Competition and Trade Regulation Within the WTO

Marcelo Berdet

07/09/07
 SUMARY

Regulation and governance are defined upon institutionalised parameters, which include

economic and extra-economic factors. A mode of regulation comp rends social processes

and struggles, which define and stabilise norms of economic conduct. The emerged

Finance-Trade mode of regulation is examined here as an organisational and institutional

features of the contemporary capitalism, furthermore itself constituting principles of

political and economic action and interests within supranational bodies such as World

Trade Organisation (WTO).

Regulation is based on competitive principles, which are indeed organising principles of

economic structures, organisations and institutions of contemporary capitalism. The role of

the WTO as a conflict-resolution mechanism within the broader Finance-Trade mode of

regulation is the object of study here. The trade and competition regulation in the WTO

concerns norms and rules governing economic relations and social interactions through

trade disputes and conflicts.

 Table of Contents

Introduction 1

Competition and trade regulation 4

Chapter 1 – The role of Competitiveness 11

1.1 Social Structure of Competition 12

1.2 Competitiveness in the ‘global economy’ and WTO 14

Chapter 2- The Bananas and Beef Hormones Cases 18

2.1 The Beef Hormones Case 18

2.2 Dialogical Competition 21

2.3 Technologozation of discourses 23

2.4 The Bananas Case 26

2.5 The meaning and interpretation contentions 28

Chapter 3- The WTO Competition and Trade Regulation 31

3.1 Trade Disputes within the Dispute Settlement System 31

3.2 The WTO Regulation 33

3.3 Competition, no-trade restrictions and market access contentions 35

3.4 Regulatory Structure 37

Chapter 4- Interests and Strategies within the WTO 41

4.1 The role of the WTO within a broader mode of regulation 43

Conclusion 49

References 52

Bibliography 56
 1

Introduction

The logic of Fordism in the West was partially based on models of ‘import-substitution’
prevailed in developing countries. Whereas the crisis of Fordism in the 1970’s afforded a
period of experimentation, the culmination of which was a ‘flexibilization’ and
transnationalized model though one less stable than its predecessor. The intensive
internationalisation of markets, financial and productive networks brought competitive
constraints to centre-stage upon the majority of economic activities. As a result, new forms
of economic and political regulation and governance were required, and also new (inter)
institutional and organisational relations in resolving actual problems.

Jessop (1995: 312) points out that national capitalisms have both comprised and mobilised
their socio-economic structures in the competitive international battle, in accordance with
the point of view of national competitiveness. Indeed, there has been an increasing
interdependence between national economies, leading to an unified ‘global economy’;
when demand slows down in a country, it is compensated by expanding markets in other
countries. In this context, financialization is at the same time a result and an accelerator of
the ‘global economy’ model, whereby wealth is consumed and accumulated as financial
assets. According to Lipietz (2001:23) the ‘globalization of the financial markets
intensifies financialization, because financial capital, in search for a productive base to milk
can play firms (or governments if they prefer bonds) off against another on a global scale.’
Finance capital rather remains intimately tied to economic structures of production,
distribution and trade. Although trade is not necessarily organised in terms of monetary
exchange, it is organised upon reciprocal relationships and administered from the above
economic structures.
 2

The attraction of finance capital into national territories has occurred in order to finance
economic growth within the competitive ‘global economy’, further enhanced by fiscal and
monetary measures taken by governments. In the absence of the Fordist (demand)
regulation, finance capital realises that the overaccumulation of productive capital no
longer depends exclusively on real demand, and further that financial deregulation and
liberalisation of trade reinforce the internationalisation of markets. As a result, finance
capital and trade are focussing their efforts on ‘global’ markets, which imply the arrival of
new players, new responses to new political and economic needs and renewed institutional
systems such as International Monetary Fund (IMF); World Bank and World Trade
Organization (WTO).

The political and economic symbiosis between liberalised trade and finance capital as
argued by Harvey (2005: 67, 2005a: 54) and O’Hara (2003: 483) has been sustained upon
neo-classic economic theory, or generally neoliberal discourses, and constitutes directives
dominating national economies, further articulating commodity and non-commodity capital
relation as social practices. Capitalist relations exist in articulation with other social
relations in the extensive economic formation or productive system, which implies that
capital accumulation is never automatic, but depends on continuing prevention of the
disarticulation of such capital relational property. Thus, Finance and Trade as a ‘mode of
regulation’ in terms of Regulation Theory comprehends a package of governing rules
stabilised by a network of collective bargaining between groups, or rather political agents
and their economic status. These governing rules represent statuses or functions in and
through the stable articulation between the invariant elements of capitalism and variant
elements of Finance-Trade (Jessop, 1990 and 1995).

In the Regulation Theory (Aglietta 1979; Boyer 1990; Boyer and Saillard 1994; Lipietz;
1988) the concept of regulation is understood to be economic action grounded in socially
embedded institutional rules. Jessop (1995: 309-311) infers that modes of regulation
provide powerful narratives of the contemporary world, and further discursively constitute
problems and interests. The emerging Finance-Trade mode of regulation define objects to
regulate, in and through specific practices under its hegemonic economic system, given
 3

attention to global financial stability and global conflict resolution extending to trade
disputes. The development of a societal (and institutional) mode of regulation seeks to
sustain the interdependence of economic structures and their recurrence, which guarantees
the stability and unity of an instituted economic process. In fact, the Finance-Trade mode of
regulation produces institutional structures with a clear function in the ‘global economy’,
and further centres interest on values, purposes and policy (O’Hara, 2003).

The term ‘global economy’ is here understood as multiple social and economic formations
running into each other, in terms of connections between activities in global scale as a sort
of ‘global production’. Such relationships are manifested in specific configurations in
specific places, as nation-states, which remain an important unit of the ‘global economy’
(Dicken, 2005).

Both objects (financial stability and global trade conflict resolution) of the Finance-Trade
mode of regulation reflect the complexity of the real world, and the capillarity and plurality
of mediations in the ‘global economy’. For instance, in spatial terms, such regulation
involves articulation between national and international levels, which frames economic
space constituted in and through global activities. Furthermore, different institutional sites
(having an independent existence) assign and articulate in various ways the diversity and
contingency of regulatory practices.

Regulation and governance occur within parameters defined by institutionalised ‘structural

forms’, which include economic and extra-economic factors, and further collective
identities, common rules, norms, agreements, networks and procedures. Therefore, a mode
of regulation comprehends social processes and struggles, which define and stabilise
economic rationale and norms of economic conduct. The Finance-Trade mode of regulation
emerged in the seventies as political and economic practices, and was enhanced in the
eighties and acknowledged in the nineties as guiding a principle of a certain economic
thought and management around free market principles of the neo-classical economic
theory (Boyer and Hollingsworth, 1997 and Harvey, 2005).
 4

Money and credit have been stirring the ‘global economy’ processes to action by the
demands of finance, which activate production and distribution by means of global trade. In
this context, the IMF and WTO are central to the organisational and institutional levels of
the competitive mode of regulation currently in place, in accordance with an internationally
competitive economy. A globalising capitalist economy requires multilateral ‘structural
forms’ coupling and adjusting other systems with the prevailed logic of accumulation and
reproduction of the Finance-Trade mode of regulation. This continuous political and
economic process imposes a dominant principle of societalisation, in which the imperatives
of ‘structural’ or ‘systemic’ competition surpass economic criteria to comprise the
restructuring of organisations and institutions on competitiveness. The IMF and WTO have
taken action, organising principles and setting specific institutional objectives supported by
definite political and economic agents, which distinctive methods aim at the establishment
of self-regulating markets relying on deregulation and liberalised trade.

Competition and trade regulation

There will be particular attention in this dissertation upon the role of the WTO as conflict-
resolution device in the establishment of the Finance-Trade mode of regulation as a broader
social formation. An institutional form of conflict resolution is a necessary supporting
structure in the ‘global economy’ to mediate trade disputes, which arise as competition
between capitals, and/or contentions between nation-states. Indeed, the WTO exerts a broad
regulation through the totality of its institutional arrangements, which coordinate and
regulate transactions inside and across the boundaries of economic sectors. Thus, national
and international capitals compete and play their interests and associations through the
various trade agreements, legal activities and judgments in the WTO (Coleman, 1997).

The contemporary regulation of the WTO is determined by the requirements of the modern
practices of capitalism, which combine organisational and institutional frameworks, and act
through organising and enforcing behaviour between their members. According to Jessop
(1995; 320) the social character of the WTO regulatory processes rests ‘as functional space
 5

within the horizon of a social formation with the need for institutional regulation in a social
formation.’ Such a view is supported when WTO is considered as an action-oriented
structure, which concerns norms and rules governing economic relations as social relations
(Bourdieu, 2005: 231). Furthermore, according with Hollingsworth and Boyer (1997:2) an
embedded institutional logic is ‘symbolically grounded, organizationally structured,
technically and materially constrained, and politically defended.’ Such institutional
relations within the WTO focus on the multiple networks in which members are embedded,
and further define identities, interests, capacities and practices.

Inter-organisational and inter-institutional relations within the WTO have properties which
involve both internal cohesion and sheer practicality in rendering negotiations. The
operational structures of the WTO are supposed to resolve trade disputes between nations,
and indirectly reconcile conflicting interests regarding a share of the global economic
surplus. Due the high trade stakes and interests playing on the WTO, many members make
this the stage to air their own concerns about and interpretation of free and ‘fair’ trade, and
ongoing negotiations help to identify conflicting interests, objectives and strategies. In this
context, members appropriate vocabularies and systems of logic for pursuing their goals in
accordance with institutional imperatives (and a broader social formation) for defining what
is valued, and designing the norms and rules by which they have to obey (Hollingsworth
and Boyer, 1997 and O’Hara, 2003).

The WTO comprehends the existence of heterarchic institutional frameworks, each with its
own objects and codes, which constitute the whole institutional and regulatory context
where economic activities take place. Further, competition as a premise provides the
ground rules and governance practices for the institutional regulation in the WTO, which
forms cognitive expectations in and through the trade disputes regarding specific issues and
governance. Thus, it ensures that interests and strategies play an important role in
enhancing institutional arrangements and rulings within the WTO.

Regulatory issues are key reasons for disputes between WTO member-states, which raise
related issues, such as economic power relations and the character of a politically driven
 6

system of negotiated agreements, in spite of presenting itself as an institution increasingly

enforcing the rules of international law applied. Furthermore, it suggests an increased
potential for struggles between domestic regulatory objectives and international
agreements. Although, this view has been countered by others (for example, Holmes et al;
2003: 2), whose consider the share trade of countries as the ‘pretty robust indicator’ of
likehood disputes into the WTO.

