a settlement; Footnote 51 i.e. an agreement that readjusts the original terms of the bargain as stipulated in the WTO treaty, accommodates the interests of the various parties involved, and reallocates the rights and burdens of international economic cooperation between them.
The claimed shift in emphasis from the legalistic rule enforcement function of the WTO DSS towards its roles of dispute-containment, settlement facilitation, and renegotiation in EC–Bananas, is first learned from the views and experience of insiders with first-hand knowledge of the dispute.
Evidence from the field
As one Ecuadorian official noted, we tend to see the WTO DSS ‘as a purely legalistic system’, but ‘that’s not the case. There’s a lot of politics behind … and in the case of … Bananas, the politics was present all along.’ In such politically complex cases, a former EU official involved in EC–Bananas observed, in turn, the WTO DSS does not serve the ‘classical straightforward’ role of ‘finding the truth, declaring the truth and then having everybody complying with the truth’; instead, it serves ‘as a leverage’, ‘as a tool to find the solution elsewhere’, outside the formal judicial process. Footnote 52
Elaborating on this point, a staff member of the AB secretariat involved in EC–Bananas noted that in this sort of convoluted cases the DSS plays two main roles. On the one hand, ‘it provides a non-negotiated solution to the dispute’, i.e., legal answers to the disputed issues. On the other hand, the DSS continues to play a role in the post-litigation bargaining between the parties, as the latter renegotiate on the basis of the legal findings and clarifications provided in the DSS rulings. Those were the roles played by the DSS in the Bananas dispute, this official stressed, and those are the roles being played in other perennial WTO disputes, such as the ongoing transatlantic Aircraft conflicts. Footnote 53
Finally, another WTO official similarly stated as follows when explaining the functions served by the DSS throughout the charged Bananas dispute:
[B]y making successive findings of inconsistencies … [the DSS] helped [the] parties to negotiate an agreement … . [T]his [dispute] was so political that it had to be done through a negotiation. But [following]… each of the [WTO] cases … the successive negotiations brought [the] parties closer to a better solution, one which guaranteed [the Latin American countries] better conditions of access to the European market, less discrimination, and more development assistance for the [ACP] countries which were affected … . Footnote 54
A close look at the sequence of events in EC–Bananas elucidates how the above-mentioned DSS roles of facilitating the settlement of the dispute and the accommodation of the competing interests through renegotiations actually operated on the ground. As for the EU, the series of DSS rulings rendered in favour of the US and the Latin American complainants in the Bananas dispute, accompanied by the implementation of trade sanctions by the US, attributed both reputational and economic costs to the violation of WTO law and the continued state of EU non-compliance. Such costs effectively turned the alternatives previously available to the EU of simply refusing to act or to engage in negotiation with the complainants much more expensive, Footnote 55 thereby triggering a strong demand on its part for renegotiation. Footnote 56 Thus, a former EU official involved in the case explained, ‘it was quite a pressure on the EU to be continuously losing these cases without being able to comply’. In addition, this official noted, these cases gave the complainants:
the leverage of saying [to the EU], ‘You’re not compliant with the dispute settlement system, you have to do something’, and that worked. The EU really felt they have to do something in order to get this off the table … . And so, this was really the incentive then to say, ‘Okay, let’s find a solution for this.’ Otherwise it wouldn’t have happened. Footnote 57
A similar picture was depicted by a US official, who noted that ‘the EU… never would have done anything to provide additional [market] access on bananas … if it wasn’t for the dispute settlement system … . [T]hat was the entire mechanism that prompted the change, even though the change wasn’t … done’ by the respondent revoking its WTO-inconsistent measure, ‘which is the standard way for most disputes’. ‘But still’, the official stressed, ‘without the disputes … there would’ve been no way that they would have … accommodated the concerns of any of the other parties.’ Footnote 58
As for the complainants, although the banana controversy had already been decided in their favour, both the US and the Latin American countries accepted the demand expressed by the EU for renegotiation. Footnote 59 In fact, the complainants ‘did not alter their readiness to negotiate even after it had become obvious that the EC would not comply’, while they were using the series of favourable DSS rulings as a bargaining leverage in the negotiations and as a means to push the negotiations forward. Footnote 60 In this spirit, a former Latin American ambassador noted, ‘[t]he dispute settlement [process] was exactly to allow our side … the winners … to push the negotiations’ with the EU towards a mutually agreed solution. Footnote 61
From a rule-enforcement perspective of the WTO DSS, as two commentators have rightly observed, it is hard to explain this ‘readiness of the complainants at various stages [of the Bananas dispute] to renegotiate an issue which had already been decided in their favour’. Footnote 62 Arguably, a broad and dynamic perspective of the DSS as a multifunction mechanism for renegotiation, for shaping bargaining positions, and for arriving at newly agreed modes of allocation between the disputing parties, may better explain such readiness.
