Significance of multilateral institutions in trade dispute management

Note on how to cite this journal:

Author, Date of the post, WMO Conflict Insight, Title of the post,  ISSN: 2628-6998, https://worldmediation.org/conflict-insight 

The antagonism in international trade negotiations impacts many countries. Small states find themselves engrossing in bilateral talks within which leaves them in weaker positions with time advancement. A multilateral agreement is pivotal even if it is evasive. An impactful trade agreement can mitigate the current volatile global economy to facilitate sustainable markets. (Koldunova, 2019) A fair trade agreement plays an instrumental role in alleviating global inequality through spearheading healthy economic growth. International institutions assist states in liberalizing by availing, providing political cover for entities facing protectionist pressures locally. Policymakers prefer to file a World Trade Organisation complaint than negotiate a compromise in dispute resolution mechanisms. Some institutionalists contend that the rules-based trade mechanism blunts the force of power politics. Legalization confers legitimacy in the context of multilateral dispute resolution mechanisms. 

Some threads emanating from the international political economy in the context of different policy-making frameworks can integrate multiple subgroups. On the demand-side political dynamics of trade has made significant progress by incorporating various entities. Redrawing of coalitions and cleavages has the potential to rejuvenate new transnational business synergies for market accessibility. International trade, as well as efforts to liberalize or to restrict trade, generate contentious politics. The significance of international work focuses on different political decision-making processes. They comprehend how a variety of economic actors benefit from the liberalization of the trade if of great importance. The World Trade Organization is facing significant in managing trade disputes for sustainable conflict resolution mechanisms. (Vidigal, 2013) The WTO’s central pillars and the implications of the global trading mechanism should reflect the institution’s centrality. The inability to conclude standard rules embodying global trade could lead to global value chains’ demise. The increasingly embryonic geopolitical environment aggravates this situation, with unpredictable consequences for the conduct of international business. Given the exponential rising of geopolitical competition, addressing the World Trade Organisation’s challenges requires concentrating on the global system’s fragmentation for investment negotiations opportunities and challenges. Society is transitioning to a new era, marred by diverging historical epochs, power asymmetries, and technological disruptions making global management of trade a herculean task requiring various actors’ political will.

Transparency and legitimacy in the context of international trade dispute resolution:

Legitimacy embodies laws, edicts, and rules in the absence of coercive power. Critics of the World Trade Organisation contend that multilateral governance lacks the audacity to rule.  Indicators of legitimacy include including institutional integrity inclusiveness, transparency, accountability, and comparative benefit. The history of legitimizing free trade encompasses advancing economic and conceptual arguments for the reduction of trade barriers. Domestic support essential for the World Trade Organisation sustenance is on the downward trajectory in both developing and developed countries. Key landmarks inspire reflection on key past developments as well as their future policy directions.  The WTO is the primary international body charged intergovernmental trade relations dealings from its predecessor, the General Agreement on Tariffs and Trade. (Schill & Vidigal, 2019) 

Resolving and exploring contentions issues require that emphasis be given in the context of a range of sophisticated economic and philosophical aspects. These encompass expected benefits emanating from global trade, climate change effects, and global governance architecture. While there is widespread acceptance of potential benefits among policymakers, there are a plethora of implementation aspects. While these issues are predominantly debated within political science and political science domains, the legal analysis is pivotal for accountability, legitimacy, and transparency of the global trade system. In the international landscape, enforcement mechanisms for optimal trade policies adoptions, especially in achieving trade-offs between competing values. (Peritz, 2020) Where rules are made, their difficulties in optimizing dispute resolution essentials in sync tandem with adjudicatory methodology. In the context of international economic, legal frameworks, the WTO system has been outstanding, particularly in line with the utilization and the development of binding dispute settlement strategies. Supporters of the international trade system advocate that the global body has a potential model for other aspects of foreign affairs. Antagonists perceive it as powerful and secretive and an improper creator of new legal obligations outside the realm of intergovernmental negotiations. These divergences raise jurisprudential and practical questions about the sustainability of global trading dispute management. 

