One of the World Trade Organization’s (WTO's) more remarkable and controversial innovations is its mechanism for resolving trade disputes among member states. Traditionally, states have resolved such disputes in "pragmatic" fashion, through negotiation and compromise informed by the relative power of the parties involved. But no longer: the WTO's Understanding on Rules and Procedures Governing the Settlement of Disputes (the DSU) provides that disputes between member states are to be resolved in adversary proceedings before impartial panels of experts." Under the DSU, panels have authority to decide whether members' laws violate international trade norms; panel decisions are essentially binding, though there is a right of appeal to an Appellate Body within the WTO. If an offending party in a dispute fails to implement a final decision, the complaining party may seek compensation from it. If the parties cannot agree on the appropriate level of compensation, the complaining party may retaliate by suspending trade concessions it has made to the offending party.
The WTO's turn to "trade legalism" has sparked a heated debate. Some commentators favor the new approach, praising its predictability, uniformity, and fairness. Others contend that the new approach will lead to a loss of national sovereignty and democratic self-government. On one thing, both sides agree: supporters and opponents alike believe that WTO rulings will have a profound impact on the policies of member states.
To students of American constitutional history, the debate over the WTO has a familiar ring. We take it for granted today that the United States Supreme Court has authority to review the judgments of state courts on questions of federal law. In the first half of the nineteenth century, though, the Court's assertion of appellate jurisdiction over state courts caused great controversy. Antebellum Americans debated the merits of Supreme Court review in a manner remarkably similar to the way in which today's Americans debate the merits of the WTO. The Court's supporters asserted that its review of state court judgments promoted uniformity, predictability, and compliance with federal norms. Its opponents contended that Supreme Court review posed dangers for state sovereignty and representative democracy. To its opponents, in Jefferson's words, the Court seemed an "instrument which, working like gravity" would obliterate the states and "press us at last into one consolidated mass.
This article explores the nineteenth-century conflict over Supreme Court review and discusses its implications for today's debate on the WTO. Part I of this article describes the DSU and examines the arguments of supporters and critics. Part II explores the nineteenth-century controversy over Supreme Court review. It focuses on three important episodes: the conflict with Virginia in connection with Martin and Cohens v. Virginia; the conflict with Georgia in connection with the Cherokee cases—a conflict that served as backdrop for some extraordinary congressional debates on the Court's jurisdiction; and the conflict with Wisconsin in connection with Abelman v. Booth. Part III discusses the implications of the nineteenth-century controversy for today's debate.
Movsesian, Mark L., "Sovereignty, Compliance, and the World Trade Organization: Lessons from the History of Supreme Court Review" (1999). Faculty Publications. 110.