Note at this point, that the importance of these particular functions of the DSS may not be overstated especially in situations like the Bananas case, where striking power asymmetry exists between the respondent (the EU) and most of the complainants (the Latin American countries). Thus, for example, an Ecuadorian official commented that ‘if we would not have this [dispute settlement] system … in a purely bilateral relationship between the EU and Ecuador … . I don’t think we would have settled this case because of the huge asymmetry between the EU and Ecuador.’ Footnote 63 Elucidating further the vitality of the legal proceedings pursued before the mandatory DSS as a means for setting the stage for negotiations between the EU and the Latin American countries and for gaining better outcomes than possible in bilateral negotiations outside the system, a former Guatemalan official stressed, the Bananas dispute had to be brought before the DSS:
[Because] otherwise we wouldn’t have the Bananas Agreement today. Why would the EU negotiate with the Latin American countries in the first place if we don’t have this leverage of saying, ‘Okay, you are in non-compliance.’ I don’t see a particular reason, especially if they are protecting the interest of the ACP countries. Footnote 64
Against this backdrop, a WTO legal officer involved in EC–Bananas interestingly concluded with the following statement when addressing this case:
[EC]–Bananas … showed that the WTO dispute settlement is a tool to achieve something, a tool to achieve something that might not necessarily be full legal compliance … . Bananas had shown that the Latin Americans and all of the constituents involved in this dispute wanted to achieve something. The EU wanted to maintain some privileges for [the] ACPs, it was politically taboo not to maintain something. The Latin Americans wanted to improve the standing of their exports, the US too, and they tried various ways … also political [avenues] outside of the WTO dispute settlement [system]. And the WTO dispute settlement [system] was an effective and a very sort of powerful tool, but only part of an arsenal, of other sort of arms that you can use … to achieve something. Footnote 65
In the complex political and economic context of the Bananas dispute, the same WTO official added:
[The DSS] enhanced cooperation between the Membership … . It … made the Members more flexible and more exposed to each other … . [I]t engaged the Members and … gave a certain dynamic to the exchanges between Members. Whether the dynamic was always positive … is, of course, another question. But it … got people around the table and it got people talking. Footnote 66
In EC–Bananas, therefore, as the assorted testimonies of practitioners involved in the case suggest, the legalised WTO DSS did not serve merely as a means to elicit compliance with WTO rules and deliver justice by maintaining the original distribution of commitments articulated in the WTO agreements. Rather, more in line with its ‘GATT DNA of pragmatism’ and flexibility, Footnote 67 the mandatory DSS formed the place where non-compliance with the original WTO commitments could have been gradually translated into a discursive process of renegotiation and transformation, and eventually into a settlement that relocates the rights and obligations of international cooperation and accommodates the conflicting interests of the parties involved, including those of third-states with interests at stake (i.e. the ACP countries).
Evidence from the jurisprudence
The enhanced role played by the DSS throughout the Bananas conflict as an orderly mechanism for fostering renegotiation, reallocation, and settlement, is apparent not only from the evidence generated through interviews with WTO professionals; it is also echoed in the choices made and the considerations taken into account by WTO adjudicators themselves along the dispute.
