Laws20062: Examining WTO & Arbitration in International Trade

This essay provides a comprehensive overview of international trade law, focusing on the role of the World Trade Organization (WTO) and arbitration in resolving trade disputes. It begins by detailing the history and evolution of the WTO from the General Agreement on Tariffs and Trade (GATT), highlighting key conferences and agreements such as the Marrakesh Agreement and the Doha Round. The essay discusses the advantages and disadvantages of the WTO's operations, including its role in protecting developing nations and the challenges of achieving consensus among member states. Furthermore, the essay explores arbitration as an alternative dispute resolution method, differentiating between mandatory and voluntary clauses, as well as binding and non-binding arbitration. It examines the process and outcomes of arbitration, emphasizing its importance in international commercial transactions. The document is available on Desklib, a platform offering study tools and resources for students.

Running head: INTERNATIONAL TRADE LAW
INTERNATIONAL TRADE LAW
Name of Student
Name of University
Author note

1INTERNATIONAL TRADE LAW
Question 1:
The World Trade Organization is the regulatory body that regulates the international
trade. It is an intergovernmental organization that was formed in January 1995 with signing
of the Marrakesh Agreement1. The agreement was a mutual treaty between 124 nations.
However, the history of the WTO is not as new as it seems. Its history dates back to 1948,
when after the World War II, an agreement of trade was signed by the different nations and it
was known as the General Agreement on Tariffs and Trade (GATT)2. With such a large
history spanning over several decades WTO is now the largest international trade and
economic organization in the world.
After the world war, the international economic bodies were determined to create an
international organization which would govern over the international trade laws and would
operate to maintain peace and harmony between the different countries on the basis of trade
relation. As the World Bank was formed and the International Monetary Fund was formed,
the General Agreement on Tariffs and Trade became the international organization governing
the trade policies and formulating trade policies for the different countries.
For many years, GATT worked as the primary body for all the trade regulations in the
global scenario. Over the years, there have been several conferences, which, focused on the
negotiations between the different countries. Seven such rounds have taken place until 1986
and were primarily focused upon the reduction of the trade tariffs for the easier and profitable
trades between the different countries. The Kennedy Round focused on the anti-dumping
agreement and other important sectional developments3. Similarly, the different rounds
focused on the plurilateral agreements, consents, and disagreements. Different policies were
1 Julio Lacarte Muró, "The History And Future Of The World Trade Organization Bycraig Van Grasstekworld
Trade Organization And Cambridge University Press,2013" (2014) 13(04) World Trade Review.
2 Sherzod Shadikhodjaev, "World Trade Organization—General Agreement On Tariffs And Trade—National
Treatment—General Exceptions—Renewable Energy—International Environmental Law" (2017) 111(01)
American Journal of International Law.
3 Lucia Coppolaro, The Making Of A World Trading Power (Routledge, 2016).

2INTERNATIONAL TRADE LAW
re-instated while others were discarded on the wake of the discussions between the member
countries.
However, in 1986, the member countries decided that the GATT was no longer
adaptive of the new strategies and the new policies that should go in accordance with the
globalized world. With such problems, identified, the eighth round of the GATT council took
place in Uruguay. The talks between the different member states ranged from the
identification of the problems that were earlier decided by the council of members in the
1982 Ministerial Declaration4. It was identified that GATT could not manage the problems of
the world trade policies with efficiency anymore as it had been doing for the past four
decades. The Uruguay Round is considered to be one of the most important trade negotiations
that were discussed between the different member states regarding the establishment of the
trade policies.
In the Uruguay round, several new policies were discussed and the focus was on the
inclusion of new trade policies, which were earlier non-existent in the GATT regime.
Sensitive trade sectors such as agriculture and textiles were brought in the dominion of the
international trade organization. These aspects escalated the older GATT policies and
demanded the reviewing of the age-old laws for aligning with the new world policies and
regulations5. These chains of discussions and negotiations for eight long years helped in the
formulation of new trade policies and practical regulations, which focused on the benefits of
the member states according to the new and globalized society. These aspects helped in the
creation and establishment of the World Trade Organization (WTO) in 1994. The first formal
4 Gary Clyde Hufbauer and Cathleen Cimino-Isaacs, "How Will TPP And TTIP Change The WTO System?"
(2015) 18(3) Journal of International Economic Law.
5 Christina L. Davis and Meredith Wilf, "Joining The Club: Accession To The GATT/WTO" (2017) 79(3) The
Journal of Politics.

