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

Reshma S Nair

Abstract

This paper describes how the General Agreement on Tariffs and Trade/World Trade Organization (GATT/WTO) has used consensus decision-making in reality. Consensus results are Pareto-improving and approximately balanced when GATT/WTO negotiating is law-based.                                                 When bargaining is based on power, governments use tools of power that are external to the norms, silently weighing the process and leading to uneven, perhaps non-Pareto-improving consensus results. Despite the fact that trade rounds have been initiated using law-based negotiation, empirical study demonstrates that rounds have been concluded through power-based bargaining since hard law is created when a round is closed. The European Community and the United States have dominated agenda shaping, which has occurred in the wake of that dominance. The decision-making guidelines have been preserved because they contribute to the production of data that strong nations utilize to determine the agenda. Consensus decision-making at the GATT/WTO is organized duplicity that permits adherence to the sovereign equality ideal and the instrumental reality of asymmetrical power, which is what consensus decision-making is ostensibly founded on.