A good illustration in this respect may be traced, for example, in the overt and discrete attempts on the part of the adjudicators in EC–Bananas to actively encourage a mutually agreed settlement between the parties. Footnote 68 Yet an even more prominent illustration of the conciliation, renegotiation and reallocation roles played by the DSS is reflected in the distinctive willingness of the panelists in EC–Bananas to provide the parties with specific suggestions on how to move forward in the negotiations toward the settlement of the dispute – a willingness that stands in contrast to the general practice of WTO adjudicators of avoiding any such suggestions, which they are authorised to make under DSU Article 19.1. Footnote 69 Thus, mindful of the fact that panels have rarely ‘made suggestions pursuant to Article 19.1’, the first compliance panel in EC–Bananas found it appropriate on this occasion to make specific suggestions to the EU ‘with a view toward promptly bringing the dispute to an end’. Footnote 70 Consequently, at the end of its report the compliance panel outlined three possible ways to be taken by the EU with respect to its banana regime. Among these ways, the move of the EU to a tariff-only regime for the importation of bananas, accompanied by a tariff/tariff-quota preference for the ACP countries that is to be covered by a suitable WTO waiver or an FTA consistent with GATT Article XXIV. Footnote 71
Beyond the notable departure of the compliance panel from the usual practice of WTO adjudicators of avoiding making such suggestions, for the purposes of the present contribution no less important is the particular nature and content of the above-mentioned policy recommendations put forward by the panellists. First, the panel’s suggestions to the EU were effectively of the kind that required all the parties involved in EC–Bananas to cooperate and engage in further negotiations in order to settle the dispute. Thus, the move to a tariff-only regime as suggested by the panel essentially required all relevant parties to renegotiate the EU tariff rate for the importation of bananas under GATT Article XXVIII. Likewise, a suitable waiver that would allow the EU to maintain its WTO-inconsistent trade preferences for the ACP countries could only be granted in the WTO system through a particular politico-diplomatic process under the WTO Agreement. Finally, the conclusion of FTAs that would exempt the preferential treatment accorded by the EU to the ACP countries similarly required these two groups of states to enter into negotiation with each other.
Second, and more importantly, the panel’s suggestions manifested some meaningful sensitivity to the complex circumstances of the case at hand, as well as an attempt to factor into the suggestions ‘other-regarding’ considerations related to the potential effects of the panel’s decision and any future EU banana regime on affected third-states – the ACP countries. Thus, the panel’s suggestions did not simply call for the elimination of the discriminatory trade effects of the EU banana regime in the name of trade liberalisation; instead, the panel’s suggestions pointed to several ways under which the EU trade preferences for the ACP countries could be maintained, but in a manner that may alleviate some of the WTO-inconsistencies pertaining to the EU banana policy, and that may improve the standing of the Latin American countries vis-à-vis the EU market.
In the spirit of this sensitivity, and after having made the aforementioned suggestions, the WTO panel ultimately found it appropriate to close its ruling in this case with the following ‘concluding remark’:
We recall that the fundamental principles of the WTO and WTO rules are designed to foster development, not impede it. As illustrated by our suggestions on implementation above, the WTO system is flexible enough to allow … appropriate policy responses in a wide variety of circumstances across countries, including countries that are heavily dependent on the production and commercialization of bananas. Footnote 72
Arguably, had the panel perceived its function in EC–Bananas merely as enforcing WTO law and securing compliance with the original WTO trade commitments, it would have probably avoided making such pronouncements and recommendations. By making, instead, these particular judicial choices and by taking such a reflective stance, the panel essentially revealed the plurality of considerations and broader horizons of justice – beyond compliance and the rule of law – that come into play in WTO adjudication, and manifested the enhanced role played by the DSS in this dispute in stimulating renegotiation, reallocation and settlement between the parties, while providing them with relevant policy suggestions for this purpose. These suggestions, as later days showed, substantively informed the negotiations held between the parties to EC–Bananas. Footnote 73 They formed a constitutive element of both the 2001 Understanding on Bananas reached between the EU, the US, and Ecuador, and the final Geneva Agreement concluded between the numerous parties to the dispute and which came into force in late 2012.