In this dissertation the WTO and particularly the Dispute Settlement System are conceived
as persuasive political battlefields to facilitate political settlement of inter-states disputes on
trade and regulatory dispositions. In other aspects, the dissertation proposes a new analysis
and theoretical approach for the study of regulation: discourse analysis. Such an approach
considers the communicative and performative interactions that occurrs in and on the
institutional and regulatory system of the WTO as a vital part of its structure. Discourse
analysis evokes that such interactions actually constitute the regulatory processes, and
further serve important functions and basis ordinated actions, and are important arenas of
struggle.

This approach has recently been demonstrated by Black (2002: 170), who worked on
regulatory conversations and contentions of discourse analysis, such as the meaning of
language and the coordination of social practices; the construction of identities; the
relationship of language, thought, and knowledge; the relationship of language and power,
and finally that meaning, thought, knowledge, and power are wepons to challange and
change structures.

Regulation is a developing process with its own dynamics wherein agents, interactions and
regulatory processes are framed and constrained by institutional and social forces. This
dissertation explores the ‘Regulatory Structure’ competition within the WTO from the
concept of institution as a self-sustaining system of shared beliefs, rules and resources.
Hence, the ‘Regulatory Structure’ is termed here as a pattern of social (and institutional of
course) interactions having a relatively stable structure, which organise and shape values
and regulate norms and conducts. Furthermore, the concept of ‘Regulatory Structure’
 7

comprehends networks of power organising allocative practices and authoritative practices.

Such ‘Regulatory Structure’ might be understood within the broader new order of
regulatory capitalism or Finance-Trade mode of regulation, and the WTO as the
formalisation of competition and trade regulation. That said, the agents within the WTO
play endowing technologized discourses and perceptually feasible actions, which
combination of action and interaction refer to a specific payoff distribution of allocative
and authoritative practices. The institutional game is to maximize the payoff.

Therefore, the ‘Regulatory Structure’ comprises political and socio-economic relationships,

and not a mere ‘re-embedding’ movement within the ‘global economy’ considering that
global markets have to be established and enforced by socio-economic relations and
political actions. In fact, such regulatory structure is the ‘re-articulation’ of politics and
economics, in a manner that such ‘re-articulation’ has a functional interest: the functioning
of the ‘global economy’ and the accordance of the other social spheres with its core
imperative of international competition.

The imperative of international competition is a constitutive element of the Finance-Trade

mode of regulation, which involves a wide and diverse range of governing institutions.
Hence the imperative of competition also is within the regulatory structure of the WTO,
which concerns national competitiveness. In the particular matter of trade, the basic
principle of competitiveness lies in the ‘comparative advantage’ theory of David Ricardo
(The principles of Political Economy), which states that a country needs to specialise
production and export goods in which its comparative advantage is greatest, or comparative
disadvantage is smallest. In addition, the refining of the comparative advantage theory with
respect to international exchanges infers that part of the gains from exchange are realised
by foreigners, who attempt to capture all the gains for themselves. As a result certain
amount of resources are transferred from domestic markets (producers and consumers) to
foreign exchange opportunities, which decreases or increases wealth around the world
(Trebilcock and Howse, 2005).
 8

Thus, the ‘re-articulation’ between politics and economics has designed and articulated
relations and practices in international trade concerning regulation and governance within
the WTO. Competition has become multidimensional and spread across national borders as
a single dominant model of economic arrangement in the increasing interconnection
between national economies. Hirst and Thompson (1997: 338) argue: ‘Trade relation, as a
result, takes on the form of national specialization and the division of labor.’ The ‘global
economy’ has been determined in its structure and distribution of resources within the
power relations between nations respecting their competitiveness, thus outcomes are results
of distinct and differential performances. Global economic interactions function as
opportunities or constraints to national economies.

This dissertation will examine how the institutional structures and regulatory process in the
WTO operate, and what interests and strategies prevail in the light of the thesis of
international competitiveness between national economies and states in the ‘global
economy’. In order to achieve such goal the Bananas and Beef Hormones disputes in the
middle of the 1990’s are used to illustrate the legal, economic, political and institutional
difficulties created by the nesting and overlapping of institutional commitments, interests
and strategies. Both disputes involved the most important trading economies, which have
the largest stakes in the international trade system. The disputes challenged the resolution
system of the WTO, as well as the effective enforcement of its rules. The WTO’s own
regulatory structure (continually produced and reproduced) is seen to be stake through the
existing tension between agreements, which, on the one hand, provide precise formulations
about the purpose and meaning to facilitate implementation and adjudication of the trade
rulings; and, on the other, yield vague formulations open to wide interpretations which
enhance views and interests of what the ‘whole system’ ought to be.

The political and institutional significance of bananas and beef hormones disputes exceed
their commercial value, compared with other economic sectors and even traditional
protectionist interests. Despite the impressive growth of trade between the North America
and EU, it is not the share trade that is in dispute, the real struggle concerns the ‘Regulatory
Structure’, which is the ongoing stake in the WTO. That is, the non-observance of free
 9

trade beliefs jeopardise the authoritative model of ‘liberalised trade’, upon which
international trade rules are based. Therefore, some of the core principles (competition, no
trade restrictions and market access) of the liberalised trade game had been threatened. The
disputes highlight the agents’ interests and strategies in and through the regulatory structure
of the WTO, whose aim the controlling of the own regulatory structure.

Chapter 1 shows the roles and uses of the concept and discourses of competitiveness in this
dissertation considering it as an element of regulation and serviceability of social
interactions, particularly in the ‘global economy’ and institutional interactions within the
WTO. Furthermore, is discussed as competitiveness form discursive interactions integrating
and articulating practices and strategies with respect to competition and trade regulation.
Which engender and interact helping to configuration of social and institutional spaces of
regulation – social structure of competition and ‘Regulatory Structure’.

Chapter 2 provides both descriptive and theoretical accounts about the bananas and beef
hormones disputes within the Dispute settlement System. This chapter deals with regulation
as a ‘communicative process’, wherein obligations and agreements of the WTO are
strategically used as technologized discourse to meaning and interpretation of written trade
‘law’ in order to achieve interests and constrain behaviours through the control of allocative
and authoritative decision-making in the ‘Regulatory Structure’ in the WTO.

In chapter 3 the Dispute Settlement System in the WTO is pointed out as one of the most
important structures of the WTO with respect to the multilateral trade system and current
issues. This chapter discusses the regulatory structure in the WTO as part of a broader
global regulatory networking for global economic management. Further, it exposes the idea
of the ‘ Regulatory Structure’ in the WTO as a space of competition, discursive practices
and strategies within the technical and political structures of the WTO.

In chapter 4 is discussed the role of the WTO as an international dispute resolution

mechanism structuring international trade, though such regulatory process is conceived as
an ongoing political-economic game wherein large economies play to sustain their political
 10

and economic hegemonies. Further, the ‘Regulatory Structure’ in the WTO is conceived as
part of a global legal order, which comprises and defines the interests of large economies
within an entire social formation – ‘global economy’ or globalisation.

Chapter 1
 11

The role of Competitiveness

The concept of competitiveness is used in this dissertation as a theoretical and

methodological tool, which permits the examination of patterns of competition within a
given social structure. Furthermore, such an analytical tool enables us to capture the
interplay of conflicts and competition relations in a determined social structure. That is,
how a social structure of competition organises certain beliefs, agents and institutions
constantly in struggle.

To establish the theoretical and methodological development of this dissertation, there is

the need to define the perspective of competitiveness and social structure of competition;
the first is related to international trade theory (and new variants) and the Hechscher-Ohlin-
Samuelson model of free trade and growth (Dalum, 1992: 192). Competitiveness is
determined by the comparative advantage of a country, due to specialisation of economic
activities and maximisation of resources. The notion of competitiveness used here goes
beyond, while resembling a medium of interactions, which permits agents to learn about the
behaviour of interacting agents and the nature and effects of certain institutional
framework. Thus, competitiveness is integrated into the interplay of institutional agents and
cognitive rules exploring the analysis of economic formations.

The understanding of the ‘Regulatory Structure’ in the WTO as a political, socio-economic

and cultural engine, which has helped to operate and regulate the ‘global economy’ and
particularly reshaping trade relationships, enhances the choice of competitiveness as
methodological category. In addition, competition remains as one of the strongest
principles of the market economy, which take the form of social interaction and discursive
practice (spoken and written). In the WTO context, competition (and competitiveness) is a
discursive formation regulating dispersed subject positions into a single statement
integrated to operations and strategies, which form objects and articulated practices.
 12

Competitiveness therefore used as strategic discourse in political-economic interaction, and

further organises fields (politics and economics) and agent- networks serving as the
articulation between agents. Furthermore, competitiveness determines the totality of
exchange relations between competing agents, which include both direct interactions and
indirect conflicts. In other words, competitiveness is not a mechanical principle of action
and reaction; it exerts a relational function, an intelligent response to forces in the social
structure of competition. To sum up, competitiveness is a strategic and discursive resource
for political and institutional legitimisation, which enables agents to mobilise and enrol
other agents and resources to reach interests. Methodologically, the articulation between
competitiveness interactions and interests enable to query how structures change and what
interests and strategies prevail within a given state of relations of production and exchange.

1.1 Social Structure of Competition

The notion of social structure of competition, as argued by Burt (2004: 325) focuses on a
network of contacts, in other words ‘the structure of the player’s network and the location
of the player’s contacts in the social structure of the arena provides a competitive
advantage’. This idea states that an economic action is embedded in certain social
structures, and such structures play a significant role in economic behaviour. Hence, within
the theoretical account already developed competitiveness is an investment in social
relations with expected returns, and further an investment on resources embedded in a
social structure of competition accessed and mobilised in purposive actions (allocative and
authoritative). In short, the ‘Regulatory Structure’ in the WTO satisfies the requirements of
one social structure of competition in the international trade system.

Within the ‘Regulatory Structure’ an economic agent acts and competes within the market
economy and international trade system; each agent has contacts and social interactions,
which provide a competitive advantage in such imperfect social structure of competition.
 13

From Burt’s account (1992; 327), competitiveness interactions count, because they provide
for the agent location and position, which are defined upon the social relationships within
the social structure of competition, and may provide a competitive advantage rewarding as
opportunities. Competitiveness is a critical variable within an imperfect social structure of
competition such as the ‘global economy’; which depends on the social relations among
agents in contemporary capitalism.

