The World Trade Organization and Justice beyond Borders

Clara Brandi

Research Fellow German Development Institute / Deutsches Institut für Entwicklungspolitik (DIE), Bonn

Paper prepared for the ECPR Joint Sessions ‘Between Facts and Norms: International Legalization Research and International Political Theory’

Münster, 22-27 March 2010

Work in progress, please do not cite or circulate without permission. Comments are very welcome: Clara.Brandi@die-gdi.de

Abstract

The aim of this paper is to argue that the World Trade Organization (WTO) qualifies as a subject of socioeconomic justice. The more general key question I address in the paper is whether transnational, international or global systems of legal and social rules may generate to duties of justice. To do so, I bracket potential links between trade and duties of global justice; instead, I argue that trade governance and international law in the context of the WTO gives rise not only to duties of commutative but also, more controversially, to requirements of distributive justice in its own right. Thereby, I argue that the existence of the WTO challenges the widely held view in the literature that the applicability of the concept of distributive justice is limited to the domestic realm, a view that has been defended from both the perspective of statism and nationalism. Yet, my argument implies that the case for requirements of just distribution beyond the domestic realm does not necessarily depend on cosmopolitan arguments for global distributive justice. Accordingly, my line of argument suggests that we should go beyond the simple dichotomy of regarding the scope of distributive justice as either purely domestic or purely global. The paper focuses on the intersection between in normative research in the context of international political theory and international law by addressing the relation between facts and norms in light of the WTO and international trading rules. More particularly, the paper strengthens the importance for international political theorists to take account of existing international law and politics. At the same time, it underlines the significance of dealing with normative questions in the context of research on international law and international relations. Last but not least, the paper confronts recent normative theories with facts, which undermine their empirical assumptions and their arguments in regard to the role of coercive law in the domestic and in the international realm. This paper points to where I think a promising focus of inquiry lies, namely on an intermediary ground consisting of a fertile area of recently established and emerging international institutions and legal systems where an important part of the task of working out considerations of transnational justice lies.

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The World Trade Organization and Justice beyond Borders

The aim of this paper is to assess whether the World Trade Organization (WTO) gives rise to

principles of distributive justice.1 If this was the case, the statist claim that the scope of

distributive justice is limited to the domestic realm would be rebutted. This paper challenges

statism by assessing whether the WTO itself should be perceived as a subject of distributive

justice. With respect to this argument, the key question is whether transnational, international or

global systems of rules generate duties of distributive justice. The paper factors out the idea of

trade as being of instrumental significance as a means to satisfy trade-independent duties of

transnational justice. It assumes, for the benefit of systematic clarity, that such duties do not exist.

The aim of this paper is to demonstrate that WTO trade regulation and rule-making cannot only

be viewed as a means to satisfy duties of justice but – more fundamentally – also as a crucial

factor in bringing about such duties.

This paper does not take it as a given that the scope of distributive justice is either exclusively

domestic, as proponents of statism and nationalism insist, or global, as cosmopolitans maintain.2

Instead, it aims at challenging these existing poles in the debate by arguing that the analysis of

trade regulation in the context of the WTO suggests that we should go beyond the simple

dichotomy of regarding the scope of justice as either purely domestic or purely global. Instead, it

argues that there is a convincing case for opening up a midway position between

cosmopolitanism and statist positions. This view is defended from two perspectives: first, from

the perspective of the Autonomy Account and, second, from the perspective of statism.

This paper focuses on the intersection between normative research in the context of international

political theory and international organisations by addressing the relation between facts and

norms in light of the WTO and international trade law. More particularly, the paper strengthens

the importance for international political theorists to take account of existing international

institutions, law and politics. At the same time, it underlines the significance of dealing with

normative questions in the context of research on international institutions and international law.

Last but not least, the paper confronts recent normative theories like Nagel’s and Blake’s with

facts, which undermine their empirical assumptions and their arguments in regard to the role of

coercive law in the domestic and in the international realm.

1 The term distributive justice is understood as concerning relative difference of possession. The term distributive justice is intended to be neutral with respect to both the distribuendum (resources, capabilities, etc.) and the particular principle (equality, priority, maximin, etc.). I assume that all plausible normative positions must at least require raising all human beings to a minimal threshold of sufficiency. The philosophically more difficult and controversial question is how to identify the site and scope where we should apply distributive justice, and, more importantly, why. The subject of justice denotes the ‘iudicandum’, i.e. what a theory of justice is meant to assess. 2 The scope of justice refers to the range of persons who have entitlements against and responsibilities to each other on the grounds of justice.

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The paper is structured as follows. Section 1 makes the case that the WTO demands special

justification in light of the Autonomy Account. Section 2 argues that the required justification of

the WTO-autonomy-constraints provides a basis for generating duties of distributive justice in

the WTO. Section 3 argues that the WTO meets the criteria for being considered as a subject of

justice – even if we were to reject the Autonomy Account.

1. The WTO and Constraints on Autonomy

This section works out and defends a novel conceptual framework for socioeconomic justice and

applies it to the WTO: the Autonomy Account. This account provides a common basis for the

ongoing dispute between cosmopolitans and statists about the scope of distributive justice. In

light of the deadlock in the current debate, what is needed are not merely arguments defending

one view against the other but a common theoretical lens that makes it possible to rigorously

assess statism and cosmopolitanism and move beyond them – which is what the Autonomy

Account aims at doing. The starting point of the Autonomy Account is Blake’s Autonomy

Principle, which demands that constraints on personal autonomy are either to be eradicated or

justified consistent with the ideal of autonomy.3 But if what matters is personal autonomy, then it

should not make a normative difference whether autonomy is restricted because of coercion or

because of some other source of constraints. If it is because autonomy is relevant that coercion

requires justification, then anything that affects whether individuals can lead autonomous lives

requires justification. From a liberal perspective, this justification demands that the constraints on

autonomy be in principle justifiable to everyone in a manner consistent with viewing each person

as free and equal: it demands to establish the justice of the systems of rules – or whatever it may

be – through which autonomy is constrained.4

When exactly does a constraint on our freedom require to be justified in a potentially justice-

triggering manner? In other words, which notion of autonomy-constraints can offer a plausible

basis for an account of the subject of justice? In what follows, I argue that a justification-

demanding constraint on autonomy entails [1.1] somebody or something [1.2] who is responsible

or that somebody can be held responsible for, and [1.3] who or what places a non-trivial

constraint on someone else’s freedom, [1.4] in comparison to an appropriate baseline.5 The