Under the analysis of WTO judicial practice conducted herein emerges, therefore, an alternative version of the perennial Bananas dispute, the institutional roles played by the DSS throughout the case, and the social outcomes to which this adjudicative system gave rise. This version is somewhat different and more complex than the one conveyed so far through the widespread rule-enforcement perspective of the WTO DSS. As a WTO legal officer aptly put it:
The Banana case … is a perfect example that can be used to show either that the [WTO dispute settlement] system is very good, or the system is very bad, depending on which view you take about it … . [Y]ou hear a lot of observers, they tell you, ‘Oh, it is used to show that the system is a disaster’… . It took so long and the EU was not complying, etc … . [I]t clearly took a long time, but that’s only because the case was a very complex case, and … when you have a case of that dimension … you need to go gradually about it. You cannot just … destroy this policy that the EU had in place to benefit these ACP countries and to order its own market … you need to have gradual changes, which the successive dispute allowed to. And if you see it from … [the point of view of] the complainant[s] … . Every successive case that they brought … improved their conditions to access the EC market … . So even before the last case, they were already increasing their participation … [in the EC] bananas market … . And, at the same time, the ACP countries, which find it very hard to compete, because they have structural problems, have been able to get some development assistance, which hopefully will help them address the kind of structural problems that they need [to tackle]. Footnote 74
The juridified WTO DSS, as this excerpt and the alternative version of EC–Bananas unfolded herein suggest, is thus not merely an enforcement mechanism designed to elicit state compliance with WTO rules and preserve a formerly agreed-upon allocation of rights and obligations. It is a forum of litigation, struggle, renegotiation, redistribution, and settlement, where many conflicts are fought not only about adherence to formerly agreed rules – though this is certainly an important function of the system – but over broader political, economic, moral, and social interests and values.
In certain realities, however, as the case in point further makes clear, these multiple and competing functions of the DSS do not coincide with one another, imposing, in turn, inevitable trade-offs between the outcomes generated by the system. Thus, in the convoluted Bananas case, the DSS role in facilitating renegotiation and settlement, ultimately resulting in an ‘agreement at intermediate points’ beneficial to the disputing parties, came into collision with the oft-cited enforcement role of the system, which denotes ‘a principled-driven adherence’ to WTO rules, beneficial to the broader ‘security and predictability of the multilateral trading system’. Footnote 75
In terms of outcomes, then, in EC–Bananas, a negotiated settlement – which reallocates Members’ rights and duties, grants remunerative market access rights to the complainants, maintains the ACP countries’ trade preferences, and thereby promotes long-term cooperative relations – outweighed compliance with the legal prescriptions originally agreed-upon in the WTO agreements. In terms of ‘justice’, in turn, one may ultimately suggest, in EC–Bananas, ‘distributive’, ‘corrective’, or perhaps ‘transformative’ justice, came at the expense of justice in its formal legal sense.
As the following section thus moves to show, a broader perspective of the multiple, competing, and shifting roles played by the DSS, and a wider view of the diverse social outcomes it brings about, may lead to the conclusion that, at least in some occasions, the renegotiating, reallocating, and dispute settling functions of the DSS, while they may not necessarily lead to full legal compliance, may promote certain dimensions of justice nonetheless.
IV. Widening the lens: Towards a broader ‘grammar of justice’ in discussions of WTO adjudication
To be clear, the preceding analytical empirical endeavour has not aimed at portraying EC–Bananas as an impeccable deed of the WTO DSS. From a rule of law perspective, the non-compliant outcome ultimately produced in this dispute is clearly problematic. It hinders the promotion of a legally predictable multilateral trade system. Furthermore, since many WTO Members are not equally positioned to negotiate and ‘buy-out’ their way of compliance – as essentially did the EU in this case – such an outcome may sustain imbalances of power and inequalities between WTO Members. Footnote 76
Yet by putting forward the alternative account of EC–Bananas in the previous section, this contribution has sought to disclose the still incomplete picture of the WTO DSS functions and outcomes unfolded through the lens of the common enforcement-oriented perspective of the system. Particularly, it has strived to illuminate the cardinal roles actually served by the DSS in this dispute as a forum of renegotiation, settlement, and reallocation of concessions, as well as to expose the conflicting outcomes consequently engendered by the system. Among them, a mutually agreed settlement that alongside its non-compliant features appears to bear some substantial cooperative, rectificatory, and redistributive social effects (i.e. effects that go beyond the mere preservation of the original distribution of expectations articulated in the WTO treaty).
By overshadowing such institutional roles and social effects, this final section argues, the prevalent enforcement-centred perspective of the WTO DSS and its conceptualisation of justice mainly through procedural and legalistic terms, has essentially worked further to eclipse other cardinal dimensions of justice, such as global distributive, corrective, or transformative justice, to which the operation of the legalised DSS could perhaps contribute, and on which it seems to be de facto influencing. Footnote 77
On distributive, corrective and transformative justice in EC–Bananas
First, the traditional narrative of EC–Bananas and the emphasis placed by commentators along this dispute on legal justice and the enduring EU non-compliant behaviour, essentially resulted in the neglect of intricate questions of distributive justice that were lurking behind this lengthy dispute and that should have arguably affected its outcomes. Footnote 78 Among these questions, which were often marginalised in the vehement compliance-oriented debates of EC–Bananas, is the question of the possible effects of strict enforcement of the original distribution of WTO obligations in this case, given the economic dependence developed by affected third-states – the ACP countries – on exports to the EU market; the intricate question concerning the similarity or rather the disparity of the socio-economic conditions prevailing in the two rival groups of developing countries with interest in access to the major market of Europe; and, consequently, the weight, if any, that should have been given to such factors in the resolution of the dispute and the redistribution of trade concessions among the parties involved through the devise of an amended EU banana regime.
