In the Shadow of Law or Power? Consensus-Based Bargaining and Outcomes in the GATT/WTO

2002/01/01 by Richard H. Steinberg · 587 citations
Economics, Econometrics and Finance · Social Sciences · #Bargaining power #Business #Economics #Global trade and economics #Hypocrisy #International Development and Aid #International trade #Law #Law and economics #Microeconomics #Pareto principle #Political science #Power (physics) #Shadow (psychology) #World Trade Organization Law

paper · doi:10.1162/002081802320005504

published in International Organization 56(2), 339-374 (University of Cambridge)

openalex publication_date 2002/01/01 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/31

Abstract

This article explains how consensus decision making has operated in practice in the General Agreement on Tariffs and Trade/World Trade Organization (GATT/WTO). When GATT/WTO bargaining is law-based, consensus outcomes are Pareto-improving and roughly symmetrical. When bargaining is power-based, states bring to bear instruments of power that are extrinsic to rules, invisibly weighting the process and generating consensus outcomes that are asymmetrical and may not be Pareto-improving. Empirical analysis shows that although trade rounds have been launched through law-based bargaining, hard law is generated when a round is closed, and rounds have been closed through power-based bargaining. Agenda setting has taken place in the shadow of that power and has been dominated by the European Community and the United States. The decision making rules have been maintained because they help generate information used by powerful states in the agenda-setting process. Consensus decision making at the GATT/WTO is organized hypocrisy, allowing adherence to the instrumental reality of asymmetrical power and the sovereign equality principle upon which consensus decision making is purportedly based.

Citations

• International regimes, transactions, and change: embedded liberalism in the postwar economic order
• World Society and the Nation‐State
• Diplomacy and domestic politics: the logic of two-level games
• The Rational Design of International Institutions

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