3 Michael Blake, "Distributive Justice, State Coercion, and Autonomy," Philosophy and Public Affairs 30(2001). 4 For a discussion of the liberal justification of coercive state power, see Arash Abizadeh, "Democratic Theory and Border Coercion: No Right to Unilaterally Control Your Own Borders," Political Theory 36, no. 1 (2008)., 37-65. 5 My account is based on Valentini’s approach set out in Laura Valentini, "Coercion and (Global) Justice: Towards a Unified Framework," CSSJ Working Papers Series SJ, no. 10 (2009). My account follows Valentini’s with respect to the responsibility, the non-triviality and the baseline condition. Yet, my framework differs considerably in terms of conceptualizing who or what can constrain on autonomy in justice-triggering ways, which in turn has crucial implications both for the scope and site of principles of justice beyond borders. Elsewhere I argue that Valentini’s account disregards the important possibility that justice-triggering autonomy constraints are not just the consequence of the existence of systems of rules but in some cases also the effect of a vacuum in terms of such systems. See Clara Brandi, "Constraints on Autonomy, Global Public Goods and the Scope and Site of Justice Beyond Borders," in

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remainder of this section explores these conditions and assesses whether there are relevant in the

context of the WTO.

1.1 The WTO as an Autonomy-Constraining System of Rules

First, depending on who or what constraints autonomy in a potentially justice-triggering manner,

the constraints in question can be either interactional or systemic. Constraints on autonomy are

interactional when the agent A who restricts B’s autonomy is a morally responsible individual or

group agent. Yet, the interactional account is inadequate to portray those restrictions of

autonomy that are most pertinent for issues of justice, namely systemic ones that are generated by

systems of social rules, which in turn denote an institution or a social practice. The first question to

be assessed is therefore who or what has autonomy-constraining impact in the context of the

WTO, i.e. whether we should adopt the interactional or the systemic framework of analysis.

While the WTO may in fact be conceived of both as an agent and as a system of rules, it is more

plausible and pertinent to analyze it from the systemic perspective.6

Currently, the WTO system of rules, i.e. the rules of WTO law, consist of a complex web of over

20 agreements, which – together with the attached Member-specific schedules of concessions

and commitments – cover more than 20,000 pages. WTO law also includes the General

Agreement on Tariffs and Trade (GATT) of 1947, all the decisions adopted by the contracting

parties to the GATT and the jurisprudence of the adjudicative bodies of the GATT and the

WTO, currently contained in over 300 reports.7 In short, since WTO membership requires

following these rules, the WTO system of rules places constraints on it members’ actions.

1.2 Responsibility for WTO Autonomy Constraints

Second, in order for restrictions of autonomy to be potential objects of justification, they have to

be generated by a responsible agent (on the interactional account) or a system of rules for which

someone can be held responsible (on the systemic account). I understand responsibility for the

autonomy-constraining character of an individual act or a system of rules in terms of “outcome

responsibility.”8 On that understanding, the responsibility condition is fulfilled if the autonomy-

constraining consequences are both foreseeable and avoidable.9 For the notion of responsibility

Normative Orders: Justification and Sanctions (Cluster of Excellence "The Formation of Normative Orders", Goethe University Frankfurt 2009). 6 Valentini argues that, whether the WTO gives rise to justification-requiring constraints on autonomy depends on whether we adopt and interactional or a systemic framework of analysis. I find – contrary to Valentini – that the WTO constitutes a potential subject of justice even if we assess it from an interactional point of view but agree with her that the systemic perspective is more relevant. The WTO matters most as a potentially justice-triggering system of social rules rather than as a potentially autonomy-constraining agent. See Valentini, "Coercion and (Global) Justice," p. 19. 7 http://www.wto.org/english/res_e/booksp_e/analytic_index_e/analytic_index_e.htm 8 David Miller, "Constraints on Freedom," Ethics 94, no. 1 (1983): p. 72. 9 Thomas Pogge, World Poverty and Human Rights. Cosmopolitan Responsibilities and Reforms (Cambridge: Polity Press, 2002).

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at issue to arise, namely outcome responsibility for the structure of an organization like the

WTO, it is sufficient that the group of participants under consideration has collective power to

alter and regulate its organization, if not by a centrally controlled adjustment or modification,

then by informal revisions regarding the many distinct choices that keep the organization going,

for example, through individual and joint reform efforts or through moral argument and social

sanction.10

This applies to the WTO: the terms of ongoing trade within the WTO treaty can be altered by

individual change, decentralized sanction and moral argument; since the multilateral system is an

established and governed ongoing, rule-based system, it is reasonable to presume that WTO

members and all those participating in the WTO, above all office-holders such as WTO panel

judges or trade negotiators, are responsible, not only to comply with the agreed upon rules, but to

try to employ their negotiating skills and powers to make sure that those rules are justifiable.11

1.3 Non-Triviality of WTO Autonomy Constraints

Third, for something to qualify as a justification-requiring constraint on autonomy, the constraint

in question has to be non-trivial.12 WTO agreements provide extensive rights but also impose

numerous obligations on the organization’s members and on their conduct of international trade.

The question is whether constraints of WTO regulation on members’ conduct satisfy the non-

triviality condition. To assess this question, let us analyze bot the content and the scope of WTO

rules.

First, WTO rules are non-trivial in terms of their impact on the economic standing of individuals.

WTO rules have a strong impact on poverty and inequality across the globe. Reconsider also the

rules on agricultural export subsidies, which severely impact upon local farmers in developing

countries insofar as this threatens the social conditions that are necessary for them to be able to

lead an autonomous life.13 Moreover, the creation of the WTO has not only witnessed a

quantitative but also a qualitative expansion of the scope of trade governance. The politics of the

trading regime since the aftermath of the Second World War have been characterized by the

progressive increase in the affected areas of regulation and competence. In the passage from the

GATT system to the WTO, the trading regime has gone from a device of shallow trade

liberalization to one of deep integration. During the GATT era trade regulation was mainly

concerned with border measures like tariffs and quotas. Such measures did not fundamentally

influence the nature of domestic institutions. Nowadays, however, border measures have become

10 Aaron James, "Distributive Justice without Sovereign Rule: The Case of Trade," Social Theory and Practice 31, no. 4 (2005): p. 7. 11 Ibid.: p. 20. 12 Miller, "Constraints on Freedom," p. 76. See also Valentini, "Coercion and (Global) Justice," p. 10. 13 See also Ryan Pevnick, "Political Coercion and the Scope of Distributive Justice," Political Studies 56, no. 2 (2008): p. 7.