While such questions escaped a thorough treatment in writing on EC–Bananas and the operation of the DSS in the dispute, this sort of considerations, as seen in Section III, did not go unnoticed by WTO adjudicators. Thus, in its recommendations on possible modifications to the EU banana regime, the first compliance panel in EC–Bananas went a long way in order to lay down the contours of possible legal options that may improve the position of the Latin American complainants vis-à-vis the EU market, while at the same time maintain the EU trade preferences for the ACP countries within the legal flexibilities of the WTO rules-based system. As noted above, the options outlined by the panel later on proved to have a significant impact on subsequent negotiations between the parties towards the resolution of the Bananas conflict, and became a constitutive element of the final Geneva Agreement settling the case.
Through their ruling and uncommon suggestions, therefore, the WTO panellists seem to have implicitly introduced elements of distributive justice into the negotiations between the parties – laying the ground for an outcome that accounts for the interests of the Latin American complainants as well as affected third-states with interest at stake, Footnote 79 while tempering possible unfairness that may result from the strict application of the law and the original distribution of entitlements embedded therein. Footnote 80
EC–Bananas, the prominent renegotiation and settlement roles served by the DSS in the dispute, and the negotiated outcome ultimately reached in the shadow of WTO adjudication – securing the complainants better access to the EU market through a revised, less WTO-inconsistent, ‘tariff-only’ regime, while effectively leaving in place the tariff preferences for the ACP countries – also encapsulate various important facets of corrective justice.
First, in the bilateral contractual relationship between the complainants and the respondent, the improved EU tariffs for banana imports agreed upon in the Geneva Agreement may be taken to play an important compensatory role for the impairment caused by the EU discriminatory and WTO-inconsistent behaviour. Footnote 81 Yet, as the EU was bound by the lower tariffs only from the day of concluding the Geneva Agreement (15 December 2009), past injury suffered by the Latin American banana suppliers throughout the long Bananas conflict was accorded no redress. Circumstances of this sort have led some commentators to call for the introduction of remedial mechanisms such as retroactive financial compensation and reparation for past damage to the WTO DSS Footnote 82 – that is, for the introduction of more corrective justice elements into the WTO judicial system. Footnote 83
The contractual relations between the complainants and the EU represent, however, only one instance for reflecting on issues of corrective justice in the context of the protracted Bananas dispute. Another such salient instance is the one related to the close relationship between the EU and the ACP countries, and the historical commitment of the first to the latter – a commitment that largely triggered the enduring EU non-compliance in EC–Bananas. Herewith several intricate questions arise: what were the exact duties of justice owed by the EU to the ACP countries and which nourished the prolonged EU non-compliance with WTO law and rulings? Were these duties of justice applicable to the EU as a whole, or only to the particular EU Members with postcolonial ties? If, indeed, such ex-coloniser duties applied to the EU in its entirety, what, if any, could have justified the disparate application of such duties in the EU relations vis-à-vis two similar groups of developing states in EC–Bananas – the ACP countries and the Latin American complainants – both ex-European colonies and both heavily dependent on banana production for their economic well-being? Also, and more generally, may the will to remedy one group of countries for past (colonial) wrongs justify, in any way, the imposition of harm on others? And lastly, what room, if at all, should postcolonial duties to make reparation for historical injustices have in the present multilateral trade setting of the WTO and in disputes coming before it?
In the extensive debates of the Bananas dispute conducted largely through the enforcement-oriented view of the DSS and the rule of law conception of justice accompanying it, this series of corrective justice questions received little academic attention. Future investigation of this type of questions may throw more light on the complex issues of justice latent in WTO disputes and inspire further thinking on the ways they should be tackled.