The use of competitiveness in the analysis of the ‘Regulatory Structure’ (as a social
structure of competition) evokes not only structural constraints and opportunities, but also
actions and choices. In this context, competitiveness means effectiveness of interactions on
networks and hierarchies, and further produces main statements and statutes of competition
policy. Thus, competitiveness aims to maximize social actions engaging interests,
relationships, hierarchical structures, social networks and other agents. That is,
competitiveness is acquired through social relations to accrue to an individual or a group by
possessing a strength and durable social network within a particular social structure of
competition.

Every such structure of is formed by agents obliged to behave to others under certain
practices, and further are dependent on exchanges with the others. Such exchanges create a
correlation between the agents within a network of opportunities, which course of action is
to engage other agents towards to access other agents and resources to gain better results
(Burt, 1992).

The links between the ‘global economy’ and the ‘Regulatory Structure’ in the WTO to
some extent have created a governance regime in contemporary capitalism, whereby trade
regulation has operated its demands and enforce its precepts. In this context,
competitiveness is an important instructive operational logic, which constructs a new
relational and economic identity among political and economic agents established on the
doctrine of liberalised trade, deregulated markets and exporting-lead economies.
 14

1.2 Competitiveness in the ‘global economy’ and WTO

Competitiveness beyond medium of interactions has theoretically to be understood as an

economic action, and further conceived as a multidimensional and multifunctional practice
on ongoing interests relationships into the WTO. Such a practice enhances economic
dispositions of the economic agents into the WTO, dispositions capable of generating
behaviours and even anticipations which might be termed ‘reasonable’ than ‘rational’.
Furthermore, competitiveness as ‘best practice’ in modern capitalism constitutes agents and
their space of action, even more is the encounter between dispositions socially constructed
in relation to the ‘global economy’ and the structures of the WTO (Bourdieu, 2005).

The precepts of the Finance-Trade mode of regulation (in particular competition) created a
social structure of competition, which constructed a political, economic and historical
social formation. Accordingly, the ‘Regulatory Structure’ in the WTO has not been created
just on the will of agents and institutions for specific ends – trade liberalisation. The
agreements of the WTO are political creations designed to regulate propensities and
expectations, being the product of historical arrangements or, recurring situations
immediately adapted and incorporated. Within this political context the WTO with IMF and
World Bank together represent a socially constructed battlefield in which agents provided
with different resources confront each other in order to gain access to exchanges and to
perpetuate or transform the prevalent relations of force.

Forms of competition are historically modified to reproduction of capital in general,

imposing demands on social relations as a whole. The increasing internationalisation of
trade, investment, finance, (and of course money) obligated each firm, region or nation to
compete in the global arena. Such political and economic agents can no longer be protected
by oligopolistic national markets, as tended to be the case during the sixties (as argued by
Hollinsworth and Boyer, 1997:56). The agents in the WTO context, in this case state-
nations, undertake actions which depend for their ends and effectiveness, on the agents
position in the ‘Regulatory Structure’. In other words, the distribution of capital (in all
 15

species) depends on the active competitiveness (or effectiveness of interactions) of each

agent, that is, the position occupied in such a social structure of competition. Hence such
structure acts in behalf of the most competitive agents.

The exertion of Finance and Trade symbiosis in the ‘global economy’ occurs in and
through the imperative of international competition. That said, the exertion of full
competitiveness is the premise of a ‘global and institutional’ regulation, which has been
restructuring societal relationships in modern capitalism. This emerging mode of regulation
in Jessop’s terms concerns the constitution of identity, interests and action ‘through
struggles around new norms of production and consumption and the associated
development of a new mode of societalization (1995; 315).’ Further, competitiveness is a
response, when a state-nation or economic sectors are no longer competitive in the ‘global
economy’. For instance, state structures have functioned toward the achievement of
international scales or standards throughout job training and supply-side intervention, and
collective stimulus to production. Purcell (2002: 292) states that state-nations have
implemented workfare policies in order to restructure national economies ‘to promote
competitiveness and accumulation.’ The state structures have moved from a set of welfare-
oriented to workfare-oriented policies, which aim to meet the new economic imperative
that emphasises supply-side competition.

Most of the state-nations have developed a medium -to long-term plan to favour competing
sectors. Rather than abandon them, such sectors have been subsidised or protected counting
on their adaptation to the new competitive environment, although the distribution of
strengths, which in the end leads to competitiveness, governs the distribution of chances of
success and profits through various mechanisms. In fact, economic structures and economic
agents or, more exactly, their dispositions, are indissociable from the totality of social
constitutive of certain social order. The agents interplay on the economy of conditions of
their production and reproduction, such as global production and demand; financial stability
and conflicts trade resolution. To tackle factual and potential conflicts there is the need of a
widespread regulatory structure, which concerns political and economic power relations.
 16

There has been stated in this chapter the distinctive use and features of competitiveness
(medium of interactions, behaviours and institutional interplay), which engenders a network
of political and socio-economic interactions. As a result, competitiveness also comprehends
a political process whereby the relationship between politics and economics rearticulates
itself. The required economic deregulation is followed by a legal and political regulation, of
which the agreements of the WTO are the finest examples. The current international trade
regulation is based on ‘disciplines’, ‘right instruments’ and ‘technocratic’ direction (Brand
and Gorg, 2001).

The ‘Regulatory Structure’ in WTO directly or indirectly states competitiveness as a

fundamental part of the whole of legal obligations. Hence, competitiveness is
institutionalised and manifested through the organisational and institutional structures of
the WTO, which are discursive spaces within the organisation. That is, competitiveness is
taken as a discursive formation by the convergence and politically articulation of discursive
practices and identities played upon competitive interactions. Several legal obligations in
the ‘Regulatory Structure’ in the WTO are based upon principles of reciprocity, non-
discrimination and equal treatment, which are designed to expand market access and
liberalise trade. In other words, the rules are designed to ensure ‘fair’ competition, and
further to respect the need of a supra-state governance structure to solve potential
polarisation and general crisis.

In fact, this emerging global regulatory structure operated by WTO is committed to the
principle of progressive trade liberalisation and consequently the opening of new markets.
The glorification of the WTO as a supra-national regulatory structure has progressively
attempted to superimpose itself above national institutions of regulation, despite of several
explicit exceptions to protect domestic economies within its legal framework.

Kirkpatrick and Parker (2004:7) have demonstrated how the privatisation of water services
in developing countries, in the 1990’s, served to enforcing of the ‘Regulatory Structure’ of
the WTO, in particular the General Agreement on Trade in Services- GATS upon
public/domestic regulation. There was the reducing or removing of the right of national
 17

governments to regulate or restrict services, which occurred due to commitments made by

member-states respecting market access and equal treatment to foreign companies or
investments. That is an example of regulatory schedules acting to guarantee access to
global markets for international capital, and also establishes a global competition in terms
of the WTO regulation.

The regulatory framework within the WTO is the combination of separate agreements,
which assist the need to guarantee the continuous accumulation and investments through
the competitive trade game. Therefore, competition is mutually important for developed
countries and developing countries to gain and protect (national) markets. In the context of
the WTO, competitiveness conceived as an economic action is always oriented to member-
states behaviour, because it takes account of the behaviour of others through institutionally
constructed meanings.

The meaning of the competitiveness exposed previously in this chapter is not of a pure and
free competition, due to its interactional character. In fact, as a socially and economically
situated action within the WTO, competitiveness is embedded in ongoing structural and
institutional interactions and interplay. In an ideal competition, there is no room for
bargaining or negotiation, and what determine the conditions in which agents come to
decide are the objective relations. Competitiveness in the ‘Regulatory Structure’ of the
WTO is a complex network of technical relations and boundary-spanning exchanges in
institutionalised contexts, which develop and force political and economic agents to
incorporate new practices and procedures.
To understand the role of competitive interactions in the WTO, the institution has to be
recognised as a space, composed of different processes and levels of regulation and
disparity, a hierarchical distribution of power, which reflects the different regulatory levels,
interests and strategies. Within the WTO occurs competition between political and
economic agents interacting upon constructed structures of relations of force, aiming to
control and guide the character and operation of the whole structure of regulation.
 18

Thus, in the WTO, competitiveness is an institutional perspective, an imperative and

constructed practice which is product of collective beliefs, conventions and codes.
In the context of the WTO competitiveness deals with competitive pressures and reflects an
efficient form of organised and rational strategic choices dominating the ‘global economy’,
whatever cultural and institutional variations exist. According to Burt (2004: 327) says:
‘The rules of trade are ambiguous in the aggregate and everywhere negotiable in
particular,’ because the rules of the trade game vary between societal and contextual
priorities and dominant conceptions of appropriate forms of economic competition.

The regulation of the WTO exists only through the agents that are found within it and
confers a certain structure on it, which provides information about potential actions of other
agents. Competitive strategies are in the nature of the trade game in WTO, in predictability,
strategic dispositions and calculation vision, and most elaborated strategies can be
implemented only within the limits and in the directions assigned to them by the
institutional and practical knowledge of constraints.

Chapter 2

The Bananas and Beef Hormones Cases

 19

2.1 The Beef Hormones Case

The US (on 26th January 1996) and Canada (on 28th June of 1996) requested consultations
with the EU regarding the prohibition of the use in livestock farming of certain hormones
and related measures, which affected the importation of Canadian and American livestock
and meat livestock. Canada and US claimed that EU measures were inconsistent with the
agreements into the WTO, in particular: Article 11 of the Agreement on the Application of
Sanitary and Phytosanitary Measures ("SPS Agreement"), Article 14 of the Agreement on
Technical Barriers to Trade ("TBT Agreement"), Article 19 of the Agreement on
Agriculture, and Article XXII of the General Agreement on Tariffs and Trade 1994
("GATT").

Canada and US structured their arguments on the combination of obligations accorded in

the WTO agreements, which located and positioned the practices and strategies of the
parties involved in this issue. The complainant parties as well as the respondent one acted
to interpret, classify and impose constraints on alternative classificatory strategies, in this
particular case of completion of the WTO obligations. Obligations and agreements
considered here as discursive formations constituted the basis of functional and
coordinative social actions in this ‘communicative process’ of regulation, functional to
achieve certain ends and coordinative in ‘producing meaning and shared senses’ as argued
by Black (2002: 164). Here, competitiveness, apart of being one feature of neoliberal
discourse and international strategy, is the imposition of a particular and effective
interpretation on the WTO obligations throughout members-states legitimate their practices.
Thus, from the point of view of the institutional interactions on competitiveness the matter
is about a hierarchical interpretation, and making clear curbs of the WTO agreements.
Therefore, what is at issue is the proper ‘Regulatory Structure’ in the WTO, which means
the wider field where subjects, objects and concepts are formed. The WTO obligations and
agreements form the basis of discursive formations constructing understanding and
definition of problems, objects and practices (Black; 2002 and Fairclough; 2006).
 20

The US and Canada argued that the Sanitary and Phytosanitary Agreement lay on the
principles of liberalised international trade invoked in the WTO Agreement, and that the
measures of the EU directly affected Canadian beef exports. Consequently, the measures
were violations with respect to market access and constituted unjustifiable restrictions
prejudicing international trade. Such arguing as a discursive practice was designed in
accordance with institutional strategies and objectives, a technologization of discourse
according to Fairclough (1995:72), which comprehends strategies, techniques and
procedures to render and relay authoritative and operable practices. Technologization is a
mobilised and elaborated framework on expertise discourse and policing discourse
strategically motivated toward to standardisation of discourse practices.