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complex trade-related reforms that redefine core issues in the domestic economic system of WTO

members.14 These so-called ‘new issues’ include, most notably, services, investment, intellectual

property and sanitary standards. The Trade-Related Investment Measures (TRIMS) agreement,

for example, affects the way in which countries are allowed to manage inward foreign investment,

which in turn is an active component of economic integration among developed countries and a

very important part of development strategies in developing ones.15 The trading system is thus

expanding ever more in areas that are known to be relevant for economic development. As Dani

Rodrik puts it, “trade reform ends up being much more than a change in relative prices: it results

in institutional reform of a major kind.”16

We can thus conclude that the constraints of WTO regulation on its members’ conduct should

be regarded as non-trivial along at least two dimensions, namely in terms of the areas, in which

they have an affect freedom, and in terms of how much they do so.

1.4 The WTO Baseline Dimension

The fourth parameter to be considered is the baseline dimension. While the appropriate

benchmark in the case of interactional constraints on freedom refers to B’s freedom in a state of

affairs without A’s intervention, in the case of systemic constraints on freedom, the relevant

baseline refers B’s freedom in a state of affairs without the system of rules under consideration.

No matter what our chosen baseline for comparison is – be it a WTO’ or WTO’’ or no

multilateral trading organization at all – we can plausibly assume that at least some agents’ freedom

would be greater in the alternative scenario than in the existing one. The baseline condition is

therefore fulfilled in the context of the WTO.

We can now put together the overall picture emerging from the above assessment of the four

relevant conditions: the WTO restricts autonomy in justification-requiring ways because its

system of rules that the member states can be held responsible for, places nontrivial constraints

on its members’ freedom, compared to their freedom in the absence of these rules.

2. Constraints on Autonomy and Distributive Justice in the WTO

Having argued that the WTO demands to be justified, the next question is what this justification

entails. The aim of this section is to assess whether the liberal justification of these constraints

gives rise to duties of distributive justice in the context of the WTO. By itself, the plausible claim

that the WTO is in need of being justified does not imply that the WTO is to be justified by

14 Bernard M. Hoekman and Michel M. Kostecki, The Political Economy of the World Trading System: The WTO and Beyond, 2nd ed. (Oxford: Oxford University Press, 2005). 15 Wolf, 2004; Shadlen, 2005 16 Dani Rodrik, "Trade Policy Reform as Institutional Reform," in Development, Trade, and the WTO: A Handbook, ed. Bernard M. Hoekman and Aaditya Mattoo (Washington, D.C.: The World Bank, 2002), p. 3.

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appeal to some sort of principles of distributive justice, let alone principles of domestic justice: the

WTO’s systemic constraints on autonomy differ from domestic systemic constraint on autonomy

and that they are therefore likely to be justified by appeal to a different set of substantive

principles. In order to analyze whether the WTO gives rise to egalitarian duties of distributive

justice from the perspective of the Autonomy Account, this section assesses the link between the

justification of constraints and the principles of justice this justification gives rise to. I start my

assessment by analyzing what I call the Cooperative Goods Argument.

2.1 The Cooperative Goods Argument

According to the Cooperative Goods Argument, justice applies to goods that are the product of

cooperation.17 In the context of the state, since the institutional benefits of social cooperation are

a joint product of the citizens of the society under consideration, an equal distribution of benefits

should serve as a baseline of comparison for claims of justice insofar as one cannot disentangle

the marginal contributions of those who cooperate. Departures from equality are then justified

only when they are acceptable to everyone.

In the international arena, the Cooperative Goods Argument is relevant as well: there are a

number of goods that are being created through cooperation beyond borders. For instance,

WTO gains from international trade, which arise on the basis of multilateral trade agreements,

can be characterized as cooperative goods since they are a single product of multiple

contributors. The case of gains from trade is a clear case, in which cooperation results in a

product that is greater, than would be possible in its absence.

Let me strengthen my case by anticipating the following objection to affirming the relevance of

the Cooperative Goods Argument in the case of the WTO: it could be objected that what

produces the gains from trade is not cooperation but the process of exchange and that these

gains can therefore be characterized as windfall gains or manna from heaven. The Windfall Gains

Argument suggests that those who benefit from such gains do not have a better claim to these

gains than others, due to the morally arbitrary reasons that generated these benefits.

Clearly, in the context of the state, the outcome of social cooperation can hardly be characterized

as windfall gains. The reason is that it is the product of a variety of actors contributing to the

cooperative surplus with their talents and efforts respectively. But is the windfall case more

relevant in the trade context? This in turn would suggest that no agent has a better claim to gains

from trade than others and that equality ought to therefore be considered as the relevant

normative baseline, from which deviation is to be justified. Let us take a look at a very simple

two-party case: A owns bread and B owns beer. Let us further assume that both A and B own a

17 I use the term ‘cooperative good’ or ‘joint product’ to denote a single product of multiple contributors. I follow Attas’ definition in Daniel Attas, "Who Owns the Product?," The Philosophical Quarterly 54, no. 217 (2004).

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fixed amount of these goods and that they have come into existence like manna from heaven and

did not have to be produced. Suppose A and B engage in trade, which is mutually beneficial. In

such a case, one could argue that neither A nor B but the exchange itself is productive: it is the

exchange that generates the additional benefit.

But should the gains from trade resulting from WTO agreements be considered as windfall gains?

There are at least two issues that suggest that the idea of windfall gains is not adequate for WTO

gains from trade. First, the notion of windfall gains suggests that they come about without any

effort. However, this seems inadequate in the context of gains from trade that are generated by a

new WTO agreement. What generates the benefits at issue is not the agreement about modified

terms of exchanging goods and services themselves – agreed in the relevant WTO negotiations –

but rather the producers and consumers making an effort to make use of these rules. Moreover,

the agreement itself does not come about without effort either, as the current Doha trade rounds

shows again. For these reasons, classifying the gains from trade that are the result of WTO

agreements as windfall gains would be mischaracterizing them.