3INTERNATIONAL TRADE LAW
meeting of the WTO took place in Marrakesh, Morocco and thus the establishing agreement
of the formation of the WTO is known as the Marrakesh Agreement6.
The Ministerial Conference, is the prime decision making regulatory body of the
WTO which meets at a period of two years7. The primary work of the Ministerial Conference
is to bring together all the member countries and the member trade unions. These conferences
are the places of discussion of the contemporary trade practices and the reviewing of all the
trade laws that are essential for the successful operations of trade relations. The Ministerial
Conference has the right to take decisions on different matters relating to the trade policies
and laws. The first ministerial conference took place in Singapore in the year of 1996 and
was detrimental in the highlighting of the issues faced by the developing nations as well as
the developed nations. These conferences have also discussed arguments about large issues
and has been trying to maintain the global policies. The Doha conference marked the
beginning of the Doha round, which made the historical decision of granting China’s entry
into the world trade organization8. This decision marked the new era of China’s economic
rise by developing the trade policies with the global market. The Doha Round also marked
the lowering of the trade tariffs, which turned to be beneficial for the member states.
The primary objective of establishing the Doha round of development was to discuss
the impacts of globalization and include its effect in the trade policies. These developments
would help the WTO to determine the enhancements for the poor by decreasing the trade
tariffs. The argument between the developed nations and the developing nations regarding the
trade tariffs and trade barriers. The liberalization of the trading markets and new laws were
predominant in the discussions of the conference. It looked forward to attain the
6 Luís Pedro Cunha, "The Failure Of The Doha Round And The Development Issue" (2014) 57(1) Boletim de
Ciências Económicas.
7 Cosimo Beverelli, Simon Neumueller and Robert Teh, "Export Diversification Effects Of The WTO Trade
Facilitation Agreement" (2015) 76 World Development.
8 ROBERT WOLFE, "First Diagnose, Then Treat: What Ails The Doha Round?" (2015) 14(01) World Trade
Review.

4INTERNATIONAL TRADE LAW
commitments of the member states and strengthen the relationships between them. However,
disagreement between several nations paused the development drive of the WTO. The
unprecedented stoppage of the conference in 2012, made the future of Doha round uncertain
and it has not yet been completed.
WTO functions to develop the trade relations between the different member states
globally and formulates different policies to safeguard the rights of the traders. However,
there are certain advantages and a disadvantage of the WTO’s functioning.
The advantage of the WTO is that it acts as the overseer of the different activities and
trade policies all over the world. Accordingly, it helps the poorer countries against the
exploitation of the richer developed countries. The WTO provides the developing nations a
platform to voice their opinions about the different trade policies and suggest newer
recommendations for the development of free trade across the world9. The WTO acts as a
negotiator of the different policies and agreements between the nations and determines the
tariffs and trade policies in a justified manner so that both the parties are benefitted from the
trade practice. The international trade regulations ensure transparency in the trade relations
all over the world.
On the other hand, there are also disadvantages in the operation of the WTO. As the
organization is an intergovernmental organization, it has a democratic way of running its
policies that is by considering the opinions of the different member states. However, in order
pass some decisions, the WTO requires majority consent from its member states, which is at
times not possible due to the disagreement of ideas between the member states10. The conflict
of ideas often leads to the stalemate situations in which the matter remains unsolved and no
9 Kristen Hopewell, "Different Paths To Power: The Rise Of Brazil, India And China At The World Trade
Organization" (2014) 22(2) Review of International Political Economy.
10 Robert Howse, "The World Trade Organization 20 Years On: Global Governance By Judiciary" (2016) 27(1)
European Journal of International Law.

5INTERNATIONAL TRADE LAW
party is benefitted from the decision. Several times arguments lead to the failure of trade
negotiations between the countries, where WTO has no role to play but be a mere spectator.
Hence, it can be argued that the implementation of the policies and the decision-making is
dependent on the consent of the member states.

6INTERNATIONAL TRADE LAW
Question 2:
Arbitration is a legal term, which explains the act of settling disputes outside the
courts11. This process is also called the alternative dispute resolution. These types of disputes
are settled in the presence of some persons who are known as the arbiters. The arbitral
tribunal acts as the decision makers for the case scenarios and have the right of providing the
arbitration award. This award is the legal process of binding the settlement parties in legal
resolution and these decisions can be processed in the legal courts at a later period of time.
Commercial disputes form the primary cases for the arbitrary settlements, where
international commercial transactions form the most number of cases. In the United States of
America, many commercial and employment related disputes are settled by the methods of
arbitration12. The arbitration clauses might be either voluntary or mandatory. These cases are
most of the times settled to produce a speedy result and not wait for the long and hectic legal
procedures. There is a basic difference between the mandatory and voluntary arbitration,
which distinguishes the commercial disputes from that of the consumer related or employee
related disputes. Consumer related disputes or employee related disputes are primarily
mandatory clauses, which lead the disputes to be settled outside the court in a compulsory
manner13. On the other hand, the commercial disputes have a voluntary clause, which allows
the commercial disputes to be settled outside the courts to provide a speedy settlement and
also reduce the costs of the legal procedures.
The outcome of the arbitration can also be divided into two parts, which are primarily
known as the binding or non-binding. In the non-binding procedure, both the parties form a
mutual understanding of the dispute and agree to take a middle path where the dispute is
settled by agreement. No concrete decision is imposed on any of the parties as there is no
11 Nigel Blackaby et al, Redfern And Hunter On International Arbitration (Oxford University Press, 2015).
12 Catherine A Rogers, Ethics In International Arbitration (Oxford University Press, 2014).
13 S. H. Elsing and J. M. Townsend, "Bridging The Common Law-Civil Law Divide In Arbitration" (2014)
18(1) Arbitration International.

