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The Club Approach to Multilateral Trade Lawmaking

Posted by on Saturday, January 30, 2016 in Articles, Blog, Vol. 49 No. 1, Volume 49.

Nicolas Lamp is an Assistant Professor at the Faculty of Law, Queen’s University. Professor Lamps Article analyzes the World Trade Organization’s (WTO) role at the center of an emerging structure of global economic governance.

The conclusion of the Trans-Pacific Partnership (TPP) in October 2015 has attracted a great deal of media attention and political debate, and the question of whether the United States should ratify the agreement promises to remain one of the most contentious issues in the current presidential campaign and the final year of Barack Obama’s presidency. The TPP’s proponents celebrate the agreement as a successful attempt by the United States to “write the rules of the road” in the Asia-Pacific region. Others are concerned that “the TPP was designed primarily by developed countries with their own concerns in mind” and that developing countries in the region may ultimately feel compelled to join it. These critics worry that ‘mega-regionals’ such as the TPP will undermine the multilateral trading system embodied in the World Trade Organization (WTO), in which developing countries have a greater voice.

My Article The Club Approach to Multilateral Trade Lawmaking provides important context for these debate. It shows that the developed countries used to be able to write the “rules of the road” within the multilateral trading system by adopting a ‘club approach’ to trade lawmaking. The club approach allowed the major trading powers to manipulate the circle of participants in trade negotiations depending on how these powers weighed the costs and benefits of the participation of additional states. The Article identifies three factors that led the major trading nations to adopt this approach: (1) the greater practicality of negotiations among a smaller group of countries, (2) the insiders’ greater influence on the outcome of the negotiations, and (3) the chance to subsequently compel outsiders to join the agreement on the insiders’ terms.

The article then shows that the establishment of the WTO in the mid-1990s has made the use of the club approach within the multilateral trading system much more difficult, if not impracticable. Realizing that they were no longer able to write the ‘rules of the road’ within the WTO, the developed countries instead started to form clubs outside the multilateral trading system, a strategy that is now culminating in the conclusion of mega-regional agreements such as the TPP. The major trading powers have begun to form clubs outside of the multilateral system for the same reasons that motivated them to employ the club approach within the multilateral system in the past: it is more practicable than negotiating with a larger group of countries, gives them greater influence over the outcome, and potentially provides them with leverage to compel outsiders to join the agreement on the insiders’ terms. While the TPP may appear unprecedented, it is simply a continuation, in a new forum, of the club approach to lawmaking that has been the hallmark of the international trade regime since the end of World War II.

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