In conclusion, multilateral gains from trade can be regarded as a product of joint cooperation, the

division of which possibly raises questions of distributive justice.

2.2 The Contribution Argument and the Disentanglement Question

Having argued that multilateral gains from trade can be regarded as a product of joint

cooperation, this section turns to the question whether it is possible to disentangle the different

contributions to this cooperative product. This is important for the following reason. If one

cannot disentangle the marginal contributions of those who cooperate, an equal distribution of

benefits should therefore serve as a baseline of comparison for claims of justice. If it is possible

to identify the shares of individuals, it is possible to distribute the cooperative product in

accordance with these individual marginal contributions. This is what the Contribution Argument

demands. The reason is that it claims that what matters when we assess how the cooperative

surplus generated by a cooperative scheme is to be distributed is the slogan ‘to each according to

contribution.’ If the Contribution Argument was right, the main implication for the WTO would

be that any distribution of the gains from trade could be justified as long as it is in proportion to

each country’s ‘contribution’ to the global gains from trade.18 They key question is therefore: is it

possible to divide the cooperative good of WTO gains from trade in proportion to marginal

contributions to this good?19

18 This in turn would imply that the notion of equality does not play any potential role in the context of multilateral trade agreements. 19 One possible reply is that there are cases for which marginal contributions are irrelevant in the first place, i.e. cases, in which the good under consideration came into being like ‘manna from heaven.’ Yet, as we have just seen in section 2.1, this reply neither applies in the case of domestic society nor in the context of the WTO.

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Dividing the cooperative surplus in accordance with marginal contributions to this surplus

requires knowledge about the size of these contributions. The next question is therefore whether

one can, in the case of multilateral gains from trade, disentangle the contributions of distinct

states. There are two options to respond to this question. On the one hand, one could argue that

one cannot unravel the contributions of individual states to the cooperative good of gains from

trade; everything is everyone’s joint product because the cooperative gains in question are the

result of multilateral agreement among all members. If this is the case, each state has an equally

good claim to the gains from international trade, or at any rate no state has a distinctly better

claim than any other. On the other hand, one could contend that the contribution of each state to

the cooperative surplus in terms of gains from trade can in fact be entangled, for example in

terms of GDP. For example, if we look at the overall gains from trade that were generated by the

WTO Uruguay Agreement, a liberalization measure undertaken by an economically big country

like the US, for instance a certain percentage cut in average tariffs rates, has contributed more to

these gains than as if the same measure had been undertaken by country with a low overall GDP

like Mali. But even if we concede that it is possible to disentangle contributions to the

cooperative surplus along these lines and to divide the joint product in proportion to the

contribution to overall gains from trade, the question is whether this is would we should do. This

is the question I will turn to in the next two sections.

2.3 The Argument from Moral Arbitrariness

Even if we grant that marginal contributions to a cooperative good that can in fact be entangled,

there are still two ways to challenge the account of justice that identifies the fair share as

proportional to the marginal contribution to the cooperative good in question (i.e. the

Contribution Argument). Both arguments seek to cast doubt on the extent, to which we can

assign normative significance to the contributions to the surplus in question. The first one is the

Argument from Moral Arbitrariness (section 2.3) and the second one is the Contribution-as-

Upholding Argument (section 2.4). This section assesses the role of the Argument from Moral

Arbitrariness in the context of the WTO. It begins by outlining it in the domestic context before

it turns to an analysis of its relevance for the multilateral trading regime.

In the domestic context, the Argument from Moral Arbitrariness maintains that advantaged

individuals do not have an exclusive claim to their advantages because of the morally arbitrary

nature of their position in the natural and social lottery.20 This argument cannot be

straightforwardly extended beyond borders. In the context of the WTO, the key question is

20 In the domestic case, what accounts for the differences in marginal contributions to the joint product of social cooperation are the differences among members of society in terms of characteristics such as talent, wealth and skill, which are morally arbitrary. See John Rawls, A Theory of Justice (Cambridge, MA: Cambridge University Press, 1971/1999).

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whether the Argument from Moral Arbitrariness can be applied to marginal contributions of

individual states to the multilateral cooperative gains from trade surplus. Are these gains morally

arbitrary or can WTO members states be held responsible for these gains?

I the case of the WTO, it is difficult to establish what accounts for the differences in marginal

contributions to the cooperative. It can potentially be grounded in a wide variety of differences

among WTO members in terms of diverse and partly interrelated characteristics such as societal

wealth measured in terms of GDP or whether the member state in question is landlocked or not.

While the geographical location of a member state should be regarded as a morally arbitrary

factor, the extent to which this is also true in the case of societal wealth is highly contested.

This question is closely linked to current debates about the question of national or statist

responsibility and the degree to which societies can be held responsible for their wealth.21 The

plausibility of national or statist responsibility for societal wealth in turn depends both on

normative disagreement and hinges on fiercely debated empirical facts. The ongoing debate and

the currently available empirical evidence about the origins of societal wealth and the degree, to

which collective responsibility can be assigned to it, hardly settle the question to what extent the

position of states in the international distribution of societal wealth is morally less arbitrary than

the position of individuals in the distribution of their respective society. This in turn implies that

it is contested to what degree the marginal contributions of states to the international cooperative

trade surplus, which depend greatly on the respective level of societal wealth, are less morally

arbitrary than the marginal contributions of individuals to the societal cooperative surplus.

Even if we assume that we cannot hold states responsible for their current level of societal

wealth, this stance would not provide a clear-cut answer about the degree of the moral

arbitrariness of gains from trade and the contributions of states to the cooperative trade surplus.

The reason is that the magnitude of any WTO member state’s gains from trade does not only

hinge on its GDP (or the historically shaped domestic context more generally) but also depend

considerably on specific domestic policies, for which we are arguably justified in assigning

responsibility, at least in reasonably democratic states. It is therefore not convincing to reject the

notion of national or statist responsibility for multilateral gains from trade: WTO members can at

last to some extent be held responsible for the gains that accrue to them – even if we were to

deny the relevance of national or statist responsibility for societal wealth. This in turn means that

the first attempt to challenge the normative significance of the contributions to the surplus in

question, on the basis of the Argument from Moral Arbitrariness has failed. Let us therefore turn

to the Contribution-as-Upholding Argument.

