This chapter examines the relationship between preferential trade agreements (PTAs) and the multilateral trading system represented by the WTO. It explores the historical context of PTAs, their proliferation, economic effects, and WTO surveillance. The chapter analyses the legal texts governing PTAs, including GATT Article XXIV, GATS Article V, and the Enabling Clause, and discusses controversies surrounding their interpretation. It also delves into regulatory issues within PTAs, such as rules of origin and provisions extending beyond WTO rules. Furthermore, the chapter addresses WTO dispute settlement cases involving PTAs and the evolving landscape of trade agreements, including digital economy and critical minerals agreements. Finally, it considers the systemic effects of PTAs on the multilateral trading system, highlighting both positive and discriminatory aspects.

This introduction to The Cambridge Companion to World Trade Law introduces the book’s purpose and structure. The volume is intended to be an authoritative and accessible guide to the field, appealing to both legal specialists and those with no specialist knowledge of trade law. It is written by experts and provides a compact discussion of the perspectives, enduring issues, and emergent challenges in the field. The introduction also discusses the current context of world trade, highlighting the divisions in the world following decades of growth and the challenges posed by globalisation. It sets the stage for the chapters that follow.

This chapter historicises the current moment of transformation in international trade governance by examining the evolving boundaries of trade expertise and the shifting techniques of trade governance. It adopts a periodisation of post-Second World War international economic governance, starting with the ‘embedded liberal’ period, continuing with the ‘neoliberal period’, and concluding with the contemporary period of liberalism ‘in motion’ or kineo-liberalism. The chapter demonstrates how the boundaries of the expert field and the available governance techniques are deeply connected to the broader politics of trade governance, reflecting and sustaining larger shifts in convictions concerning the purposes and rationales of international trade governance. The current moment is characterised by instability, uncertainty, and contestation, leading to a denaturalisation of the boundaries of trade governance and a reinterpretation of its fundamental aspects.

This chapter analyses the WTO’s institutional features, focusing on rule-making and dispute settlement. It describes the creation of the GATT and the shift to the WTO, analysing salient aspects of the WTO’s structure. It reviews how WTO institutions have operated, highlighting problematic features and identifying potential reforms. The WTO is widely viewed as a seriously flawed institution. Despite its goal of promoting liberalised trade, members have found it virtually impossible to conclude new agreements. The dispute settlement system, once viewed as its crown jewel, now lies in tatters. While many factors have contributed to the current situation, the multilateral trading system’s institutional architecture is deeply implicated.

This chapter examines the political economy of international trade policy, exploring the evolution of the international trading system from the GATT to the WTO. It analyses the fault lines between free trade and fair trade and winners and losers, and the role of labour market policies in addressing transition costs. It also discusses the challenges facing the WTO, including institutional dysfunction and an expanding mandate. It proposes potential solutions, such as plurilateral agreements and improved institutional arrangements, while emphasising the need for collaboration with other international agencies. The chapter concludes by stressing the urgency of recovering the aspirations of the post-war international order to address current global challenges.

This chapter discusses the relationship between WTO law and other public international law (PIL), focusing on the interpretation of WTO law through the lens of the Vienna Convention on the Law of Treaties (VCLT). It examines how WTO dispute settlement bodies have approached non-WTO law, particularly in the context of treaty interpretation and potential conflicts between legal regimes. The chapter argues that while the VCLT provides a framework for interpretation, it has limitations in addressing conflicts between different agreements, as illustrated by the interaction between the Paris Agreement and the WTO. The authors contend that legislative solutions within the WTO are necessary to address these conflicts and ensure the WTO’s continued relevance in the face of global challenges like climate change.

Through a new account of three early disputes, Chapter 16 revisits the novel role of the League Council in interstate dispute settlement. This role was delimited by a legal threshold: the question of whether disputes arose out of a matter purely within a state party’s national jurisdiction or domaine réservé. Application of this test, nominally left to the Council, prompted considerable experimentation with institutional forms, and particularly recourse to ‘committees of jurists’, an understudied, flexible, and protean mechanism which would go on to be deployed in many spheres of League activity. Drawing on contemporaneous legal scholarship and a range of archival materials, the chapter sketches the Council’s procedural management of three key disputes, redirecting focus to the larger landscape of institutionalized dispute settlement beyond the Permanent Court of International Justice. In this larger landscape, the chapter teases out the diverse characteristics associated with recourse to avowedly ‘legal’ expertise and reasoning. This close reading of varied ‘legal’ deliberations recovers the multifaceted relationship between institutionalization and legalization of dispute settlement – and suggests the complexity of relations between legal reasoning and peaceful ordering, both for contemporaries and for us.

This chapter begins by elaborating on the concept of a dispute, before providing a historical perspective on the evolution of the requirement to settle disputes peacefully. The chapter then explores diplomatic and legal methods of dispute settlement. Diplomatic forms of dispute settlement (also known as political or non-legal forms of dispute settlement) include negotiation, mediation, inquiry, and conciliation. Legal forms of dispute settlement include arbitration and adjudication. Resort by states to dispute settlement procedures, and in particular legal methods of dispute settlement, has grown exponentially in the last decades. Since the 1990s, the International Court of Justice has had an increasingly active docket of cases; in addition, the Permanent Court of Arbitration has undergone a sort of renaissance. The focus of this chapter is on the settlement of inter-state disputes, as opposed to disputes between states and non-state actors or between non-state actors.