7INTERNATIONAL TRADE LAW
concrete winner or loser in these cases. The arbiter works as a mediator who helps both the
parties to a settlement point 14. Both the parties tend to compromise on any of the mutual
grounds and accept the clauses of the settlement accordingly. These types of settlement are
also not enforceable in the courts later, as both the parties who accept the changes and bind
themselves by the compromising regulations do not settle by the establishment of the truth of
any of the clauses but by the acceptance of compromise of the dispute.
However, on the other hand the binding clause of arbitrary settlement is more like a
court case where the decision of the settlement goes in the favour of one of the parties. The
principal decision of the arbiter upholds the clauses of one of the settlement parties and asks
the other to abide by the dispute settlement 15. This practice might seem like the regular court
case, but the difference is that in the arbitrary settlement much financial resources and time is
saved. Legal procedures take a lot time to settle, but the case is not for the arbitrary
settlement. In the binding settlement, one party has to accept the clauses of the party. These
types of binding decisions are even enforceable in the court of later, if the parties fail to abide
by the decisions of the settlement.
In the arbitrary proceedings the settlements of disputes are presided by an unbiased
arbiter. The decision of the arbiter is final in these cases as the decision is taken after judging
and reviewing of the settlement clauses that are presented by both the parties16. The arbiter
balances and asks the parties to settle on the most clause, which ensures proper justification
of the case scenario. The decision of the arbiter is final and both the parties must abide by the
clauses so that the dispute is legally settled outside the court and put a relieve from the
hassles of the court-room.
14 R. Goode, "The Role Of The Lex Loci Arbitri In International Commercial Arbitration" (2014) 17(1)
Arbitration International.
15 Renato Nazzini, "THE LAW APPLICABLE TO THE ARBITRATION AGREEMENT: TOWARDS
TRANSNATIONAL PRINCIPLES" (2016) 65(03) International and Comparative Law Quarterly.
16 Ramona Lampley, "'Underdog' Arbitration: A Plan For Transparency" [2015] SSRN Electronic Journal.

8INTERNATIONAL TRADE LAW
As has been discussed earlier that are scopes by which the arbitrary decisions are
enforceable in the court of law, but at the same time the scopes are very limited. Arbitrary
decisions cannot be directly challenged in the court of law as it is a mutual settlement of the
disputed parties. However, if one of the parties do not abide by the clauses of the dispute
settlement, then only the decision of the arbitrary settlement can be enforceable in the court.
There are certain advantages and disadvantages of the of arbitration settlement. Some of
the advantages of the arbitration settlements are:
 Differing from court litigations, the arbitration settlements have the advantage of
choosing their own tribunal. This is particularly helpful as the parties can choose the
persons who are familiar with the nature of the case and can provide an unbiased and
speedy decision17. For example, if the dispute is regarding some real estate, then the
tribunal can consist of persons who are conversant with the construction laws or the
technical aspects of civil engineering.
 Arbitrary settlements produce faster results than normal court cases.
 The arbitrary settlements are more cost effective than the normal court cases.
 In normal court-cases, there are options of appeals and further re-appeals, which
lengthens the procedure of the legal battle. This is not available in the arbitrary
litigations and hence resolves the cases in a shorter period of time.
The disadvantages of the arbitration settlements are:
 The arbitrary settlement clauses are sometimes mentioned as the smaller objectives in
the legal registration papers, which make the consumers or employees unaware that
they are subjected to mandatory arbitrary settlement in case of any disputes18.
17 L. E. Trakman, "Confidentiality In International Commercial Arbitration" (2014) 18(1) Arbitration
International.
18 Peter Arnt Nielsen, "Current Developments∵The Recast Brussels I Regulation" (2014) 83(1) Nordic Journal
of International Law.

