Related Links:

Threats to the Sustainability, Equity and Effectiveness of the WTO Legal System

Globalization of Law: More Law, More Lawyers

Four Sites of Struggle over Global Law

Why Has the IMF Failed Its Mission?

Why Is Law Globalized? It Depends on the Type of Law

Scholar Gregory Shaffer argues that we must move beyond a simple government versus market perspective in order to understand the regulation of international trade. Shaffer studies the ways that the U.S. and the European Union have used the World Trade Organization (WTO) to further their trade interests and, in so doing, regulate international trade relations.

Beyond Governments or Markets: Public-Private Networks

As business and trade have become more international, no single actor (governments or market actors) is able to regulate global market relations. Because of this, common perspectives that focus on either the role of governments or markets do not tell the whole story. A third perspective on international market governance is required.

This third account focuses on the networks between public and private actors to make sense of the development and use of international trade regulations. Government actors—usually agencies within a national government—act within the WTO to bring claims against other states or to defend their trade practices and policies. However, especially in the U.S., the government often responds to the interests of multinational corporations when bringing cases before the WTO. So, even though governments are the official actors in the WTO, they often do so in response to requests from corporations.

Over time, stable patterns of interrelation form between governments and businesses. These public-private networks are increasingly responsible for regulating global markets.

Legislation by Litigation

How is international trade law created within the WTO? How are public and private actors involved in the process?

Shaffer says that international trade agreements are often pitched at a high level of abstraction. The agreements provide general principles without specifying exactly how the details are to be worked out in practice. In both the U.S. and the EU, corporations are expected to bring accusations of trade barriers to the attention of the government agencies. The government agencies, in turn, may bring a case before the WTO Dispute Settlement Body to decide the case. In the dispute, governments rely on the detailed information provided by the corporations in order to support their position.

It is through this process of litigation that general international trade agreements are transformed into more specific regulatory procedures. Says Shaffer, litigation is a form of governance, related to legislation.

Why? Resource Interdependencies and Stakes

The increasing complexity of global trade has brought about a situation where no single actor, government or private corporation, has the ability to govern international trade relations on their own. The growth of public-private networks reflects the needs that actors have for the resources of other actors. Shaffer describes this need for mutual resources as resource interdependencies.

What Resources Do Different Actors Bring to the Table?

• Public actors. Governments wield constitutional and legal authority. However, public actors suffer from a lack of detailed information on particular trade circumstances and specialized expertise.
• Private actors. Private actors wield organizational, political, financial and informational resources that are not accessible to public actors. Pressing a WTO case requires considerable specialized expertise and financial resources. These are strengths of large multinational corporations. However, private actors are limited by the fact that only public members of the WTO can bring claims before the WTO Dispute Settlement Body.

However, resource interdependence alone is not enough to explain participation in public-private networks. Participation is in large measure explained by the stakes that actors have in WTO policy. For example, because medium to small corporations that operate within domestic markets may not consider themselves to have a large stake in WTO policies, they are less likely to spend the considerable time and resources in this regard. Large multinational corporations, on the other hand, have a large stake in the implementation of WTO trade policies.

In short, having available resources is not enough to explain an actor's participation in a public-private network. Actors must believe they have an interest in global markets as well.

Who? Public and Private Actors in the U.S. and the European Community

Public-private networks are different in the U.S. than in the EU. The U.S. process is “bottom up.” Claims generally originate with private actors who petition the U.S. to act on behalf of their interests. The EU, in contrast, is more “top down.” The more centralized governing organizations of the EU are less apt to act in the interests of specific private actors. Rather, they are more likely to press for WTO policies that reflect larger interests of the EU.

U.S. Actors

Two types of actors are involved in the U.S. public-private networks:

• Public. The primary U.S. public actor is the Office of the United States Trade Representatives (USTR). Even though the U.S. President has the official power to “impose retaliatory duties and other import restrictions on countries that discriminate against U.S. Products,” Congress transferred the authority to make Section 301 trade decisions to the USTR. Congress is also a major player in that members of Congress are subject to pressure from constituents who may support protectionist policies.
• Private. USTR action is generally instituted at the behest of large multinational U.S. corporations. However, WTO litigation that threatens domestic regulatory policies can provoke a populist backlash among private interest groups that Congress cannot easily ignore.

European Union Actors

• Public. The EU counterpart to the USTR is the Trade Directorate-General of the European Commission (EC). The authority for formulating and implementing trade policy falls to the EC General Affairs Council, which, in turn, must answer to the interests of member states. In practice, however, it is the responsibility of the European Commission to represent the interests of EU member states and companies on trade matters.
• Private. Unlike the U.S., large corporations have been less involved in pressing for WTO dispute cases, and the European Commission is much more likely than the USTR to originate claims. In fact, the Commission has often been forced to lobby private actors (companies and trade associations) to bring their complaints.

Bottom Line

Gregory Shaffer identifies the role of public-private networks in WTO trade disputes. He says that public-private networks are effective because they combine different resources from the public and the private sectors.

Full Text Availability:

Available for purchase at