International economic law is a field of public international law that regulates cross-border transactions in goods, services, and capital, as well as monetary relations between states. This chapter focuses on the branches of international economic law that govern international trade, international investment, and international monetary law. This chapter sets out the historical background, fundamental rules, and dispute settlement systems in the areas of international trade law and international investment law, and it concludes by introducing international monetary law. International trade and international investment law share some fundamental principles, such as non-discrimination, although most favoured nation treatment and national treatment take somewhat different forms in the two bodies of law. This chapter covers the Bretton Woods institutions, namely the World Bank and the International Monetary Fund (IMF), as well as the World Trade Organization (WTO).

Abstract: This chapter examines the system of remedies applied in WTO dispute settlement, sometimes called ‘prospective’ or ‘forward-looking’. This system integrates remedy repetition and remedy escalation, with remedies being issued sequentially: initial rulings (Mere Adjudication and Declarations of Breach) are followed by the possibility of compliance adjudication, and, where this is insufficient, the prospect of escalation through authorised trade retaliation (Permissible Responses). While authorised retaliation is often seen as the key WTO remedy, the practice shows that it is rarely implemented. Instead, the system’s strength lies in mobilising the deterrent effect of remedy escalation together with the reputational costs of declared non-compliance. The chapter considers the historical evolution of remedies applied in international trade law, from the GATT 1947 to the current Dispute Settlement Understanding, analysing their central components and practical applications. The design of the WTO’s system of remedies, which seeks to mobilise the various layers of pro-compliance forces of international law, provides an analytical framework for the subsequent chapters assessing the remedial practice of international courts in the face of non-compliance.

This chapter argues that, albeit with variations, each of the three countries – that is, the US, Mexico and Canada – that belong to the USMCA can point to some concrete positive economic and welfare developments that have been realised because of NAFTA. The relative success of NAFTA / the USMCA has largely happened because of the belief that the three contracting parties have in the institution created to enhance the implementation of obligations under the agreement. Indeed, in 1994, NAFTA placed emphasis on the creation of ‘effective procedures for the implementation and application’ of member states’ obligations. In contrast to dispute settlement under the AfCFTA, ASEAN and MERCOSUR, a premium was placed on an effective dispute settlement mechanism. This explains why the USMCA’s chapter 10 is viewed as the ‘crown jewel’ of the RTA. The same can be said of Chapter 14 on ISDS which even has authority to review decisions by, for instance, a state court in the US. Further, we have also argued that free trade agreements between a hegemon and countries at a lower level of economic and political development may likely lead to the loss of ability by the party at the lower stages of development to adopt trade measures for the protection of its own industries.

One of the core arguments we have made in this monograph is that for regional trade agreements to effectively realise their prosperity agendas, greater attention must be paid to the institutions that can ensure the implementation of the newly created regional project. In this regard, this chapter explores such institutions and their necessity in regional trade agreements in the Global South. In the absence of a centralised authority to enforce international agreements, it is common for states to either rely on peer pressure to encourage enforcement of the agreements or delegate the authority to interpret and rule on compliance to a third-party adjudicating body. While the former might generally have a low success rate in terms of ensuring compliance, the latter might only be successful in ensuring a high rate of compliance if the third-party adjudicating body is sufficiently robust. Therefore, this chapter explores the promise that dispute settlement mechanisms hold for the effective implementation of various trade agreements in the Global South.

This chapter offers a concise analysis of the legal framework on the protection of foreign investment at the time of the League of Nations, in many respects a rather turbulent period. Such legal framework was essentially composed of a rudimentary network of very heterogeneous bilateral treaties, some basic customary rules, and some broad general principles largely based on the notions of justice and equity. Many fundamental questions remain fiercely disputed, and insurmountable divergences between states to a large extent frustrated the attempts to codify the international rules on the protection of foreigners and their property. Yet the legacy of this period should not be underestimated. From a substantive perspective, state practice already demonstrated a certain convergence on some basic rules on the treatment of foreign investors, while some legal claims put forward by some states – including the so-called Hull formula concerning compensation for expropriation – failed to muster the general acceptance necessary to become legally binding rules. Regarding the settlement of investment-related disputes, an embryonic role for investors started to surface in this period.

The chapter gives an overview of dispute settlement during the Old Regime. Contrary to older assessments of the historiography, dispute settlement retained its importance in this era, both in qualitative and in quantitative terms. This was true for the field of theoretical literatures, which, from the last decades of the seventeenth century, dealt intensively with the subject. Normally, a clear distinction was made between an elected arbiter, who definitively decided a dispute, and a mediator, who only made peace proposals. Diplomatic practice, which made intensive use of the instruments of dispute settlement until the last decades of the eighteenth century, was much more flexible. The transitions between arbitration and mediation were fluid; the boundaries of confession and rank were also frequently crossed. In Old Regime Europe, mediation was also used for the first time in peace negotiations between Christian and Islamic powers. New forms of mediation emerged as well. One was the armed mediation, in which a power intervened in a conflict uninvited and set a peace ultimatum; this could easily lead to war. This indicates that dispute settlement did not automatically contribute to an increase in peace; the relationship of dispute settlement to war and peace remained rather ambivalent in Old Regime Europe.