21 For arguments in favour of national responsibility for societal wealth, see David Miller, National Responsibility and Global Justice (Oxford: Oxford University Press, 2007).

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2.4 The Contribution-as-Upholding Argument

Let us now make two concessions: let us grant that it is possible to disentangle marginal

contributions to the cooperative surplus and let us grant that these contributions are not based

on morally arbitrary factors. Even if we make these concessions, this does still not imply that the

fair shares are those that are proportional to the marginal contribution to the cooperative good in

question. To show why this is the case, let us return to the Contribution Argument considered

above and assess in more detail the notion of contribution that might be underlying it. The

Contribution Argument challenges a distributive justice approach to the WTO on the basis of the

notion ‘to each according to his contribution.’ However, what exactly counts as a ‘contribution’

in the WTO case is not quite as clear as it may seem to be at first sight. The key question is how

we should conceptualize the notion of ‘contribution’ as well as what sort of contribution to what

we are dealing with. To assess, which notion of ‘contribution’ is plausible in the context of the

WTO, I will turn to and assess the notion ‘justice as relative to contribution.’

‘Justice as relative to contribution’ can be regarded as the core of Justice as Fair Reciprocity.

From this perspective, reciprocity is sometimes described in brute terms as a matter of

contribution and return, in some kind of proportion. This bears resemblance to Gauthier’s view

of Justice as Mutual Advantage.22 However, the idea of justice as relative to contribution as the

core of Justice as Fair Reciprocity can provide a basic notion of fair return that differs from

Justice as Mutual Advantage. In the context of the WTO, this is the case as long as we are careful

to distinguish bargaining strength from contribution. While Justice as Mutual Advantage, allows

for justice as relative to bargaining strength, Justice as Fair Reciprocity rejects such a connection

between justice and bargaining power (which in the context of the WTO is mainly a function of

economic power and a country’s GDP or world trade share); instead, Justice as Fair Reciprocity

focuses on the notion of contribution in terms of supporting and upholding the structure of the

cooperative system at issue which is – for the most part – independent from bargaining power.

Similarly to the conception of contribution in the domestic case, the notion of contribution in the

context of the WTO viewed as a system of trade cooperation can be regarded as referring to the

contribution of each member in terms of upholding the cooperative trade system rather than to

the economic, productive contribution of each member to the gains of cooperation. The idea is

that each and every member does his or her part in upholding this scheme and that this justifies

each member receiving an equal share of the cooperative surplus. The Contribution-as-

Upholding interpretation thus undermines the idea that each WTO member state’s ‘just share’ of

the gains from trade, i.e. gains that result from a new round of successful trade talks, simply

22 David Gauthier, Morals by Agreement (Oxford: Clarendon Press, 1986).

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consists in a share of these gains that is strictly proportional to the member state’s ‘contribution’

to these gains, for example understood as the value of market access concessions.

Overall, the Contribution-as-Upholding Argument acknowledges the normative plausibility of the

notion of ‘to each according to contribution’ but undermines its straightforward inegalitarian

implications on the basis of a re-interpretation of the relevant definition of contribution.

2.5 The Contribution Argument and the Doha Round

This section challenges the role of the original Contribution Argument (as set out in section 2.2)

for the distribution of gains from trade in the WTO from a practical perspective in the context of

the ongoing Doha Round of WTO negotiations. It assesses the option of accounting for differing

contributions in this context in terms of how much of the overall gains from trade stems from

the move towards liberalization of a specific country or a specific country group, for example

industrialized countries or developing countries. To do so, let us grant that unequal distributions

of gains from trade can be justified as long as they are in proportion to each country group’s

‘contribution’ to the global gains from trade.23

In order to assess what empirical data tells us regarding the issues at stake, let us take a look at the

big ‘pie’ of gains from trade anticipated to be generated by a Doha Agreement and assess how

much of that ‘pie’ stems from high-income country liberalization and how much is generated by

developing country liberalization. If we assess the projected sources of the gains from full

liberalization of global merchandise trade by developing and by high-income countries, the

numbers tell us that across all sectors, 55 percent of the overall global trade gains for the world

are the result of high-income liberalization, while 45 percent are due to developing country

liberalization.24 This suggests – if we follow the ‘contribution’ view – that the high-income

countries are justified to gain more than the low-income countries.

Yet, if we compare the ‘sources’ of the gains from trade with the ‘destination’ of these benefits,

we find a mismatch. Removing all merchandise trade barriers and agricultural subsidies globally,

the model projections under consideration show a disproportionate share of the benefits going to

high-income countries: in the full-liberalization scenario, high-income countries receive 70% of

the income gain in dollar terms, while low-income ones receive only 30 percent even though they

have ‘contributed’ 45 percent of the overall gains. This in turn means that – even if we were to

adopt the contribution-based view set out in section 2.2 – the Contribution Argument would not

be able to justify the currently projected distribution of the gains from trade of the Doha Round.

23 The doctrine of comparative advantage entails precisely that all countries – even those with an absolute advantage in nothing – can contribute to mutually beneficial division of labour. 24 Kym Anderson, Will Martin, and Dominique van der Mensbrugghe, "Would Multilateral Trade Reform Benefit Sub-Saharan Africans?," Journal of African Economies 15(2006): table 4. The authors assess the percent of region’s real income gain in 2015 relative to the baseline scenario.

12

2.6 Conclusion

This section has argued that the justification the WTO demands in light of the Autonomy

Principle offers a basis for generating duties of distributive justice. First, it has made the case that

gains from trade can be regarded as the product of cooperation, the division of which raises

questions of distributive justice. Second, this section has rejected the inegalitarian division of this

cooperative surplus that the Contribution Argument demands.

To do so, I have assessed several challenges to the notion of ‘to each according to contribution’,

which is at the heart of the Contribution Argument. The first challenge rejected the relevance of

marginal contributions for goods that come into being like ‘manna from heaven,’ the relevance of

which I rejected both in the domestic and in the WTO context. The second challenge underlines

that marginal contributions cannot always be entangled, which I argued to be less relevant in the

WTO than in the domestic case. Third, but even if there are marginal contributions to the

cooperative good that can in fact be entangled, this does not imply that the fair shares are those

that are proportional to the marginal contribution to the cooperative good insofar as these

contributions are morally arbitrary. This however, is empirically contested and, in all likelihood,

only partially true in the WTO, if at all – in contrast to the domestic case. But there is a further

challenge to the inegalitarian implications of ‘to each according to contribution’, namely the

Contribution-as-Upholding Argument: even if there are marginal contributions to the

cooperative good that can in fact be entangled and even if these contributions are not based on

morally arbitrary factors, this does still not imply that the fair shares are those that are

proportional to the marginal contribution to the cooperative good because what matters

normatively is not only a notion of contribution to the cooperative surplus but also a notion of

contribution-as-upholding.

