International Handbook on Informal Governance
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International Handbook on Informal Governance

Edited by Thomas Christiansen and Christine Neuhold

Acknowledging that governance relies not only on formal rules and institutions but to a significant degree also on informal practices and arrangements, this unique Handbook examines and analyses a wide variety of theoretical, conceptual and normative perspectives on informal governance.
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Chapter 14: Evolving Trade Governance on the Formal–Informal Spectrum: The Case of the World Trade Organization

Amrita Narlikar


14 Evolving trade governance on the formal– informal spectrum: the case of the World Trade Organization Amrita Narlikar INTRODUCTION Formalization of global governance takes many forms, but one of the strongest indicators of formality in governance is legalization. Legalization is defined as ‘a specific set of dimensions along which institutions vary . . . the degree to which rules are obligatory, the precision of those rules, and the delegation of some functions of interpretation, monitoring, and implementation to a third party’ (Goldstein et al. 2001, p. 34). Of all the institutions of global governance, the World Trade Organization (WTO) perhaps shows the highest level of legalization. Its rules are precise, and its members are obliged to adhere to their obligations or risk costly penalties. Particularly in the area of dispute settlement, we see a high level of delegation; indeed, when the WTO was created in 1995, it also inaugurated one of the most powerful dispute settlement mechanisms that the world of international governance has witnessed in terms of its automaticity and enforceability. Add to this the additional functions delegated to the WTO’s Secretariat, such as the conduct of trade policy reviews to which all members of the organization are subject (in contrast to the conditionalities of the Bretton Woods institutions that affect only borrower nations), and the formalization of multilateral trade governance in its deepest form – legalization – is clear. Interestingly, this formalization is underpinned by a strong and wellentrenched tradition of informal governance, which derives from the WTO’s roots in the General Agreement...

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