Work Text:
An Analysis of the WTO Appellate Body Crisis Using Theoretical Approaches in IR
The WTO is an economic coalition that closely works with the UN to establish, revise, and enforce international trade rules. It requires oversight considering its size of 164 members which comes in the form of its Appellate Body. Made up of seven judges (with a required minimum of three), the Body oversaw the appeals process of disputes among WTO members. However, after the US blocked the appointment of multiple judges and two Body members’ terms expired, the Body has been unable to carry out its duties. While we can apply various theoretical approaches to explain this ongoing crisis, I believe combining the Open Economy Politics (OEP) and Liberal Institutionalist approaches works best. This combination of approaches accounts for how member states’ interests are shaped by domestic political actors and the dynamic between members of an international institution attempting to balance their interests with the collective institutional interest.
To begin with, the OEP approach incorporates the symbiosis between domestic political actors and member state interests. Other theoretical IR approaches (such as Realism or Liberalism) choose to focus on the state at large and assume it to be a rational unitary actor. However, this is simply not a practical assumption. A fundamental aspect of OEP is that it analyzes the smaller units that make up the building blocks of a state, such as individuals, organizations, and other factors of production. Aggregating each unit’s position within the international political economy (IPE) forms the member state’s interest in foreign policy (Lake 2009, 225). In essence, a member state’s interests consist of the interests of its domestic political actors. The Appellate Body Crisis stems from the US’ argument that the WTO has failed to protect American interests. In the context of foreign relations, the US government will inherently prioritize American interests. These interests encompass the interests of OEP’s main units of analysis: American citizens and organizations.
In addition, applying the Liberal Institutionalist approach alongside OEP offers insight into how international institution members maintain a delicate balance between their own interests and the group’s larger, shared interests. This ties into the first situational dimension that Liberal Institutionalism holds: mutuality of interest. Conflict of interest between actors positively correlates with the chance of actors defecting (Axelrod and Keohane 1985, 228). The WTO aims to promote global free trade by, among other things, reducing tariffs and other trade barriers. While these acts promote cheaper imports and increase competition among producers, they can harm and cripple domestic industry if not controlled. WTO members must strike this balance, as only furthering the WTO’s interests could harm a state’s domestic economy while only furthering their own interests could lead to the state facing disciplinary action.
However, the OEP approach has its flaws, and many critiques of its real-world applications exist. One potential criticism is that OEP doesn’t consider the possibility of foreign actors’ interests overriding domestic actors’ interests. As per the Liberal Pacifist approach, people value material interests and peaceful trade above all (Doyle 1986, 1152-1153). A counterargument to this, though, lies in OEP’s nuance regarding the complexity of the domestic influences intertwined with IPE. An example of foreign and domestic interests clashing is the 1983 motorcycle tariff issued by President Reagan. This was done after Harley-Davidson lost its majority market share to foreign manufacturers who undercut Harley-Davidson by nearly $2000 per motorcycle (Klein 1). Liberal Pacificism would’ve allowed these significantly cheaper imports to freely compete with domestic industry as the cheaper goods would further appease people’s material interests. However, OEP considers domestic actors’ economic stakes. In this situation, Harley-Davidson would’ve gone bankrupt without these increased tariffs and would’ve put many Americans out of work.
Another potential criticism of my thesis is one of OEP’s concessions. It states that the more veto points within a system, the more difficult it is to implement reforms (Lake 2009, 228). An apt illustration of this can be seen in the current Appellate Body Crisis as the US had the veto power necessary to prevent several key appointments to the Body. The US’ argument consists of six claims asserting that the Appellate Body has exceeded its authority and strayed from the rules agreed upon at its founding in 1995. A counterargument to this critique originates from one of Liberal Institutionalism’s strengths. Regardless of a member’s status, international institutions create an environment where members can have equitable standing (Axelrod and Keohane 1985, 238-239). On top of this, international institutions can lower the chances of defection by a) incentivizing and rewarding cooperation in the long run and b) establishing protocols and procedures that allow for quick detection and punishment for defection (Axelrod and Keohane 1985, 236).
In conclusion, the theoretical approach that best explains the ongoing Appellate Body Crisis is the amalgamation of the OEP and Liberal Institutionalist approaches. It considers how domestic political actors shape member states’ interests and how members balance their interests with the collective’s. One cannot analyze members' interests in an international institution without considering the members’ domestic political situations nor can the relation between individual and group interests be ignored. Despite that, this approach has its flaws and there are various critiques of it. Nonetheless, the combined OEP and Liberal Institutional approach is a strong contender to serve as the framework for how we perceive this crisis as it continues.
Works Cited
Axelrod, R., & Keohane, R. O. (1985). Achieving Cooperation under Anarchy: Strategies and Institutions. World Politics, 38 (1), 226–254. Achieving Cooperation under Anarchy: Strategies and Institutions | World Politics | Cambridge Core
Davis, Christina L. Why Adjudicate? Enforcing Trade Rules in the WTO. Princeton University Press, 2012.
Doyle, M. W. (1986). Liberalism and World Politics. The American Political Science Review, 80 (4), 1151–1169. Liberalism and World Politics | American Political Science Review | Cambridge Core
Farnsworth, Clyde H. “U.S. Raises Tariff for Motorcycles.” The New York Times, The New York Times, 2 Apr. 1983, U.S. RAISES TARIFF FOR MOTORCYCLES - The New York Times
Klein, Daniel B. “Taking America for a Ride: The Politics of Motorcycle Tariffs.” Taking America for a Ride: The Politics of Motorcycle Tariffs, Cato, 12 Jan. 1984, Taking America for a Ride: The Politics of Motorcycle Tariffs
Lake, David A. “Open Economy Politics: A Critical Review - The Review of International Organizations.” SpringerLink, Springer US, 28 May 2009, Open economy politics: A critical review | The Review of International Organizations
Maruyama, Warren, and Alan Wm. Wolff. “Saving the WTO from the National Security Exception.” PIIE, Peterson Institute for International Economics, 19 May 2023, Saving the WTO from the national security exception || PIIE.