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Under U.S. implementing legislation and recent court decisions the WTO agreements and rulings have neither direct nor even indirect effect within the U.S. legal system. Political-economic theory can explain this result and the paradox of Congressional support (even mandate) for the more legally binding WTO dispute settlement regime that emerged from the Uruguay Round appearing side-by-side with Congressional insistence on a firewall of separation between WTO law and the U.S. legal system. It can also explain the few exceptional cases - for example, the TRIPS and Government Procurement Agreements - in which the parties adopted a form of quasi-direct effect. The non-direct-effect result for the WTO as a whole (in both the U.S. and the EU) contrasts sharply with court-mandated direct effect for the EC Treaty in the EU - a result that transformed the EU into a law-based quasi-federation. But whereas the EU is an integral, constitutive regime, premised on member-state commitment to community-level welfare - a regime hospitable to direct effect - the WTO remains a bargained-for, reciprocal, largely non-constitutive regime, in which the absence of direct effect operates as a kind of safety value allowing parties to undertake more ambitious liberalization. For integrated, thickly interdependent communities like the EU the rule of hard law (direct effect) is appropriate. But for less integrated, more loosely interdependent communities, such as the global trading system - a soft law regime more reliant on executive branch commitment and good will for its effectiveness seems inevitable, at least for the near term and from a U.S. perspective. These themes are developed in the paper in three parts: the first addresses the U.S. law concerning direct and indirect effect for WTO agreements and rulings. The second develops a political-economic explanation for the absence of WTO direct and indirect effect in U.S. law. The third discusses the prospects for including direct or indirect effect for WTO agreements and rulings in a future multilateral agreement.

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World Trade Organization