Role of rules and relations in global trade governance

Global Trade Governance, as embodied by the former General Agreement on Tariffs and Trade (GATT) and the present World Trade Organisation (WTO), is generally described as a rules-based system, wherein a framework of formal rules and procedures govern accession, negotiations and enforcement of agreements. Whilst acknowledging that an elaborate system of rules has indeed evolved that influences global trade negotiations, this paper proposes that a relations-based system of trade governance (centred on close communications in small group situations) is equally pertinent, and is influential to the GATT/WTO's operation. The author argues that the implicit relations-based nature of trade governance considerably shapes trade negotiations. Relations-based decision-making represents the alternative dimension of global trade governance, and is critical to the GATT/WTO rule-making, agenda-setting process. In defining and describing the key characteristics of rules-based and relations-based systems of governance and the distinctions between them, the author argues for a better understanding of global trade governance as a two-tiered governance system to enhance global trade and incomes.