Making conflict management feasible from a global perspective:

The political economy in trade policy is the combined effect of international trade on international, regional, sub-regional, and domestic politics. Trade liberalization may change the calculus of local preferences. It may lead to new political cleavages and conflicts. Openness increases the potential number of multilateralism supporters. Greater exposure to external risk in line with trade parameters exacerbates the volatility of the domestic economy.  Societies that expose themselves to amounts of foreign risk demand a more significant government role as shelter from global markets’ vicissitudes. (Alvarez Zárate, 2018) Increasing exposure to international trade may create needs for more government intervention, which is necessary to sustain majority support for economic development. As countries become open to trade, they will maximize insulation, stability, and autonomy.  Exposure to international trade brings higher economic growth rates through the development process resulting in better democratic fundamentals. A virtuous cycle of trade liberalization engenders democratization and promote trade liberalization trajectory.

Trade may constrain available policy options to decision-makers. It may produce a backlash and ultimately create pressures for closure and protection. As countries become open to the international political economy, it may affect their governmental relations, and conflicts may ensue, cementing the importance of dispute settlement in international trade. New trade affects the global political system and aggravates political-military conflicts. The different arguments, however, imply other feedback mechanisms. Going forward, if trade produces many battles, ultimately, more protectionism is inherent. (Theuns, 2019) The problematic role of international trade institutions seems to be aggravated by the severity of many domestic economic crises adhering to inward-looking instead of the multilateral approach. Preventive diplomacy plays a pivotal role in maintaining harmonious trade environments by managing the World Trade Organisation and ushering in new political cleavages to render desired support for the sustainability of global trade system management. The world is experiencing seismic geopolitical, geopolitical, and technological shocks, but globalization and international trade dispute management remain a formidable force.

De-escalating conflicts through investment mediation:

Conflicts have huge socio-economic ramifications. It may include political competition for dominance, rent-seeking by interest groups, litigation mechanisms by contending parties, and business contests. Analyzing the effects of conflict behavior, post-conflict scenarios, and repeated interactions in the context of achieving the escalation of conflict or the pursuit of peace are essential. The repeated exchange between the contestants, post-conflict behavior may be used for signaling purposes, affecting the de-escalation of conflict and the possibility of peace. De-escalation may occur within the parties, in the context of their interactions, and external parties, or the broader community. (Foster, 2017) Parties may avoid escalating entrapment processes the analytical frameworks of conflicts. The unequal distribution of costs in a dispute may be a point of departure for de-escalation. Focusing on specific trade goals prevents escalation. When adversaries interact with the advancement of time, they may develop social bonds essential for de-escalation mechanisms. Conflict intermediaries, conflict resolution facilitators, and mediators may act as third parties categorically.

Divergences in the underlying conditions affect the emergence and escalation of conflicts and change the de-escalation of conflicts. Parties may lose confidence mechanisms in the appropriateness of their cause or their basic ideological grounding. Deviances in the composition of a party may also change their attitudinal tendencies towards pursuing the conflict. De-escalation is likely when the stalemate is costly for both sides and the availability of a better alternative. Adversaries facilitate cooperation and pursue a win-win outcome depending on the context. Changing conditions create opportunities for de-escalation accordingly, but with no predetermined guarantee. Intermediary actors may limit the antagonists’ conflict resources and provide consultation, mediation, and facilitation services to the involved parties. (Gong Ting, 2018) Long-term policies should promote cross-cutting social ties, shared identities, improved conditions for disadvantaged groups, and standardized conflict resolution procedures. Long term de-escalation policies for protracted conflicts may employ a graduated reciprocation in tension reduction strategy or the tit-for-tat approach. Conflict de-escalation policies must rest on a vision of the desired new relationship with the other side.

References:

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Schill, S. W., & Vidigal, G. (2019). Designing Investment Dispute Settlement à la Carte: Insights from Comparative Institutional Design Analysis. Law & Practice of International Courts & Tribunals, 18(3), 314–344. https://doi.org/10.1163/15718034-12341407

Theuns, T. (2019). The legitimacy of free trade agreements as tools of EU democracy promotion. Cambridge Review of International Affairs, 32(1), 3–21. https://doi.org/10.1080/09557571.2018.1552247

United Nations. (2018) “United Nations Convention on International Settlement Agreements Resulting from Mediation (New York, 2018) (the ‘Singapore Convention on Mediation’) | United Nations Commission On International Trade Law.” Last modified December 20, 2018. Accessed November 10, 2020. 

Vidigal, G. (2013). From Bilateral to Multilateral Law-making: Legislation, Practice, Evolution, and the Future of Inter Se Agreements in the WTO. European Journal of International Law, 24(4), 1027–1053. https://doi.org/10.1093/ejil/cht064

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