Finally, the perennial Bananas conflict, the roles played by the DSS throughout the case, and the outcome negotiated between the numerous parties involved, may also be explored through the lens of the more modern notion of transformative justice; a notion of justice that does not seek to distribute rights and obligations or to correct harm exclusively, ‘but rather to resolve conflicts between national interests in a manner that develops and strengthens relationships among those involved’. Footnote 84
Transformative justice, as noted by Carmody, aims to fashion accommodative relationships between groups with competing interests. Footnote 85 Accordingly, as elaborated on this concept in another study:
Transformative justice must be driven by the needs of participants. Decisions on how to resolve the conflict ought to be based on a consensus … . The goal will be to find common ground on which a mutually acceptable resolution can be established. This is the power of transformative justice: the possibility of using the substance of a conflict as a means of exploring options and establishing responses that are not only acceptable to all parties but develop and strengthen relationships among those involved. Footnote 86
Within this transformative justice framework, in turn, the adjudicative process – rather than being a means for the mere application of the law, the advancement of legal predictability, and the vindication of rights in a victory versus defeat pattern – serves as a mechanism to facilitate the active participation of the relevant parties in finding a mutually agreed solution to the dispute. Footnote 87 In other words, unlike the conventional perception of the judicial process as a backward-looking adversarial process that works to produce winners and losers, under a transformative justice approach ‘the aim of dispute settlement is to achieve solutions that are acceptable to all of the parties, and that promote interdependence’. Under this latter approach, there is ‘[n]o absolute requirement to restore the relationship by repairing the harm done. Relief is instead fashioned along flexible and broadly remedial lines.’ Footnote 88
While the WTO Agreement contains fundamental aspects of distributive and corrective justice, Carmody has observed, when ‘[t]hought about carefully, transformative justice seems to best describe the overall operation of the WTO agreement’. It explains ‘the insistence on consensuses’ in the WTO framework. It explains ‘the shape of dispute settlement’ and the explicit preference made in DSU Article 3.7 for ‘a solution that is mutually acceptable to the parties’. Finally, transformative justice also ‘explains the reflexive relationship between dispute settlement and negotiation’ in the WTO system. Footnote 89
EC–Bananas, as the empirical account of this charged and complex conflict provided in Section III has shown, illustrates probably more than any other WTO dispute this reflexive relationship. This dispute illuminates how the legalised, multi-stages WTO dispute settlement procedures serve not necessarily as a two-sided adversarial process, but rather as a mechanism for bringing together all the parties with interests at stake, facilitating renegotiation between them, and allowing them to arrive at a balanced accommodation of the competing interests that is acceptable to them all and conducive to their long-term cooperative relations. Put differently, the intertwining between third-party adjudication and negotiation in EC–Bananas and the mutually agreed settlement ultimately achieved in the case exemplify how the conflict situation between the manifold parties with interest at stake was transformed, through the adjudicative process, from one in which groups were in competition with one another to one in which groups came to recognise their mutual interests and were better able to arrive at a workable solution.
On the complementary and conflicting nature of the various conceptions of justice
As one may infer at this point, the latter notion of transformative justice, like the concepts of distributive and corrective justice, or the legal justice concept prevalent in discussions of EC–Bananas and the WTO DSS, each resonates with different moral concerns and socio-economic interests that manifest themselves in the real life of WTO adjudication. Each provides a unique perspective on how to assess the diverse functions played and social outcomes generated by the WTO DSS. Each conception is thus partial, and often complementary to the others. Yet, at times, tensions may also arise between the different conceptions.
One such notable tension is the one flagged by Franck in his treatise Fairness in International Law and Institutions, between the more substantive, distributive aspect of justice, and its rather legal and procedural dimension. Footnote 90 Whereas the former favours change, Franck has noted, the latter dimension of justice expresses the preference for order and provides the kind of stability that the rule of law generally supports. Footnote 91 ‘[I]t accommodates a deeply felt popular belief that for a system of rules to be fair, it must be firmly rooted in a framework of formal requirements about how rules are made, interpreted, and applied’, and it must equally enforce the rules against everyone. Footnote 92 In some cases, therefore, Franck has concluded, these two dimensions of justice may come into collision, Footnote 93 since ‘the rule of law’, in its preference for order and stability, may be unconducive to change and ‘may impede the advancement of justice, understood as a matter of moral distributive allotments or as rectification for wrongs of the past’. Footnote 94
Such a tension indeed manifested itself in the Bananas dispute. Thus, whereas the pursuit of justice in its international rule of law dimension pulled in the direction of equal enforcement of WTO law on the EU, rectification for past colonial wrongs and the advancement of a new distributive allotment between the disputing parties and affected third-states pulled in another, less WTO-compliant direction. In the contestation between these various dimensions of justice, as insinuated earlier, the latter dimensions seem to have prevailed.
