Joel P. Trachtman

The Economic Structure of International Law

* Preface * Introduction * Jurisdiction * Customary International Law * Treaty * International Organization * Inter-Functional Linkage and Fragmentation * International Adjudication * Afterword * Notes * Index

Domestic regulation and service trade liberalization

International barriers to services trade are deeply intertwined with national regulatory, investment, and immigration policies. Accordingly, the liberalization of trade in services is considerably more complex that the liberalization of trade in goods. Sector-specific issues abound. This book sheds much light on the challenges facing the trading community in this area, through essays from a distinguished group of authors. Services liberalization has been, and will continue to be the engine of trade liberalization, if that outcome is to occur at all. The book provides one of the best guides to services trade, and all its technicalities, ups and downs, and the future of the world trade order.

THE CUSTOMARY INTERNATIONAL LAW GAME

Customary international law (CIL) is under attack as behaviorally epiphenomenal and doctrinally incoherent. In this article, we reject both claims. To be sure, CIL is a feat of levitation; it rests not on a rock-solid natural law basis of divine principles, but on a fabric of rational acts, woven through a multiplicity of relations over time. And while there are limits on, and variations in, the effectiveness of CIL, we argue that there are circumstances where it may independently affect the behavior of states. There is no reason in theory, or in data adduced by others, to believe CIL to be generally epiphenomenal. Since certain components of CIL serve as the foundation of all international law, this article suggests the circumstances under which one would expect international law to affect state behavior.

Institutional Linkage: Transcending "Trade and . . . "

“Trade and … ” linkages arise when nontrade issues are linked to trade. Thus, if the United States declines to trade with Myanmar until it complies with certain human rights or democracy standards, this is a “trade and … ” linkage. All “trade and … ” linkages are constructed, in the sense that the decision to link trade to other issues is always a political decision and is not otherwise determined by the nature of things. Governments link trade concessions to the satisfaction of other, nontrade policy interests, either politically or legally, whenever they find such linkage useful to the achievement of their goals.

Ruling the World?: A Functional Approach to International Constitutionalization

The problem of international constitutionalism is the central challenge faced by international philosophers in the twenty-first century. Introduction This is a book about constitutional practice – and constitutional discourse – at transnational sites of governance. For some readers, this may seem an odd topic. As a historical matter, constitutional discourse has predominantly – but not exclusively – occurred in the domestic legal setting. However, as described in the essays in this volume, recent years have witnessed an intensification of constitutional discourse in many sites of transnational governance. In response, a rapidly growing body of scholarship explores the existence and implications of international constitutions. Drawing on insights from scholarship in international relations, international law, and global governance, the essays in this volume extend earlier efforts and describe, analyze, and advance international constitutional debates. To do so, these chapters examine the conceptual coherence and normative desirability of constitutional orders beyond the state and explore what is at stake in debates over global constitutionalism. This is a particularly auspicious time to undertake such a project. As discussed below, the enhanced salience of debates over constitutional orders beyond the state reflects, in part, larger trajectories in international relations, including the increased density and reach of international norms, the increasing importance of new legal actors in international legal processes, and the rise of new topics of international legal regulation – along with an increasing sense that some of these developments threaten elements of domestic constitutional structures.

Embedding mutual recognition at the WTO

Abstract Mutual recognition is a useful tool for international liberalization in particular contexts. However, it poses two important types of risk. First, it could jeopardize a satisfactory level of prudential regulation. In order to address these risks, mutual recognition should be limited to initiatives that can be supported by satisfactory essential harmonization that can protect a satisfactory level of prudential regulation. Second, mutual recognition could disadvantage poor states, either de jure through closed recognition among developed states or de facto through harmonization or equivalence conditions that are excessive, or excessively costly, for poor states. In order to address these risks, mutual recognition initiatives should be designed to be accessible to poor states.

