World Trade Court Has Real Power

It's the biggest case ever to go before the World Trade Organization's court. Worth billions of dollars to both Airbus and Boeing, the subsidy dispute between the US and the EU will likely take several years and several million dollars to resolve. And the people who will decide the case probably won't even be judges -- at least, not full-time judges.

That's the way it is at the intersection of law and trade. The WTO court is staffed by freelance judges -- often diplomats -- who have very little knowledge of legal practices but are strong in their negotiating skills. For most who have sat on the WTO bench in the past, it's their first time ever settling a trade dispute.

The WTO court is chaired by a three-person panel of judges. It has real power. Just ask President George W. Bush. Two years ago, the WTO court forced him to abandon tarrifs aimed at protecting the struggling US steel industry from foreign competition. The lever in that ruling was the threat of $2 billion in trade sanctions.

Both US and EU eaders are leery of the court. "WTO panels are making up new rules," Montana Democratic Sen. Max Baucus wrote in response to questions from The Wall Street Journal. He said they "have invented rules that do not appear in any negotiated agreement -- then used those rules to strike down US laws and policies."

An EU study found the WTO panel system should be altered, saying "panelists do not have time to develop expertise in the procedural and technical aspects of the dispute settlement system."

Even the judges themselves complain, saying they can't hear cases and keep their day jobs at the same time. But that's just what they're expected to do. And if they have a hard time understanding the trade laws upon which they rule, you can imagine how difficult it is for the countries involved to interpret and implement those rulings.

FMI: www.wto.org