The EC level of protection for growth promoting hormones was significantly higher than
the EC level of protection for antimicrobial growth promoters (…) resulting in a
discrimination against Canadian beef imports and a disguised restriction on international
trade (WTO Panel Complaint by Canada, 1997.

Canada claimed that Canadian beef produced with growth promoting hormones was a ‘like
product’ to beef produced in EU from animals whose the hormones had been administered
for therapeutic reasons, thus the ‘like’ beef also contained residues of antimicrobial growth
promoters and the other veterinary drugs. Accordingly, the EU measures were violations of
the WTO obligations, which guarantee market access and ‘treatment no less favourable’
than like products of the EU origin. This is an argumentation for epistemic and normative
claims, structured from epistemic to normative arguing and the main argument is that
protectionist or restrictive measures threaten liberalised trade (Fairclough, 2006).

2.2 Dialogical Competition

At this point statements and discursive formations interact through the arguing, and
discursive objects are identified and classified by the statements themselves. The positions
start to become clear as well as the strategies chose, and mediated in the context of the
 21

WTO agreements, and ‘the strategic use of rule design’ is deployed on skills of
argumentation and rhetoric (Black, 2002: 165). The dispute focused on the attempt to
regulate and control the ‘trade rules’ and their completion, altering behaviours according to
identified purposes involving ‘mechanisms of standard-setting, information-gathering and
behaviour-modification’ (Black, 2002: 170). All parties resorted to technologization of
discourse as a calculated intervention to shift meaning and interpretations.

Also the US argued that sanitary and phytosanitary measures directly or indirectly affected
international trade and ‘nullified or impaired’ the benefits of the liberalised international
trade system. Further, such measures were in fact a discrimination action between members
where identical or similar conditions prevailed, being a clear violation of the Article II (3)
of the SPS Agreement, which constituted a ‘disguised restriction on international trade’ and
failed to accord to imports from US the advantages, privileges or immunities granted to
other countries.

The EU claimed that the measures had not ‘nullified or impaired’ the benefits accruing to
Canada and US pursuant to the WTO agreements, its argument was that such a practice (the
ban of certain hormones) was a prior policy and that the benefits were claimed by Canada
and US after the adoption of such measures.

The dispute is hence a dialogue conducted through interactions on written agreements and
obligations, where broader strategic discourses (competition and liberalised trade) are
contextualized, operationalized, and enacted. There is the discursive construction of
purpose and legitimation in relation to authoritative practices, in relation to the obligations
and agreements of the WTO. Such authoritative practices constitute in fact the
authoritativeness of the ‘Regulatory Structure’, which is legitimated throughout the
recognition of shared linguistic practices entailing and forming the basis of social actions,
in this case institutional practices in WTO (Black, 2002; Jessop, 2000 and Leeuwen, 2000).

In general the WTO panels reach agreement behind the scenes through negotiations and
manoeuvres. Their rulings are ambiguous recommendations to benefit the major bargaining
 22

forces. The conciliation and bargaining strategies argued by Garrett and Smith (2002:14)
rely on market power, which benefit the large economies. Hence, the Dispute Settlement
System is used as a persuasive political battlefield for the interplay of political-economic
issues, and its operation and results back and shape the regulatory structure in the WTO.
The beef hormones dispute reveals the interacting of key agents over the distribution of
allocative and authoritative decision-making.

Both parties strategically based their arguments on the interpretation, meaning and
hierarchy of the WTO agreements. The EU argued that a first violation of GATT
obligations was a precondition before the SPS Agreement could be applied, a fact that had
not occurred, which interrupted all proceedings. To strengthen its arguments, the EU
attempted to focus the dispute on the SPS Agreement, and demonstrate the legality of
measures under GATT terms. In opposition, the strategy of Canada and US was to
demonstrate that the obstacles imposed by the EU measures were more trade-restrictive
than necessary and violated the most important imperatives of the WTO agreements.

The ‘Regulatory Structure’ assembles practices and meanings in the WTO, which shapes its
structures and agents toward to trade and competition regulation. Thus, in the Dispute
Settlement System, the contracting parties are both regulators and regulated, whose
‘regulatory conversations’ involve a regulatory process concerning the operation of the
regulatory system as a whole (Black, 2002).

Similarly, Canada strategically focused and claimed that the SPS Agreement, GATT and
TBT Agreement were agreements of equal status under the broader WTO Agreement
(following Article II). Thus, Canada required the examination of the application of the SPS
Agreement rules on the EU measures, since they are more detailed, and then the GATT
obligations

The strategy of the EU was to use the SPS Agreement to interpret provisions of the GATT,
and adding procedural requirements by itself. The SPS Agreement was used to interpret the
Article XX (b) of GATT in a manner that the substantive provisions of the SPS Agreement
 23

could be judge only under the same conditions applied to the Article XX of GATT, which
states that any recourse might be made only after a violation of another provision of GATT
was first established.

Subject to the requirement that such measures are not applied in a manner which would constitute
a means of arbitrary or unjustifiable discrimination between countries where the same conditions
prevail, or a disguised restriction on international trade, nothing in this Agreement shall be
construed to prevent the adoption or enforcement by any contracting party of measures:
b) necessary to protect human, animal or plant life or health; (General Exceptions, Article XX (b),
GATT).

2.3 Technologization of discourses

The assemblage of agreements and obligations on argumentation occurred in order to

enhancing the technologization of discourses, and become operative to the achievement of
goals. The strategic use of technological discourses was used differently and by different
agents in the Dispute Settlement System, in accordance with the position of the agents and
institutional terms of struggle. Hence, the beef hormones dispute institutionalised and
rationalised the dispute mechanism in the WTO, the disputes came to be handled by
relationships implicated by the particular construction of trade ‘law’ ((Dezalay and Garth,
1996 and Fairclough, 1995).

The argument of the EU on Article XX (b) of GATT was intended to strengthen its
standing on the specific legality of the SPS Agreement and TBT Agreement to tackle the
issue only as technical restrictions, instead of a violation of the constitutive principles of
liberalised trade and competition, which guide international trade system.

Canada argued that the SPS Agreement did not possess such substantive worth to interpret
Article XX (b) of GATT, with the addition of procedural rules. Furthermore, Canada
argued that the self-standing character of the SPS Agreement is itself equal to the status of
GATT, and stands as more than an interpretation of Article XX (b) of GATT, which itself
 24

constitutes a multilateral framework of sanitary and phytosanitary rules in order to

minimize SPS effects on trade. The strategy of Canada was to demonstrated how the SPS
Agreement stands independently from GATT, emphasizing that Articles 3 and 4
(‘Harmonization’ and ‘Equivalence’) had no relation to any provisions of GATT but had
rather to be understood as more than additional procedural requirements.

Canada and US argued that the banning of the importation of meat and meat products from
animals administered with growth hormones was a measure inconsistent with its agreement.
It was also claimed that the EU measures were contrary to GATT precepts regarding
‘treatment no less favourable’ and ‘non-trade restrictions’ (Articles III and XI). In fact,
Canada and US argued that the prohibition import was an internal measure designed to
discriminate in favour of the EU cattle and beef products and against Canadian and
American cattle and beef products. The tacit question was about the interpretation of
procedures and obedience to the ‘Regulatory Structure’ in the WTO. Canada also claimed
that the ‘non-trade restrictions’ and ‘non-discrimination’ precepts of GATT are present in
the TBT Agreement, as far as the violation of the Article 2:1 was invoked with respect to
‘no less favourable treatment’ to imported products than to domestic products.

The EU continually argued about the interpretation and meaning of the provisions, and
further about the understanding of procedures. The right of a member to establish the level
of protection within this territory was emphasized, and the EU also argued that the SPS
Agreement exempted any level of sanitary change applying before the Agreement.
Furthermore, the EU used the note to Annex 1a of the WTO Agreement to strengthen its
arguments based on the member right to protect human health according to the SPS
Agreement in derogation of GATT.

In the event of conflict between a provision of the General Agreement on Tariffs and Trade 1994
and a provision of another agreement in Annex 1A to the Agreement Establishing the World Trade
Organization (referred to in the agreements in Annex 1A as the "WTO Agreement"), the provision
of the other agreement shall prevail to the extent of the conflict’ (General interpretative note to
Annex 1a: MULTILATERAL AGREEMENTS ON TRADE IN GOODS).
 25

The practices of the parties involved into the Dispute Settlement System regarding this case
were oriented to classify and hierarchize the obligations and agreements of the WTO; in
other words, the objects in dispute or at stake received linguistic designation; the criteria of
inclusion or exclusion and their boundaries became a theme of interest. The parties sought
to enact defining types of interactions through the WTO institutional frame, and its
discursive constraints. Obligations were strategically used as technologized discourses. The
technologization of discourse was used as a resource by key agents to embody ideology
(competition, no-trade restrictions and market access) to make them an effective
mechanism for sustaining hegemonies (Fairclough, 1995).

The discursive identification of the parties with obligations or agreements enter into
competition to describe and meaning the ‘Regulatory Structure’ in the WTO by the
dominance of the legitimate use of the legal framework. Which attempts were to enforce
the dominance and interpretation of certain parties (complainant or respondent) upon all
interactions between obligations and agreements. For instance, the EU attempted to
prioritise the right to health protection under the SPS Agreement above other obligations
and agreements of the WTO. Therefore, the disputes involving the EU on one side and
Canada and US on other into the Dispute Settlement System had the institutionalism of
trade at stake, and further the interpretation, meaning and nature of procedures of the WTO
agreements.