The above, and in particular the Cooperative Goods Argument in conjunction with the

Contribution-as-Upholding Argument, undermines the view that the distribution of gains from

trade is justified insofar as it is in accordance with contributions. Therefore the question remains:

it must be determined how the product of social cooperation is to be divided: this is the problem

of distributive justice. In short, if we apply the Autonomy Account to the WTO, the organization

qualifies as a subject of distributive justice.

3. The WTO from a Statist Perspective

The aim of this section is to argue that the WTO qualifies as a subject of distributive justice even

if we were to reject the Autonomy Account. From a statist point of view, the application of the

concept of distributive justice is restricted to the domestic realm. Statists argue that the state is

normatively peculiar that this is the reason why the scope of distributive justice is restricted to

13

this context. Because of the normative peculiarity of the state, they would – in all likelihood – not

agree with my Autonomy Account and its implication for transnational distributive justice. This

section argues that the WTO could nevertheless be considered as a subject of justice – even if the

Autonomy Account was rejected.

Statists base their domestic scope thesis on a number of characteristics, above all non-

voluntariness, threat-based coercion, cooperation and reciprocity. Statists claim that these

characteristics set apart the state’s normative peculiarity and give rise to duties of distributive

justice. The aim of this section is to argue that statists are wrong when they contend that these

characteristics are not relevant beyond borders. To achieve this aim, I assess the Non-

voluntariness Argument (3.1), the Coercion Argument (3.2), the Cooperation Argument (3.3) and

the Provision of Public Goods Argument (3.4). It may be true that these features do not exist

across the globe in general; yet, they are present outside the boundaries of the state in the context

of certain institutional arrangements such as the WTO.

3.1 The Non-Voluntariness Argument in WTO

The Non-voluntariness Argument maintains that distributive justice applies domestically (but not

globally) because distributive justice is applicable among persons governed by a non-voluntary

system of rules and the state system is inescapable (while global systems of rules are voluntary

and escapable).25

The Non-voluntariness Argument is relevant in the context of the multilateral trading regime.

When the previous General Agreement on Tariffs and Trade (GATT) system started after the

Second World War, featuring only 23 participants, accession was really a matter of free policy

choice. But because the GATT system featured a progressive expansion of its membership,26 the

likelihood of having normal trade relations for non-members gradually faded away. The

contemporary WTO system has 153 members (including all large markets) out of 192 trading

nations and 29 states being currently involved in accession negotiations. A trade organization that

manages a small portion of the international trading regime puts different kinds of pressures on

non-members than a regime whose participants make up the quasi-totality of world GDP and

trade flows and that does not have any serious competitor. Non-membership ceases to be a

practicable option. Moreover, a rejection of the outcome of WTO negotiations would entail a

withdrawal from membership in the WTO altogether: since the WTO treaty is a ‘single

undertaking’, members cannot choose which bits of the treaty they wish to accept, instead, the

negotiated agreement is a take-it-or-leave-it-offer.27 Some of the costs of withdrawal would apply

25 Thomas Nagel, "The Problem of Global Justice," Philosophy & Public Affairs 33, no. 2 (2005). 26 Hoekman and Kostecki, 1995 27 See, for example, Andrew G. Brown and Robert M. Stern, "Achieving Fairness in the Doha Development Round," Global Economy Journal 5, no. 4 (2005): p. 2.

14

to all countries equally, whether they are powerful or weak.28 However, overall, the costs for poor

countries would be much higher than for developed countries. Poor and weak countries would

suffer especially as a result of losing the benefit from having the ‘rule of law’ that the WTO

provides for trade between nations and that tends to restrain powerful countries from the use of

economic power. Moreover, the agreements of the WTO are a country’s only insurance against

prohibitive tariffs.29 The most crucial point is that powerful states can threaten to exit the

organization if the WTO member states are unable to achieve consensus and shift issues from

the WTO as main negotiating platform to bilateral treaties, regional integration agreements, or

so-called mini-lateral institutions which are formed by the industrialized countries and those

developing countries that are ready to bow to their will. Thus, the risk is that industrialized

countries might withdraw their commitment to the WTO and turn to alternative bilateral and

regional arrangements. The costs of such arrangements and the decline of the multilateral trading

system would be the highest for poor, developing countries: the more powerful countries would

be freer to impose their will unilaterally on their smaller trading partners. Smaller countries would

have to deal with each of the major economic powers individually, and would be much less able

to resist unwanted pressure.

It is doubtful that much legitimating value can be placed on a party’s consent to an agreement,

when the party is confronted with a take it or leave it option and the costs of non participating

are prohibitively high. In sum, neither remaining non-members nor exiting the WTO can be

regarded as an affordable option, above all for smaller and less powerful developing countries.

The difference between citizenship in states and membership in international organizations like

the WTO is hence insufficient in terms of inescapability in order to draw a morally salient

contrast between them in this regard. In conclusion, the costs of non-membership in the WTO

are too large to assume that membership in the WTO is voluntary in the relevant sense, and thus

to deny a concern with substantive standards of distributive justice.

3.2 The Coercion Argument in the WTO

The Coercion Argument claims that distributive justice applies domestically (but not globally)

because distributive justice is applicable among persons governed by a common system of

28 These costs may include the loss of all the rights embodied in the GATT/WTO regime such as Most Favoured Nation treatment and the protections afforded by the dispute settlement mechanism 29 If the United States had applied its maximum tariffs to China in 2001, rather than the tariffs accorded WTO members, the trade-weighted duty on Chinese imports would have increased from 3.8% to 45%. See Vladimir Pregelj, "Most-Favored-Nation Status of the People’s Republic of China," Congressional Research Service Reports, no. 30225 (2000): p. 7. See also See Amrita Narlikar, "Fairness in International Trade Negotiations. Developing Countries in the Gatt and WTO" (paper presented at the Conference on Political Economy of Fairness and Globalization, Tulane University, 2005), pp. 13f.

