By Gilbert R. Winham
From The Centre for International Studies
Abstract: In recent years negotiation practices in the GATT/WTO have become vastly more institutionalized, to the extent that a practitioner stated, “the Uruguay Round had effectively created a new international organization for its four-year life” (Oxley 1990). What accounts for this development in negotiation behaviour? In pursuing this question, analogies are made to the U.S. Congress, where institutions similar to those of the WTO (e.g., committees, committee chairs, and staffs) have long been part of the legislative process. An explanation of this development makes use of the theory of transactions costs, in which Ronald Coase and his later associates explained the existence of the firm in terms of its capacity to reduce economic transactions costs compared to other means of organizing production. This theory has been used to account for the development of institutions in Congress, and it provides a plausible explanation for institutionalization in the WTO. The role of organizational phenomena in multilateral trade negotiation should be taken into account by both practitioners and scholars.