In the WTO context, competitiveness takes the form of discursive practices producing and
interpreting interests and strategies, in spoken and written interaction. Competitiveness as
practice is constructed upon the broader Finance-Trade mode of regulation, which
constitutes a kind of contemporary capitalist identity – the unification of capital. The
competition-orientation structures practices, experiences and discourses, and further
constructs languages games which articulate objects and practices. Therefore, in the context
of contemporary capitalism, the WTO attempts of regulation to establish a ‘new’ exporting
culture, and competitiveness is an important discursive logic constructing interactions in
and of economics (Daly, 1991and Dezalay and Bryant, 1996).
 26

2.4 The Bananas Case

On 5th February of 1996, Ecuador, Guatemala, Honduras, Mexico and the United States
jointly requested consultation with the EU regarding the regime for the importation, sale
and distribution of bananas, and the EU legislation, regulations and administrative
measures, including those reflecting the provisions of the framework agreement on
bananas, which implemented, supplemented and amended that regime. The complainants
claimed that EU importing restriction measures were inconsistent with Article XXIII of the
General Agreement on Tariffs and Trade 1994 (GATT), Article 6 of the Agreement on
Import Licensing Procedures (to the extent that it related to Article XXIII of GATT),
Article XXIII of the General Agreement on Trade in Services (GATS), Article 19 of the
Agreement on Agriculture (to the extent that it related to Article XXIII of GATT), and
Article 8 of the Agreement on Trade-Related Investment Measures (TRIMS, to the extent
that it related to Article XXIII of GATT).

In the bananas dispute Ecuador (cooperatively with Guatemala, Honduras, Mexico and US)
argued that the EU import restriction measures produced trade distortions, which ‘nullified
or impaired’ benefits granted by the WTO Agreement, and the measures impeded the
objective goals of the GATT and other agreements.

The dispute interconnected materialities of politics, economics and institutional ensembles

highlighting ‘the constraints involved in processes that operate “behind the backs” of the
relevant agents’ (Jessop, 2004: 5). The discursive relations in this dispute occurred through
institutional orders rooted in conflicting trade conflict interests, which oriented discursive
practices and identified objects of intervention. The ‘discursive selectivities’ revealed the
danger of a lack of control on regulatory processes of competition and trade, the main drive
of the large economies in this dispute (Muchlinski, 1997).
 27

The use of the tariff quotas structure by the EU was contested by the complainant parties,
who claimed that such a system imposed differential rates among banana exporters. The
issues concerned the differential treatment between traditional banana exporting countries
on the one hand, and non-traditional African Caribbean and Pacific (ACP) countries on the
other. According to the complainants, the application of such differential based on foreign
source constituted a direct contradiction of one of the most fundamental guarantees of the
GATT, the ‘non-discriminatory tariff treatment’ stated in the Article I:1.

The contracting parties competing on the recognition of institutional boundaries involved in

the dispute deployed coordinative and discursive strategies to produce meanings and
interpretations. These communicative interactions occurred through both obligations and
agreements in the WTO and shared linguistic practices which serve to frame thought and
knowledge. Meaning and interpretation were taken as being open, and as the coordinative
engine to shape agents and regulatory structure in the WTO (Black, 2002 and Jessop,
2004).

According to the complainant parties, the EU measures allocated shares to its market
among banana export countries in a manner inconsistent with Article XIII:2 of GATT,
which authorises the suspension of any concession or inappropriate adjustment. The
country-specific share considered other aspects than trade, and even failed to respect
similar or even greater historical levels of trade. In the view of the complainant parties view
the quotas favoured particular countries, who had not reached such shares of trade in the
absence of the restrictions. The quotas system (or import licensing system) was accused by
the complainant parties to confer market advantages to some foreign sources over others,
which was claimed as a clear violation of the Article I:1 of GATT.

2.5 The meaning and interpretation contentions

 28

Written obligations include standards, principles and values but they provide no clear
distinction between rules and discretion. Normative and coordinative claims are textually
constructed upon obligations and agreements, for instance: ‘treatment no less favourable’;
‘no-trade restrictions’ and ‘liberalization of market access’. These elements of discourses
relate with each other through the elaboration of meaning or specifying or describing
another, and further one extend the meaning to another adding new elements, and finally
one enhances the meaning of another qualifying it in vary ways (Fairclough, 1992 and
Fairclough, 2006).

The Latin countries and the US claimed that the EU regulations imposed on imports from
Latin America created unfavourable conditions of competition and discriminatory, trade-
restrictive and trade-distortive effects. The EU measures directly contradicted the GATT
guarantees of tariff non-discrimination in Article I, and the ‘treatment no less favourable’
principle.

In opposition, the EU saw no discrimination or violation within the tariff quotas system,
which allocated shares of imports in the EU market in accordance with the legal
frameworks of the WTO. Furthermore, the EU argued that the tariff quotas system was
consistent with Article XIII (Non-discriminatory Administration of Quantitative
Restrictions) of GATT, due to only one specific tariff quota being considered and
particularly its administration. No allegation regarding discrimination had to be applied to
administration of two different and independent regimes, both being justified on different
bases.

The process of interpretation requires that the parties involved have an interest in the
operation of meanings as discourses and social actions, that is, the competing agents invest
because the game matters and the stakes are worth pursuing. Therefore, the interactive
relationships between discourse and argument in the Dispute Settlement System constitute
it as both; a social structure of competition and agency, and the prevailing of the
interpretative practices is one of the stakes. The regulatory structure is interpreted in
 29

accordance with the strategies and pre-interpretative positions of behaviours to curb

(Bourdieu and Wacquant, 1992 and Black, 2002).

Classificatory conflicts about the interpretation, meaning and hierarchical arrangement of

the obligations and agreements of the WTO were constitutive features of the banana
dispute. The ‘Regulatory Structure’ comprises the articulation of politics and economics in
the WTO, and when considered as a social structure of competition, itself became an object
and simultaneously the medium of conflicts between complainant and respondent parties
involved in such trade disputes. Both parties used a relational strategy to understanding and
interpretation with respect to obligations and agreements of the WTO. In other words, the
institutional relations and competing agents on the legal framework of the WTO operate the
structuring of dominant principles and views of its ‘Regulatory Structure’.

Such play on both written obligations and discursive practices is critical to the regulatory
process, and such play further occurs thought the materiality of trade conflicts and
textuality of obligations and agreements. The bananas dispute brought uncertainty about the
precision of obligations and agreements, though precision does not mean certainty. The
regularisation of practices is the goal, and the inconsistencies and contradictions of detailed
provisions are cognitive strategies to achieve this end. The interpretation ‘involves the
development of new cognitive frames and form of practical reasoning’ (Black, 2002: 180),
through the selection of particular obligations and agreements for interpreting events and
legitimising practices to formation of shared normative commitments. (Black, 2002 and
Jessop, 2004).

The arguments of the complainant parties included the operation of two discriminatory
access regimes as a violation of GATT wider obligations, and further the violation of the
Articles I and XIII (Definition of Terms and Due Restrain) of the Agreement on
Agriculture. Furthermore, the Latin countries and the US asserted the non-applicability of
the Agreement on Import Licensing Procedures with respect to tariff quotas, and the non-
applicability of the Articles III:4 and X (National Treatment on Internal Taxation and
Regulation and Publication and Administration of Trade Regulations) of GATT regarding
 30

borders measures. According to Guatemala and Honduras the EU ignored legal standards
by conferring trade advantages to non-traditional ACP countries over traditional banana
export countries in order to ensure interests of a satisfactory domestic marketing for
bananas.

The discursive formations of both parties sought to integrate textual and intellectual
technologies in an articulated discursive strategy to ban or bar contrary discourses and
practices. This was demonstrated by the use of contextualised obligations and agreements,
which sought to sustain or challenge events, and further interconnected a global competing
narrative resonance into the institutional dimension of the WTO. Technologization of
discourses was enhanced by the deployment of a ‘meta narrative’ searching ‘for for a
meaningful “post-Fordist'” macro-economic order in an increasingly integrated world
market’ (Jessop, 2004:15). The role of the Dispute Settlement System, a decision-making
structure, leads to broader configurations of the ‘global economy’ and to interpretative
control of important features of competition and trade regulation. Thus, the interpretation of
obligations and agreements provides the potential for power and the enhancement of
positions, that is: control over interpretation is control over power resources. In this context,
interpretation mean ‘meaning and application’, both as authority and as a means of biding
obligations and the effectiveness of different types of agreements (Black, 2002 ;
Fairclough, 2006 and Jessop, 2004).

Chapter 3

The WTO Competition and Trade Regulation

3.1 Trade Disputes within the Dispute Settlement System

 31

The WTO is founded upon adherence to the imperative principles of multilateral trading
system, among them competition, ‘no-trade restrictions’ and market access, which
constitute ground-rules of trade between nations. Such principles are settled in the
agreements of the WTO, negotiated and ratified by the member-states. Among the aims of
the WTO are: administering the agreements; promoting trade negotiations; handling trade
disputes and monitoring national policies. Although with regard to its actual functioning,
the WTO itself concerns the development of modern capitalism ‘on issues of identity,
agency and strategy’ in accounts of discourses and narrativity (Jessop, 1995: 313).

The trade liberalisation of all assets - human, industrial, agricultural, natural, financial –
implies the production of goods and services in domestic markets to compete overseas. This
is the principle of ‘comparative advantage’ whereby national economies take advantage of
their assets in order to produce most and trade best. Trade liberalisation means the
unrestricted flow of good and services in deepened competition. Nevertheless, obstacles to
imports are always present to protect domestic producers, which mean both a potential
reduction in world economic activity, and also jeopardy to competitiveness in WTO
agreements terms.

Members-states of the WTO are contracting parties under the whole of its agreements or as
called in this dissertation as ‘Regulatory Structure’ in the WTO. As contracting parties, the
conjoined members have in the Dispute Settlement System a resort to strengthen and
improve the obligations of the regulatory framework of the WTO. The management of
disputes in WTO is a process where the focus is on interpreting agreements and
commitments, and ensuring the compromise of national policies within them. Hence, the
disputes in the WTO refer to broken obligations perpetrated by member-states, which
constitute violations of its trade rules.

A dispute arises when a member-state takes trade measures or actions that are considered to
break the WTO agreements, or when it fails to accomplish its legal obligations. The
Uruguay Round agreement structured a process with clearly defined stages and procedures,
 32

and further emphasized the function of such a dispute resolution structure to the
effectiveness of WTO. The Dispute Settlement System is the most important structure in
WTO providing security and predictability to the multilateral trading system. It serves to
preserve the rights as well as enforcing obligations to member-states under the covered
agreements, and ensures that the agreements are in accordance with international public
law.