15

coercion and the state is a coercive actor (but the global system is not coercive).30 Even if

coercion-based statists were right in maintaining that coercion is a necessary condition for

requirements of justice, this does not undermine my claim that the WTO gives rise to duties of

justice: coercion is not only present within but also beyond borders, above all in the context of

the WTO. Of course, many international organizations, including the United Nations, lack

enforcement mechanisms and are therefore often being referred to as toothless tigers. Yet, the

WTO case is different. The WTO’s dispute settlement understanding (DSU), in particular, which

was reached in the Uruguay round of the GATT and is perhaps the most important cornerstone

of the WTO that arose out of that round,31 is coercive because it can impose sanctions.

The WTO is a harmonization arrangement that requires nations, as a condition of participation,

to conform their economic policies and laws to certain uniform requirements (eliminating import

quotas, for example).32 Prior to the establishment of the WTO in 1994, disputes about

compliance with WTO rules were dealt with under a pure veto (and thus voluntary) system:

under the old GATT system of settlement, a Panel ruling could be adopted only by unanimous

decision of the GATT council. Under the new WTO system on the other hand, the Dispute

Settlement Body automatically adopts the Panel or Appellate Body ruling, unless members

unanimously agree otherwise. Thus, countries can no longer block adoption of a panel ruling

which states that their policies are in violation of the GATT/WTO. Moreover, automatic

adoption implies authorization of compensation claims and/or sanctions on the part of the

plaintiff country.33 “This introduces a firm element of coercion into the dispute settlement

mechanism (DSM).”34 In sum, the WTO satisfies the threat-based coercion: WTO members are

strongly let to comply with WTO rules because otherwise they would suffer the consequences of

sanctions.

3.3 The Cooperation Argument in the WTO

The Cooperation Argument claims that that distributive justice applies domestically (but not

globally) because distributive justice applies in systems of cooperation that exist at the domestic

30 See Blake, "Distributive Justice, State Coercion, and Autonomy." See also Nagel, "The Problem of Global Justice." Richard Miller, "Cosmopolitan Respect and Patriotic Concern," Philosophy and Public Affairs 27, no. 3 (1998). I understand coercion to involve two conditions. First, non-voluntariness: coercion generates a situation in which X has no reasonable option but to do A. Second, threat: X has no reasonable option but to do A because if X does not do A, his or her situation would be substantially worsened. See Mathias Risse, "What to Say About the State," Social Theory and Practice 32, no. 4 (2006): p. 680. 31 Bryan Mercurio, "Why Compensation Cannot Replace Trade Retaliation in the WTO Dispute Settlement Understanding," World Trade Review 8, no. 2 (2009). 32 Samuel Freeman, "The Social and Institutional Bases of Distributive Justice," Draft for the Stanford Political Theory Workshop January(2009). 33 The question of whether the retaliatory phase of the process is designed to rebalance concessions, coerce compliance, or punish recalcitrant respondents is simply not clearly addressed in the text of the DSU. Mercurio, "Why Compensation Cannot Replace Trade Retaliation in the WTO Dispute Settlement Understanding." 34 Wilhelm Kohler, "The WTO Dispute Settlement Mechanism: Battlefield or Cooperation? A Commentary on Fritz Breuss," Journal of Industry, Competition and Trade 4, no. 4 (2004): p. 319.

16

level (but not globally).35 The current literature refers to the concept of cooperation in two

different ways: cooperation as interaction against stable common rule and cooperation in the

context of collective decision-making.

The first notion of cooperation as prerequisites for duties for justice is understood as interaction

against stable common rules.36 According to this definition, the relevant kind of cooperation

exists when the rules and practices that govern interaction are generally known, and sufficiently

complied with to enable reasonably settled expectations about agents’ behaviour.37 If we apply

this notion of cooperation, then the WTO, since it satisfies these conditions, qualifies as a subject

of justice.

The second, more restricted view of the notion of cooperation refers to the mutual dependency

on collective decision-making among citizens as giving rise to duties of distributive justice.38 Most

contemporary nation states fulfil the requirements for mutual political dependency among their

citizens, i.e. being structures of interaction against stable rules that depend upon collective

decision-making. But, even on this more demanding notion of cooperation, it is reasonable to

make the case that the WTO satisfies these conditions on the grounds that the GATT/WTO

treaty has given rise to an ongoing, rule-based system, which is governed by negotiations that are

subject to decision on the basis of unanimity.39

In conclusion both notions of cooperation can be said to apply in the context of the WTO:

cooperation as interaction against stable common rule, cooperation in the context of collective

decision-making and cooperation in the context of ‘basic’ cooperative institutions.

3.4 The Provision of Public Goods Argument in the WTO

The Provision of Public Goods Argument claims that that distributive justice applies domestically

(but not globally) because distributive justice applies to systems that provide public goods that

exist at the domestic level (but not globally). From this perspective, demands of distributive

justice do not arise unless there is a scheme of socially coordinated action that provides public

goods, which gives rise to specific kinds of strong reciprocal relations among those who are part

of the joint engagement in the production of these goods.40 Yet, the production of public goods

is not only relevant in the domestic context but also beyond borders. Public goods that span

beyond borders do not only include a stable climate and stable financial markets but also

35 The Cooperation Argument is to be distinguished from Cooperative Goods Argument set out above. 36 Thomas Pogge, Realizing Rawls (Ithaca: Cornell University Press, 1989), p. 21. 37 See also Christian Barry and Laura Valentini, "Egalitarian Challenges to Global Egalitarianism. A Critique," Review of International Studies, no. forthcoming (2009). 38 For a more extended discussion of the political view, see Christine Chwaszcza, Moral Responsibility and Global Justice. A Human Rights Approach (Baden-Baden: Nomos, 2007), chapter 2. 39 Aaron James, "Skepticism About Fairness in Trade," (2006), p. 9. 40 Brian Barry, "Humanity and Justice in Global Perspective," in Ethics, Economics, and the Law, ed. J.R. Pennock and John W. Chapman (New York: New York University Press, 1982). See also Andrea Sangiovanni, "Global Justice, Reciprocity, and the State," Philosophy and Public Affairs 35, no. 1 (2007).