9INTERNATIONAL TRADE LAW
 This mandatory clause limits the parties from moving to the courts with their cases in
the event of any dispute.
 It is easier to influence the tribunal in the arbitrary settlement as the parties choose the
tribunal. Placing a known person can be helpful to influence the decision in the favour
of a particular party.
Australia is a very renowned place to settle international commercial disputes, which
ensures global safety of trade relations and promotes ensured commercial relationships,
which are often high risk factors in the international investments.
International commercial arbitration is a private method of settling commercial disputes
by international parties in the presence of a third party tribunal from a neutral country19. This
method has been popular for a long period of time as it saves the longer time that is required
for settling cases in a legal litigation in the court of justice. Moreover, cross-border disputes
requires an investment of a lot of money for the legal procedures to continue. Hence, the
businesspersons all over the world choose to settle disputes in a commercial manner, and
maintain good relationships with the opposing parties at the same time. The flexibility of the
process in Australia, lets businesspersons from all over the world choose Australia as a site of
settling disputes in the most preferred manner. It also saves the parties from the hassles of the
rigid legal system.
Australia has one of the most stable economies in the world, which allows the country to
provide good commercial services to its clients. More industries are choosing to establish
trade with Australia due to its stable and profitable economy. This aspect has made
Australia’s commercial arbitration dispute settlement industry the most demanding over the
other countries in the world20. Moreover, Australia provides a transparent and simple judicial
19 C. Newmark and R. Hill, "Can A Mediated Settlement Become An Enforceable Arbitration Award?" (2014)
16(1) Arbitration International.
20 Andrew Stewart, "Fair Work Australia: The Commission Reborn?" (2013) 53(5) Journal of Industrial
Relations.

10INTERNATIONAL TRADE LAW
framework, which makes it a natural choice for the dispute settlers. In addition, Australia is
closely located to the Asian continent, which makes it easier for clients to access the
Australian judicial system in a cost benefit way.

11INTERNATIONAL TRADE LAW
References:
Lacarte Muró, Julio, "The History And Future Of The World Trade Organization Bycraig
Van Grasstekworld Trade Organization And Cambridge University Press,2013" (2014)
13(04) World Trade Review
Shadikhodjaev, Sherzod, "World Trade Organization—General Agreement On Tariffs And
Trade—National Treatment—General Exceptions—Renewable Energy—International
Environmental Law" (2017) 111(01) American Journal of International Law
Coppolaro, Lucia, The Making Of A World Trading Power (Routledge, 2016)
Hufbauer, Gary Clyde and Cathleen Cimino-Isaacs, "How Will TPP And TTIP Change The
WTO System?" (2015) 18(3) Journal of International Economic Law
Davis, Christina L. and Meredith Wilf, "Joining The Club: Accession To The GATT/WTO"
(2017) 79(3) The Journal of Politics
Cunha, Luís Pedro, "The Failure Of The Doha Round And The Development Issue" (2014)
57(1) Boletim de Ciências Económicas
Beverelli, Cosimo, Simon Neumueller and Robert Teh, "Export Diversification Effects Of
The WTO Trade Facilitation Agreement" (2015) 76 World Development
WOLFE, ROBERT, "First Diagnose, Then Treat: What Ails The Doha Round?" (2015)
14(01) World Trade Review
Hopewell, Kristen, "Different Paths To Power: The Rise Of Brazil, India And China At The
World Trade Organization" (2014) 22(2) Review of International Political Economy
Howse, Robert, "The World Trade Organization 20 Years On: Global Governance By
Judiciary" (2016) 27(1) European Journal of International Law

12INTERNATIONAL TRADE LAW
Blackaby, Nigel et al, Redfern And Hunter On International Arbitration (Oxford University
Press, 2015)
Rogers, Catherine A, Ethics In International Arbitration (Oxford University Press, 2014)
Elsing, S. H. and J. M. Townsend, "Bridging The Common Law-Civil Law Divide In
Arbitration" (2014) 18(1) Arbitration International
Goode, R., "The Role Of The Lex Loci Arbitri In International Commercial Arbitration"
(2014) 17(1) Arbitration International
Nazzini, Renato, "THE LAW APPLICABLE TO THE ARBITRATION AGREEMENT:
TOWARDS TRANSNATIONAL PRINCIPLES" (2016) 65(03) International and
Comparative Law Quarterly
Lampley, Ramona, "'Underdog' Arbitration: A Plan For Transparency" [2015] SSRN
Electronic Journal
Nielsen, Peter Arnt, "Current Developments∵The Recast Brussels I Regulation" (2014) 83(1)
Nordic Journal of International Law
Newmark, C. and R. Hill, "Can A Mediated Settlement Become An Enforceable Arbitration
Award?" (2014) 16(1) Arbitration International
Stewart, Andrew, "Fair Work Australia: The Commission Reborn?" (2013) 53(5) Journal of
Industrial Relations