Another shift in the Uruguay Round agreement compared to the previous General Accord
on Tariffs and Trade (GATT) procedures on trade disputes is that whereas authoritative
decisions could previously only be adopted by consensus, now such decisions are
automatically adopted unless there is a consensus to reject it. Furthermore, the settling of
disputes is performed under the responsibility of the Dispute Settlement Body (DSB),
which includes all WTO members. Recommendations and rulings of the DSB are taken
upon the findings provided by appointed panels to consider each case, which comply clear
procedures. Such a change implies that the objects of WTO regulation could not exist
before the constituted imperatival and identity of trade as an element of different
articulations in different ways (Jessop, 1990: 186). The objects of regulation are known
through the processes of their regulation.

The Dispute Settlement System of the WTO is one of the cornerstones of the multilateral
trade order, due to the establishment of an integrated system permitting the WTO members
to base their claims upon any of the multilateral agreements. Such multilateral agreements
or ‘Regulatory Structure’ of the WTO attempt to improve the transparency in national
policy-making. The concepts and precepts to accomplish free trade in terms of the
agreements of the WTO interact with each other to achieve coherent global economic
policy-making in accordance with trade liberalisation. In the context of the WTO, the
multilateral agreements suppose regulatory exchanges between members in order to
guarantee the expansion of trade and avoid world imbalances.
 33

3.2 The WTO Regulation

The bananas and beef hormones cases in the Dispute Settlement System are remarkably
useful for comprehending the current developments regarding the multilateral trade system
and international political economy. The disagreements over normative rules concerning
the covered agreements of the WTO request means of evaluating actual changes and trends
in the ongoing ‘global economy’, and particularly the international trade system. Jessop
(1995: 315) argues that in ‘the real world there are only definite objects of regulation that
are shaped in and through definite mode of regulation’, and that the ongoing competitive
struggles regarding Finance-Trade mode of regulation have changed the political and
economic structures governing modern capitalism, while remodelling such structures of
power through the redefinition of the forms and inter-relations between political and
economic agents.

The Dispute Settlement System is a new development in international economic relations

and ‘international law’, and this development has inaugurated a shift from a politically
driven system based on negotiations to one where universal rules apply. The key cases,
bananas and beef hormones between EU and North America (US and Canada) and some
Latin countries raised strong perceptions both on the intrinsic values of each case, and also
on the legitimacy and completion of the ‘Regulatory Structure’ in the WTO.

A wide ‘global market’ based on liberalised trade and competition is a political-economic

process, in terms of connections of activities into circuits and networks. Dicken (2007:11)
has argued that trade interdependencies are embedded into the macro-structures of the
‘global economy’, and these macro-structures are the institutions, conventions and rules of
the capitalist market system. Hence, the authoritative dictates of the capitalist, liberalised
market system are the basis of the WTO regulation. Member-states are thus allowed to
 34

maintain controls to restore or develop national economies, although within a supra-

national institutional framework designed to ensure equal market access to national markets
for foreigner competitors. The action of member-states has occurred considering the
agreements of the WTO as a regulatory networking for a global economic management,
which gradually controls nationally-based economic structures.

Such regulation is not an evolutionary process, consisting in fact of complex interactions

focused toward political regulation based on the reproduction of broader capitalist relations.
The rise of neoliberalism (re) articulate economic and political structures upon a market-
oriented view and international competition (in this context the WTO) appear as a supra-
state governance structure to mitigate polarisation and general crises. Hence, the WTO
resembles the political and asymmetric distribution of opportunities in terms of resources,
participation and influence manifested on unequal relations between developed and
developing countries, north and south (Purcell, 2002 and Favreau, 2000)

Since the trade rules of the WTO have become more detailed, as a result more precise and
biding, the Dispute Settlement System has transformed itself into a sophisticated legal
analysis mechanism. Increasingly, international competition is followed by the need of
regulation in and through WTO, which is characterised by the formalisation or
juridification of regulation to provide equal market access to all. The regulation of the
‘global economy’ has been structured upon principles of liberalisation and the
implementation of substantive rules, which have governed the economic structures and
grant the WTO as a contemporary and broader social structure of competition.

3.3 Competition, no-trade restrictions and market access contentions

The bananas and beef hormones disputes reveal the tensions and interactions between
deregulation and competition on the regulatory structure in the context of the WTO
 35

agreements. As argued by Picciotto (2002:3) liberalisation initially involved ‘deregulation’

swifty followed by ‘reregulation’ by a wide variety of new regulatory processes ‘referred to
as neoliberal’ on politics and economics spheres to appease special interest groups.
Furthermore, WTO disputes reveal, according to Jessop (1995; 314) ‘constructivist
elements in discourse- analytic accounts of how organizations and other social forces
besides individuals come to develop distinctive identities, interests and strategies.’ Hence,
the bananas and beef hormones disputes disclose the institutional efforts and particular
member-states interests in controlling the development of the liberalised trade agenda. Both
disputes were related to alleged policies or measures restricting imports into the EU
territory, and further constituted in conflicts respecting the domestic regulatory objectives
and the suitable completion of the WTO agreements.

Both disputes involved major economic forces in the ‘global economy’ providing a means
to examine how the trade liberalisation ‘game’ has been based on schedules of concessions
and biddings tabled under the agreements of the WTO and respective obligations. Garrett
and Smith (2002:3) have argued that international trade game in the WTO is characterised
by three strategies: strategic restraint (or lack of it); strategic conciliation or strategic
bargaining. The ongoing use of such strategies is acknowledged, though the emphasis of
this dissertation regards the regulatory structure in the WTO as stake and discursive object
to be controlled, in a process where the regulatory propriety has been constructed and
classified upon dispersed, but connected and acclaimed, WTO obligations. Furthermore,
particular obligations of the agreements help to identify the competence of the ‘Regulatory
Structure’ in the WTO, which concerns the accomplishment of liberalised trade, and
guarantees of equal competition. To apologists of liberalised trade the imperfect
competition is explicitly dealt in the agreements of the WTO, through the attainment of
trade benefits to member-states.

The ‘WTO Agreement’ creates an order with reference to international commerce and
classifies legal constraints (provisions, norms, procedures) regarding the functional relation
between the institutional goals and discourses: ‘treatment no less favourable’ and ‘do not
arbitrarily or unjustifiably discriminate between members where identical or similar
 36

conditions prevail’. For instance, the fundamental ‘law’ of ‘treatment no less favourable’ is
assured to every member, as a signatory contracting party under the ‘WTO Agreement’.
Such broader ‘law’ appears in several Articles in the agreements of the WTO (GATT, The
Agreement on Agriculture, GATS, Agreement on Technical Barriers to Trade and The
Agreement on Trade-Related Investment Measures -TRIMs), with respect to different
‘markets’. Furthermore, there are several excerpts in the WTO agreements referring to
lower trade barriers, such as ‘members shall ensure that such measures are not more trade-
restrictive than required’.

Organisational and institutional capacities and strategies of the agents into the WTO are a
discursively mediated form of regulation, which constitute the different objects, processes
and practices of regulation. The WTO obligations establish relationships between and
within the organisational and institutional structures, and such relationships are drawn into
the dichotomous language of public authority versus private interests. The WTO
obligations are also recipients of embedded actions relating to practices and procedures,
which aim and form the consolidation of the ‘Regulatory Structure’ in the WTO. For
instance, ‘no-trade restrictions’ statements pursue a goal within the broader ‘Regulatory
Structure’, which creates a kind of order and classifies other trade objects within the
‘Regulatory Structure’. That is, ‘no-trade restrictions’ statements accorded as obligations by
the contracting parties, sought to accrue equal benefits (any advantage, favour, privilege or
immunity) in imperfect global markets (Jessop, 1995 and Picciotto, 2002).

Therefore, the constructed concept of (interactional) competitiveness used here helps to

examine the articulation between discursive formations and linguistic context within the
‘Regulatory Structure’ in the WTO. Furthermore, the concept of competitiveness orders
and coordinates the relational functions between provisions of the agreements, the
incorporation of substantive statements in active discourses: ‘treatment no less favourable’,
‘the liberalization of market access’, ‘no protection to domestic production’ and ‘disguised
restriction on international trade’.
 37

3.4 Regulatory Structure

Objectively, the idea of interactions upon competitiveness ascribes practices and interests to
the ‘Regulatory Structure’ in the WTO, further refers to the capacity for organising and
connecting obligations that belong to a whole. Furthermore, the idea of competitiveness as
practice to prevent trade distortions is settled in agreements regulating international trade.

The interaction between competitiveness and competition provides both a dynamic and the
requirements of regulatory structure to promote global economic policy-making, which
imply a wide range of normative orders across the globe. Article IV (a) of GATS
-Increasing the Participation of Developing Countries – states:

(a) the strengthening of their domestic services capacity and its efficiency and
competitiveness, inter alia through access to technology on a commercial
basis;

Further, the competition policy of the WTO as a result of the Ministerial Conference in
Singapore (1996), is progressively reinforced to attend to the interests of globalising
business activities. Competition, trade liberalisation and competitiveness are tied in order to
promote economic efficiency, development and growth.

Therefore, the ‘Regulatory Structure’ in the WTO constitutes itself a space of competition
principles and international competition, where the force of the rules are interpreted as
legally binding, as argued by Maher (2002: 114). Such a competition code is both a
discursive formation with normative perceptions and agency, and a powerful rhetorical
device. Furthermore, the ‘Regulatory Structure ’in the WTO (besides IMF and World
Bank) is part of heterarchical, and specialised regulatory processes, which constitute
control and authority at all levels exploring the weakness of state institutions. Hence, the
WTO trade ‘law’ is a world wide legal discourse, which ties trade law meaning with the use
 38

of the legal/illegal code, and where the ‘Regulatory Structure’ is an organisational and
functional network (Muchlinski, 1997 and Teubner, 1997).

In the bananas and beef hormones cases, the complainant parties claimed that domestic
regulation and requirements caused prejudicial effects on international trade and
discriminated against foreign competitiveness. In other words, the quantitative restrictions
concerning banana imports imposed by EU against certain Latin Countries (Ecuador,
Guatemala, Honduras and Mexico) ‘nullified or impaired’ the principles of liberalised trade
and competition. In the beef hormones dispute, Canada and the US also claimed that
technical barriers ‘nullified or impaired’ WTO trade benefits and constituted domestic
protection against imports. In fact, there was competition enforcement upon common
substantive and procedural trade liberalisation and competition principles, where the
network of the WTO agreements were used strategically by the contracting parties to
advance particular interests and objectives.