17

multilateral trade rules administered by the WTO: the reason is that the benefits stemming from

WTO membership are both non-excludable and non-rival.41 A global trade system codified in

trade rules can thus be regarded as a global public good. In fact, the WTO is the sole provider of

the global public good of universal rules for international trade.

Accordingly, just as we can understand the special relationship between citizens as joint

producers (and consumers) of certain public goods, with their activity in this regard coordinated

and enforced by the state, we can conceive of the relationship between WTO members as special

as joint producers (and consumers) of public goods, above all the good of multilateral trade rules,

with their activity in this regard coordinated and enforced by the WTO. It follows that the WTO

should fall within the scope of justice on the Provision of Public Goods Argument.

3.5 Conclusion

Let me turn to the conclusion of this section. The WTO has jurisdiction over a smaller range of

issues than a state, with a corresponding difference in its impact on individuals; the property

domain regulated by the WTO is also much smaller than that regulated by states. Accordingly, my

analysis does not suggest that the WTO is equivalent to a domestic basic institution for its

members; yet, relevant similarities are found. But claims to the existence of associative duties can

be made by pointing out that there is no reasonable alternative to membership in the WTO, that

the dispute settlement system of the WTO is coercive, that the WTO entails interaction against

stable common rules and collective decision-making and that the WTO is the only provider of

the global public good of multilateral rules for international trade 42

The WTO may also be regarded as special from the perspective of the concept of legalization,

which refers to three characteristics that institutions may (or may not) possess: obligation,

precision and delegation.43 WTO Agreements are strong on all three elements and therefore close

to resembling the ideal type of full legalization, as in highly developed domestic legal systems:44

the WTO administers a highly elaborate, remarkably detailed set of legally binding international

41 Secretariat of the International Task Force on Global Public Goods, International Trade (Stockholm: Expert Paper Series Four, 2006). See also Ronald U. Mendoza, "The Multilateral Trade Regime: A Global Public Good for All?," in Providing Global Public Goods: Managing Globalization, ed. Inge Kaul, et al. (New York: Oxford University Press, 2003). In addition, see Christian Friis Bach, "The International Trade System," in Toward New Global Strategies: Public Goods and Human Rights, ed. Erik André Andersen and Birgit Lindsnaes (Leidern/Boston: Martinus Nijhoff Publishers, 2007). See Ronald U. Mendoza and Chandrika Bahadur, "Towards Free and Fair Trade: A Global Public Good Perspective," in Challenge: The Magazine of Economic Affairs (New York: M.E. Sharpe, 2002). Mendoza, "The Multilateral Trade Regime: A Global Public Good for All?." 42 Claims to the existence of such duties can also be made by reference to the fact that TRIPS forces developing countries to accept intellectual-property standards that developed countries themselves were willing to accept only when they reached a certain stage in their development. See Michael Finger and Philip Schuler, "Implementation of Uruguay Round Commitments: The Development Challenge," World Economy 23(2000): p. 430. 43 Kenneth W. Abbott et al., "The Concept of Legalization," International Organization 54, no. 3 (2000): p. 401. 44

Ibid.: p.404.

18

rules; it also operates a dispute settlement mechanism, including an appellate tribunal, which has

been granted the authority to interpret these rules and settle disputes.

4. Conclusion

This paper was devoted to defending the claim that trade regulation in the context of the WTO

raises issues of distributive justice in its own right. This paper has defended this claim from two

perspectives: the Autonomy Account and statism. First, it has made the case that the WTO

demands special justification in light of the Autonomy Principle and that the required justification

in turn provides the basis for generating duties of distributive justice. Second, it has argued that

the WTO should be regarded as a subject of distributive justice even if we were to adopt a statist

point of view. Statists are right when they claim that certain disanalogy properties are not

applicable globally. But while they may not apply at the general global level, this paper has show

that they do apply in the context of the WTO.

The overarching question I have explored in this paper is whether international systems of rules,

such as the WTO, but also transnational or global systems of rules, may give rise to duties of

distributive justice. In the first part of this paper I have argued that systems of rules trigger a

demand for justification insofar as they yield justification-requiring constraints on autonomy. On

that basis, international, transnational or global systems of rules that coordinate cooperation with

members of different societies may give rise to claims of socioeconomic justice. In such cases,

distributions extend only to the product of international, transnational and global cooperation, as

decided by the specific terms of cooperation that specify the common institutions regulative of

cooperation.

The argument from the statist perspective has the following advantage: it shows that we can

reduce the extent to which theories concerning distributive justice across societies need to rely on

controversial empirical assumptions about the general nature of the global order if we shift our

focus of concern to the case of international trade and the WTO and the distributive issues they

raise. Granting that principles of distributive justice apply within each society does not imply that

they are valid on a global scale; instead, it needs to be argued that the analogy between the

domestic and the global context is close enough. However, the arguments set out in this paper

show that the notion of justice in trade does not hinge on the plausibility of an argument about

the analogy between the domestic and the global context in general. The empirical controversy

about the extent of economic integration and a potential global basic structure can be side-

stepped because there are real distributive requirements across societies that arise because of the

existence of the WTO, requirements beyond those raised by arguments in favour of sufficiency in

the face of extreme global poverty, even if societies are not fully integrated and even if there is no

global basic structure.

19

Moreover, the above argument illuminates how the issue of distributive justice across societies

can be addressed and suggests a novel answer to the key question regarding the scope of

distributive justice. In particular, the above argument strengthens my overall conclusion that

there is a convincing case for steering a middle course between cosmopolitanism and statism. It

shows that it is possible to defend a convincing midway position from both perspectives at stake

in this paper: generally in the context of certain constraints on autonomy but also specifically in

the analysis of the WTO. This paper thereby demonstrates that we should reject the view that

distributive justice only applies within the domestic realm. On the other hand, it shows that the

case for duties of just distribution across societies does not necessarily hinge on cosmopolitan

arguments for trade-independent principles of transnational socioeconomic justice. In other

words, my findings challenge the existing positions in the literature by arguing that an analysis of

trade regulation in the context of the WTO suggests that we should transcend the simple

dichotomy of regarding the scope of distributive justice as either purely domestic or purely

global. My line of argument shows that international institutions like the WTO prompt important

questions regarding transnational socioeconomic justice. Specifying these normative requirements

of international institutions is where a crucial part of the objective of working out requirements

of transnational distributive justice lies.

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