Yet EC–Bananas exemplifies not only the conflicting relationship between the various dimensions of justice pertinent to the WTO DSS operation, but also the manner in which the different dimensions may complement one another. As the statements of the Ecuadorian and Guatemalan officials in Section III suggest, it was the shift to the rule of law introduced by the binding WTO DSS that enabled these developing countries to seek justice in its distributive, corrective and transformative sense in the Bananas case. The legalised DSS offered the Latin American complainants not only more voice and procedural fairness compared to the GATT; Footnote 95 it also provided them with the leverage needed to bring the EU to the negotiating table and seriously address their impairment; Footnote 96 it framed the necessary bargaining environment for redistribution of the gains from international trade; and it enabled the numerous parties involved in the case to transform the state of non-compliance to one that better accommodates the competing economic, social, and political interests at stake.
That said, in the discussions of the convoluted Bananas dispute over the years, often conducted through the enforcement-oriented lens of the WTO DSS, the complementary and conflicting relationships between the various dimensions of justice underlying the dispute and the DSS operation have been hardly considered. This has also been the case with respect to many of the distributive, corrective and transformative justice questions briefly delineated in this section, and the more general question of what principles should be followed in order to assure that the diverse challenges and dimensions of justice encapsulated in the roles, operation, and outcomes of the WTO DSS are adequately addressed.
EC–Bananas, therefore, as this article suggests, serves not only as an informative case for studying the manifold, competing and shifting roles – beyond enforcement – played by the WTO DSS in today global governance. It also serves as an instructive dispute for exposing some of the profound challenges of justice that pave their way to WTO adjudication, for highlighting the need to embrace a broader grammar of justice for evaluating the social outcomes the WTO DSS generates and the processes through which they are created, and for stressing the need to more generally rethink the delicate and complex relationship between non-compliance, justice, and the roles of international adjudicatory institutions such as the one operating within the WTO framework. Non-compliance, as the case in point has shown, need not be viewed solely through the enforcement role of the WTO DSS and its complementing rule of law conception of justice. It may also be construed through the settlement, renegotiation, and reallocation functions served by the DSS and the concepts of distributive, corrective, and transformative justice that such judicial functions bring to the fore.
V. Conclusion
The way we perceive the role/s of international courts like the WTO DSS defines the way we analyse their operation and capture their outcomes. It also brings certain issues of justice to the foreground and pushes other to the background. And so, as seen in this article, the prevalent enforcement-centred perspective of the WTO DSS – largely nourished by the legalisation of the multilateral trade system with the transition from GATT to the WTO, and the judicialisation of international law more generally – has resulted in the marginalisation of other important functions, beyond enforcement, played by this international adjudicative system. This includes the very traditional dispute settlement role of the DSS, as well as its cardinal functions as a forum of renegotiation and reallocation of rights and obligations between WTO Member states. In turn, the enforcement-centred perspective of the WTO DSS, due to its natural focus on such notions as the rule of law, compliance, and procedural justice, has worked further to eclipse other salient issues of justice that manifest themselves in WTO adjudication and on which the DSS seem to be effectively influencing. Against this backdrop, through a close empirical investigation of the perennial Bananas dispute and the intricate political, social, economic, and moral questions associated therewith, this contribution has sought to put forward a broader multifunctional account of the WTO DSS, and thereby to shed light on the consequent need to broaden the lens of justice – beyond the rule of law – in writing on the DSS, so as to more critically assess the actual functions served and social outcomes produced by this global judicial system.
Acknowledgements
This research was supported by the European Research Council Advanced Grant (grant No. 323323). I am grateful to Eyal Benvenisti, Tomer Broude, Ester Herlin-Karnell, Poul Fritz Kjær, Yuval Shany, the participants of the EU Grammar of Justice Conference, and two anonymous reviewers for their insightful comments. All views expressed herein, as well as any errors, are my own.