Brazil - Measures Affecting Imports of Retreaded Tyres: A Balancing Act

This paper provides a legal-economic analysis of the Appellate Body decision in Brazil – Retreaded Tyres. We develop a simple economic model that we use to analyze the market structure and environmental externalities that were most relevant to this case. We start by analyzing Brazils policies in a model in which tyre retreading generates a positive production externality through the delay it provides society before a used tyre becomes a waste product with the potential to harm society through its adverse impact on human health and the environment. We examine the different welfare implications of (i) a production subsidy for retreading of once-used Brazilian tyres, (ii) a tariff on imports of retreaded tyres, and (iii) a ban on imports of retreaded tyres. While a production subsidy is the first-best instrument to address this type of externality, there are reasons to believe that it might be infeasible. The welfare implications of the other measures depend importantly on the magnitude of the positive production externality. From the lens provided by this economic analysis, we draw three primary insights. First, we identify the critical piece of empirical information that the Panel and Appellate Body require to make a rational judgment of the utility of the Brazilian policies contested in the dispute – i.e., the size of the underlying externality associated with retreading. Second, if the justification for the original import ban on retreaded tyres was based on the argument that it was a second-best Brazilian policy designed to combat a large externality, then Brazil’s failure to enforce a ban on used-tyre imports has the troubling result of eroding those potential welfare gains through a reduction in equilibrium production (and consumption) of Brazilian retreaded tyres. Third, the Brazilian policy which exempted from the ban retreaded imports from MERCOSUR partners also has the same troubling feature. The second and third points are congruent with the reasons for the Appellate Body’s determination that the Brazilian policy did not qualify under the chapeau of Article XX. We examine the WTO jurisprudence of Article XX(b), in order to compare the methodology developed under this jurisprudence to the type of examination of changes to total welfare from implementing one policy relative to a postulated alternative policy that most economists would follow. We find that the WTO jurisprudence in this area is internally incoherent, and also fails to evaluate the types of concerns that an economic welfare analysis would evaluate.

The World Trading System, the International Legal System and Multilevel Choice

This article develops a theory of multilevel choice of regulatory jurisdiction based on normative individualism, and suggests how certain features of the World Trade Organization (WTO) might be understood in terms of this theory. The WTO has some capacity for positive integration, as demonstrated in, for example, the harmonised minimum standards for intellectual property protection contained in the TRIPS agreement. Yet the WTO has generally not been used as a site for re-regulation in areas congruent with its de-regulation. However, in a limited way, and in particular contexts, it provides certain incentives for re-regulation at other sites. For example, both the SPS Agreement and the TBT Agreement encourage the formation of harmonised rules. These agreements require Member States to use international standards as a basis for their measures, with important exceptions.

Building the WTO Cathedral

The WTO law of remedies for violation appears incoherent. States that fail to comply with their obligations are subject to WTO-authorized retaliation. First, this retaliation takes the inefficient form of blocked trade by the complaining state. This remedy is unlikely to be useful to developing countries. Second, the amount of trade blocked by the violation is often used as the measure of authorized retaliation. This measure is not necessarily incentive compatible, as it is not necessarily linked to welfare. Thus, its use may result in inefficient breach, or inefficient compliance, with WTO law. Third, only states that engage in dispute resolution proceedings are authorized to retaliate, artificially reducing the possible incentives to comply. Fourth, authorization to retaliate is granted only prospectively, and there are generally no formal remedies for damages accruing before adjudication and the passage of permitted time for compliance. This also artificially reduces incentives to comply. This paper analyzes the rationale for, and structure of, welfare-based remedies that could form the basis for cash compensation in WTO law.

Continued suspense: EC–Hormones and WTO disciplines on discrimination and domestic regulation Appellate Body Reports: Canada/United States – Continued Suspension of Obligations in the EC – Hormones Dispute, WT/DS320/AB/R,WT/DS321/AB/R, adopted 14 November 2008

Based on the reasoning of the Appellate Body in Canada/United States – Continued Suspension of Obligations in the EC–Hormones Dispute (‘Continued Suspension’), this paper analyzes the distinction between the national-treatment obligation under Article III of GATT and the requirement under the Agreement on Sanitary and Phytosanitary (SPS) Measures that such measures be based on a risk assessment that takes into account available scientific evidence. The Appellate Bodys reasoning makes clear that the primary purpose of the SPS Agreement is to discipline discriminatory regulation, and not the level of protection. We argue that the case clarifies that de facto protection (market segmentation) created by an SPS measure must be motivated by demonstrating that the measure is addressing a market failure, as reflected in the existence of some scientific basis for a health or safety concern. The scientific-basis requirement is a means for determining the intent of an SPS measure. While this is a factor that is ostensibly not relevant in GATT national-treatment cases, the need for scientific justification is not a move away from a concern with preventing illegitimate discrimination against imported products.