The disputes occurred through the obligations and procedures of the WTO agreements,
which bases members-complainants and members-respondents positions. Practices and
discourses regarding ‘no-trade restrictions’ and competition are formed within the WTO
technical and political structures, such as the Dispute Settlement Understanding and
Dispute Settlement Body. The ‘Regulatory Structure’ formed by all WTO agreements is an
object at stake, because its dominance enhances positions and strategies in the trade game.
The ‘Regulatory Structure’ of the WTO constrains procedures, behaviours and practices,
and also restrains misconduct or non-observance. The obligations interact among them
within different agreements, and respecting the WTO Agreement. The disputes concerning
observance or non-observance of WTO obligations constitute themselves in institutional
interactions between WTO members-states, which are shaped by such ‘Regulatory
Structure’. These interactions are the operation of strategies concerning the interpretation
and meaning of the WTO obligations, which make liberalised trade and competition the
objectives of the arrangements settled as provisions, such as ‘treatment no less favourable’
and ‘the liberalization of market access’.
 39

The nature of the ‘Regulatory Structure’ is expressed by the written obligations relating the
exemption from all duties or charges of any kind imposed on, or in connection with, the
importation or exportation of goods and services. The development of strategies depends on
the articulation of the obligations as discursive formations, which are resources to maintain
or (re) define a competition policy result (Maher, 2002: 118). The precepts of liberalised
trade and competition regularly appear as discursive formations on agreements and
obligations, for instance the obligation that imports products have to receive ‘treatment no
less favourable’ than accorded to like products of national origin in respect of all laws,
regulations and requirements. That is an obligation to make sure that regulatory measures
‘shall take into account of the interests of exporting contracting parties with a view to
avoiding to the fullest practicable prejudicial effects’ (GATT, Part II, Article III).

The WTO agreements operate upon the rationale of ‘comparative advantage’, which bases
the notion of competitiveness among exporting economies in the ‘global economy’. The
‘Regulatory Structure’ gives the constraints that curb the international trade game, which
may be condensed in: competition, no-trade restrictions and market access.

An untold competition over competition principles occur in the WTO, which is objectively
reflected on protecting and advancing trade interests. Thus, bananas and beef hormones
disputes are about market access, though focusing on the discrimination and trade
restrictions and concealed competition within the import market (Maher; 2002: 126). In this
context, trade conflicts between members-states or group of members-states are also
struggles about what principles (or trade and competition policy) are central with respect to
the distribution, differentiation and accretion of the world trade. Such struggles are at the
same time about the dominating logic (market-driven or performance-oriented action) of
the ‘Regulatory Structure’ and the volume and values of world trade (Jessop, 1995).

The bananas and beef hormones disputes in the 1990’s exposed some objective relations in
the WTO, with respect to basic obligations of members agreeing to accomplish
competition, no-trade restrictions and market access. In the view of complainant parties
(Canada, US, Ecuador, Guatemala, Honduras and Mexico) the endorsement of sanitary and
 40

phytosanitary measures (beef hormones dispute) and tariff quotas (bananas dispute) taken
by the EU threatened international trade competition. Such measures were considered by
the complainant parties as a means to control domestic market and production, and further
were used more restrictively than has required to meet their appropriate level of protection.

Chapter 4

Interests and Strategies within the WTO

The production of spaces of regulation is ultimately a political process, which permits

agents to maximize resources and benefits, while simultaneously imposing the burdens of
 41

regulation and effects upon the allocation of resources. Regulation is exerted by a

regulatory body whereby the distribution of political strength is ordained through law,
institutional and technocratic thoughts (Jessop, 1990; 1995 and 2001, Lipietz, 2001).

In contemporary capitalism the WTO function as one regulatory body (besides IMF and
World Bank as regulating devices of ‘global economy’), which is designed and operated to
deliver protection and benefits among national economies with respect to the international
trade system. According to Dezalay and Bryant (1996:63) trade conflicts ‘became the raw
material for the construction of a transnational legal order.’ Furthermore, as an international
dispute resolution mechanism, the WTO is a key institution in the structuring of
international trade, and also a space of competition, and visions and projects of ‘imagined
economies’ (Jessop, 2004: 5). Within the WTO, the Dispute Settlement System pursues this
differential coupling between political institution and the economics of capitalism, in other
words the WTO is constituted through economic and political spaces and the struggles that
occur over naming and mapping such spaces.

The interactions of regularising practices on trade constitute the institutional objects in the
WTO, which are naturalised in and through the process of international trade regulation.
The developed practices and meanings of the actual regulatory structure mechanisms
regarding international trade are manifested within a discursive field and on specific forms
of identity formation and subject formation. The regularising practices are products of the
historical growth of trade liberalisation considering the economy of practices as defined
upon reference to a wide range of functions and ends, behaviours and interests regarding
trade. Hence, regularising practices on trade are socially situated actions within the WTO,
such as the greater involvement of states in business competition and multilateral trade
arrangements. Further, discursive practices are drawn and interpreted strategically,
disclosing how relationships actually function within defined domains (Bourdieu and
Wacquant; 1992; 1993 and Dezalay and Bryant; 1996 and Fairclough; 1995).

Garrett and Smith (2002;7) demonstrated that between 1995 and 2002 the US and the EU
participated on over 50% of the WTO panels, and compliance was achieved in the majority
 42

of cases through conciliation and bargaining . This did not occur in two cases: bananas and
beef hormones. There is no doubt that struggles with respect to international trade such as
the bananas and beef hormones disputes arise and are resolved by asserting structural and
institutional limits, identities and the varied interests of political-economic forces within the
WTO. Although the competitiveness interactions approach is useful to understand the
interplay of conflicts and competition within the WTO regarding such cases. The dispute
panels are mechanisms of interpretation and their understandings involve the legitimacy of
the institution and reveal trade regulation as being far from a cooperative and balanced
game. Rather than trade, the object of the WTO regulation has to be understood as the
international arbitration of political-economic relations between large economies,
developed and developing countries, north and south (Black, 2002 and Muchlinski, 1997).

Therefore, the WTO as an historically developed ‘Regulatory Structure’ establishes new

compromises and rules for recognising political-economic agents and defining interests.
This is a complex economic and extra-economic process, whereby political discourses and
broader ‘societal paradigms’ are institutionalised. The WTO is a configuration of
contemporary capitalism, functionally determined by the requirements of capitalist
practices within a given place and time. Furthermore, the WTO constitute itself a ‘a
moment of a network of social in given social field (sic), institutional order, or wider social
formation’ (Jessop, 2004: 7). International competition as a dominant societal paradigm
poses both empirical and normative practices, and further posses a cognitive element
informing the positions and behaviours of agents (Bourdieu, 2005 and Hollingsworth and
Boyer, 1997).

4.1 The role of the WTO within a broader mode of regulation

The emerging new mode of regulation which institutions and structures rise in the ‘global
economy’, and as argued by Brand and Gorg (2001: 77) becomes ‘socially-produced
inherent constraint which brings it the imperative of economic competitiveness.’
 43

Competition, no-trade restrictions and market access are particular dispositions acquired
through learning processes and proactive dealings with regularities, and these dispositions
coordinate and form the operating agents within the WTO with vocabularies and logics for
pursuing their goals. Thus, the WTO is the combination of institutional arrangements
governing and coordinating trade at the global level through the institutionalisation of
norms and rules, and enforcement of contracts, which permit economic agents execute most
effectively their transactions at a global level inside and across the boundaries of economic
sectors (Bourdieu, 2005; Hollingsworth and Boyer, 1997).

In the context of the WTO two logics prevail; the logic of influence and the logic of
membership, both operating on organisational structures (as in the Dispute Settlement
System) toward the goals definition and implementation. Transformation of the relations
and in the organisational development, definition and management of distributive or
regulatory instruments involve political-economic interests of member-states in the
managing of rules of the trade game (Coleman, 1997).

The difficulty is to construct both effective and integrated patterns of regulatory policy to
cope with global political-economic forces and coordinate competition and conflicts, within
the prevailed logic of membership in the ‘global economy’. Strategies and interests into the
WTO seem to have trade stake as the main goal, or the distributional effects of liberalised
trade on countries. Thus, the WTO is understood as a set of principles, norms, rules and
decision-making procedures, where agents expectations converge in a given international
relations. The WTO is the device through which political and economic agents organise and
manage their interdependencies, whereby agents and interdependent practices
hierarchically control their activities and interactions.

The ‘Regulatory Structure’ in the WTO is a clear legal framework used to reduce
uncertainty and control orientated internal and institutional regularities, into a ‘global
economy’ characterised by agile rationality of the agents. Therefore, this regulatory regime
compromises and monitor behaviour and strategies, which are limited by the logic of
institutional arrangements.
 44

The disputes in the WTO involving bananas and beef hormones parties involved conflicts
between different members endeavouring to impose legal and institutional forms of trade
law toward the completion of a ‘global legal expertise’. More than just the dispute about
volume and shares of trade in the ‘global economy’, there occurred a competition among
national and regional block approaches concerning the interpretation and governance of the
‘Regulatory Structure’ in the WTO. The transnational level of the WTO resembles a virtual
space that provides strategic opportunities for competitive struggles, engaged by national
agents adding politics in economics, and institutional affairs. Self-interests concerning the
effectivity of the ‘Regulatory Structure’ of the WTO govern strategic interactions among its
member states, which interact as political and economic agents through the trade
competition and simultaneously attempting to gain control over the rules of the game
(Dezalay and Garth, 1996; Boyer and Hollingsworth, 1997).

In contemporary capitalism, nation-states combine a specific capacity of supporting modern

economic activity and operating across borders on institutional and regulatory structures,
which are organised according to a clear distinction between two levels: the definition of
the rules of the game on one side and on the other side the interaction within a particular
institutional setting. International trade regulation in the WTO is based on GATT
procedural principles of negotiation, mediation, conciliation and arbitration, and the novelty
is the establishment of panels hearing (by the Dispute Settlement Body) as ‘neutral site’.
The current regulatory movement is almost exclusively based on the ‘right instruments’ and
‘social-technocratic’ direction, which both are intended to guarantee a certain institutional
coherence but cannot eliminate contradictions rather they incorporate and reproduce such
contradictions.

Within WTO the Dispute Settlement Body represents an international dispute resolution
device and key institution to regulate international trade arbitration, which structures
‘global markets’ and it is further a space of and competition between contradictory views.
Trade regulation and regarding institutions and structures bring the imperative of economic
 45

competitiveness and the continuous search for new markets, which characterise the ‘global
economy’ by more involvement of states in business competition.

The strategic play into the Dispute Settlement Body by the member- states occurs in terms
of locations and positions, and how specific discourses challenge or create knowledge,
regime and regulation. They come into being, these positions and struggles define
procedures, objects, arguments and discursive positions in the international trade context.
Thus, the function of existence of the WTO has emerged upon the intention, the context
and meaning of the increase of international trade, and further has institutionalised
international arbitration as an important aspect of the ‘global economy’. Competition, no-
trade restrictions and market access are constructed objects, classified and identified by the
institutional agents in the WTO. Such objects are brought to social life and discursive
spaces into the structures of the WTO through the valorisation of technocratic expertise,
which articulates subjects and their behaviour and strategies (Andersen, 2003; Bourdieu,
1993 and 2005).

Furthermore, the WTO is a distinctive institutional innovation organising an entire social

formation – generally called globalisation. The legitimisation and management of
conflicts, institutionalisation and the creation of a collective legitimacy depend on the
operations and strategies of dispute resolution within the WTO. In addition, the bananas
and beef hormones disputes demonstrated the complex interactions between discourses and
strategies of member states, even more the conflicts involving trade have become the raw
material for the construction of a ‘global legal order’ (Dezalay and Bryant, 1996 and
Jessop, 2004).

The institutionalisation of competition between states within the WTO has impinged upon
the boundaries of the legal and illegal binary code, which is a process organising the mutual
constitution of legal acts and legal structures by the agents. The formulation of a
‘Regulatory Structure’ in the WTO does not depend exclusively on the existence of formal
sanctions nor upon hierarchies of norms. It is a process based on ‘legal pluralism’. Teubner
(1997:14) defines such ‘legal pluralism’ as ‘a multiplicity of diverse communicative
 46

processes in a given social field that observe social action under the binary code
legal/illegal’. Hence, as a social structure of competition, the WTO is an intermediate level
of social structuring ‘upwards’ to social formation and ‘downwards’ to social actions.

The member-states of the WTO are qualified to act through being constrained by its
institutional framework, which defines types of interaction. Therefore, trade disputes may
be understood as social practices that call for regulatory responses, whereby the major
political-economic agents attempt to control and shape the emerging regulations. The
technologization of discourses is an effective mechanism to take or to sustain institutional
hegemony. The powerful economies are prepared to formulate international economic
policy in the interests of their home-based transnational companies or competitive sectors,
which ensure that regulatory constraints in the ‘global economy’ are favourable to them.
Furthermore, the principle is maintained that only nation-states can generate international
law through their customary practices, treaties and interplay.

According to Bourdieu (1992; 1993) interest is ‘to be there’, to participate , to admit that
the game is worth playing and that the stakes created in and through the trade disputes are
worth pursuing. Interests help to recognise social relations in order to understand socio-
economic structures and institutions, whereby interests and social relations exert their
interactions. Interest drives social and economic actions, though the relational of interest
with social relations cannot be reduced in a mechanical way to some particular interest.
That is, interest can only be consummate within a framework of societal and institutional
relations. Hence, interest makes agents and institutions take actions, which may combine
with others and force new outcomes or in opposite prevent them, and further ‘objective’
interests inform behaviours.

In the context of the WTO, the Dispute Settlement System operates by the definition of
specific issues and trade interests, which are related to other specific stakes and struggles.
T0 the Dispute Settlement System function there is the need both of stakes and political-
economic agents interested on them. That said, the strategy used by all parties involved in
the bananas and beef hormones disputes was to define a hierarchical order with respect to
 47

obligations of the WTO. Each party attempted to define and value certain agreements or
disciplines upon others through the technologization of discursive practices, which sought
to guarantee particular interests (volume and share of international trade) and
simultaneously intervene in the functioning of the WTO as a social structure of
competition.

Therefore, the WTO can be seen as a social structure of competition, whereby the
distribution of competitiveness is accumulated on previous struggles, which guide
subsequent strategies. The ‘Regulatory Structure’ of the WTO governs strategies aimed at
preserving or transforming itself, which means that such regulatory is always at stake.
Thus, the use of disciplines and obligations such as discursive formations operate
strategically in order to command the authority of the institutional structure, and the
dominant logic.

The exertion of the legal framework of the WTO to the technologization of discourse is a
process of intervention in the sphere of discursive practices with the objective of
constructing an institutional hegemony, as part of strategies to impose restructured
institutional practices. In addition, the Dispute Settlement System within the WTO is a
mechanism for aligning economic conduct with social-political objectives, and such action-
mechanism has to rely upon ‘expertise’ in relation to pre-existing issues and depends on the
existence of a range of interlinked agencies, interests and calculations. The systematic and
coherent use of the articles and agreements of the WTO by contracting parties involved in
disputes has the character of a theoretical discourse, which is articulated in relation to
particular interests within which their objects and objectives are constructed. However, the
legitimacy and rationality of such elaborated theoretical discourse lies out of linguistic
elements, being based on political and socio-economic life (Miller and Rose, 1990; Dezalay
and Garth, 1996).

In fact, the Dispute Settlement System jurisprudence influences the interpretation,

application and social perception of the trade ‘law’, and thus affects future struggles and
strategies in the light of these understandings. The rulings of an individual case has both a
 48

substantial and a systemic component; the substantial component is that regarding the
violation or accomplishment with a legal obligation, while the systemic component affects
the understanding of the trade ‘law’ enforcement in subsequent disputes, as well as for
future bargaining in potential litigation.

The Dispute Settlement System was designed to enhance multilateral trade and guarantee a
certain stability to the ‘global economy’ reducing unilateral actions, and the US and EU
have demonstrably played a huge role in it. The interactions and interplay among member-
states involving high stakes disputes constitute the trade game, and further the contentious
disputes between the US and EU put in order the authority of the ‘Regulatory Structure’ in
the WTO. The play of the major political-economic forces in the WTO occurs in order to
impose their interpretations and guidelines in accordance with the agreements of the WTO.
Domestic high trade stakes only increase the possibility of disputes.

Conclusion

The ‘global economy’ has long been known for its very marked degree of deregulation,
although such deregulation has been more limited than has been claimed. In fact, there are
no pure exchange relations in perfect markets; political and social institutions are
endogenous economic factors. Hence, a modern form of regulation emerges, which focus
on shared but changing norms of production, distribution, consumption and modes of
economic calculation. Furthermore, regulation brings back subjects into economic analysis,
and constitutes social processes and struggles which both define and stabilise modes of
economic calculation and norms of economic conduct. The idea of subjects acting and
bearing structures permit to theorise contradictions and changes temporarily stabilised by
 49

distinctive institutional frameworks, which are mediated on capital relation and strategies of
particular social forces.

In capitalism, economic agents act in specific circumstances and in accordance with

objective requirements to guarantee economic and extra-economic preconditions for the
profitable operation of capital, though in an uneven manner. Thus, social spaces of
regulation have to take into account uneven effects and opportunities directly or indirectly
involved on social and economic interactions and practices among agents. That is the case
of the WTO, which gained importance in and through the constitution and naturalisation of
trade regulation.

The WTO broadly includes institutional arrangements to coordinate and regulate

competition and trade exchanges inside and across domestic markets, in a manner both to
encourage, organise and also enforce behaviour between its members. Its regulatory
structure establishes a set of relationships governed by a collection of principles regarding
liberalised trade and competition, which arrange the contingency and complexity of social
relations, the role of strategy, and bodies of ideas in specific conditions producing certain
outcomes, and also the possible coexistence of different outcomes. Moreover, the WTO
faces the same obstacles concerning the organisational framework as its predecessor
GATT, which is to say tension between the major economic forces in the ‘global economy’.
North America, Japan and EU have played aggressively defending interests on sectorial
politics (for instance, agriculture and textiles), which have demonstrated the power
relations embedded in the WTO and potential constraints to international trade (Garrett and
Smith, 2002 and Dicken, 2007).

Thus, the WTO is based upon international determinants and interactions which have
constructed integrated practices, behaviours and interests from the level of international
regulatory bodies down to key regional and national governments. That is, an international
governance structure functioning as device through which political and economic agents
organise and manage their interdependencies, whereby interdependent political and
economic agents coordinate and hierarchically control their activities and interactions. The
 50

recognition of the WTO as such a governance structure permits political and economic
agents to realise self-interests in and through efficient institutional arrangements in order to
govern their strategic interactions and competition.

Horn et al. (1999:6) have demonstrated that Canada, US, Japan and EU account for over
60% of all complaints and 55% as respondents within the Dispute Settlement System in
WTO. This reveals that in contemporary capitalism the imperatives of liberalised trade and
competition embedded into the WTO have become inherent interests of powerful nation-
states, and equally constituting as modern economic practice. The struggles in the WTO
involving major economic forces, such as the bananas and beef hormones disputes
disclosed the tension between principles and practices with respect to the institutional
distribution, differentiation and accumulation of power (political and economic). In other
words, the ongoing WTO struggles constitute in a manner the structures, positions,
perceptions, attitudes and dispositions, and above all the dominant logic of the regulatory
structure of trade law.

Within the wider social formation of the Finance-Trade mode of regulation, the WTO is
both an institutional and a social space, whereby projects and hegemonic visions of the
‘global economy’ interplay. Furthermore, the WTO (besides IMF and World Bank) is a
configuration of spatio-temporal capitalist dispositions, where agents struggle for decisive
interpretation and intervention on modes and codes of conduct that are the rules of the
game.

According to Jessop (2004: 9) ‘diverse economic, political and socio-cultural narratives’

and their strategies interconnect ‘in private and public domains’; their capacity to interpret
and mobilise resources defines the structuring order. The emblematic bananas and beef
hormones cases, which lasted about ten years, reunited experiences, discourses, strategies
and materiality to examine the operation and articulation of market forces in modern
capitalism.
 51

Competition and trade regulation are both an institutional reality and a public discourse
developing proactive policies for the promotion of competition through regulatory authority
such as the WTO, which in the end function to steer the economy. Furthermore, the
interplay in the regulatory structure in the WTO implies that trade regulation itself became
regulated, because competing agents within WTO self-monitoring the compliance of the
trade law. To sum up, competition and trade regulation are result of political and
commercial conflicts over redistribution of income and economic opportunities related to
international trade and finance.

The study of regulatory processes in the WTO in this dissertation could be improved by the
addition of emerging economies as relevant agents, due their importance to path and
structuring the ‘global economy’. The increased access of transnational corporations (based
in the North Hemisphere) in developing countries markets (in the South Hemisphere) leads
to further research with respect to political-economic issues on trade policy and the control
over of the spatialiality of economic structures and trade specialisation in ‘global
economy’. In short, the likely division between one agricultural economy in the south and
one manufacturing and services economy in the north.

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