Summary International Economic Law as taught in LL278 Public International Law at LSE
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Course
(LL278)
Institution
London School Of Economics (LSE)
The pack includes a comprehensive overview of the International Economic Law topic. It includes lecture notes, core and further reading notes as well as a model answer to a past paper question. It includes economic globalisation as well as the creation of the WTO from the GATT and how this effected...
What is economic globalisation?
Globalisation is about how things are made in complex ways
Idea of comparative advantage sparked globalisation ie you
make what you make best and I make what I make best and
we trade through that – better to think about how trade can
be beneficial for all (specialisation in domestic activity, as
opposed to dominating in all activity)
Orford criticises this history;
- She argues that all economic theory has a theory itself
- Post WW2 many countries require significant bonds to
reconstruct as well as decolonisation; at the same time in
US there is a dominant theory of ‘modernisation’ that you
can transplant a recipe to all parts of the world
- Lots of rules developing in aid of liberalisation, greater
ease of trade, but what does this mean for countries trying
to get to that place to actually trade – goes against
modernisation as not all countries start from the same
place
- Its not just about specialising but about what to do when
countries don’t have capital, technology and such to
specialise in the first place
Reaction to modernisation theory?
- Walt Rostow on transplanting modernisation recipe – ‘the
tricks of growth are not that difficult’
- But this is not the case; eg colonies are primarily focused
on exporting goods, as opposed to specialising and getting
benefits of primary processing
- NIEC was a call for global south to develop a doctrine of
permanent sovereignty of natural resources; NIEC is a call
for developing countries to regain control over their own
resources and decide direction of their trade (Anghie –
While the West asserted colonialism in the past, the West
relied on these relationships of power and inequality to
maintain economic and political superiority, then
attempted to entrench this through ostensible neutral
international law)
So there is a dominant voice (coming from US) saying ‘just
grow the pie, it will benefit everyone’ and then an underlying
political tension on what it actually means for all
Economic interdependence is great, logical and can help
create complex products, however can also be weaponised
(Henry Farrell and Newman say because countries are so
interdependent, supply chains and economies can be
weaponised)
,End of globalisation?
If governments are so worried that there supply chains
are not resilient, is economic globalisation coming to
an end?
WTO:
Creation of the WTO –
General Agreement on Tariffs and Trade was a provisional
agreement
- Post WW2 UK, USA and Commonwealth countries met to
discuss International Trade Organisation but it never
came to fruition (because of USA)
- So GATT became the WTO (even though it was only meant
to be provisional)
- They agreed that every few years the countries would
meet and tariffs would be ratcheted down over years of
meetings and discussing (different rounds)
- Focused on tariffs to begin with and expanded this out
Central idea is Multilateralism; coordinating relationships
between states on generalised principles – ie for global
economy to work, governments have to agree to same rules
Marrakesh Agreement (WTO) signed 1994 in line with new
functions of WTO
Introduction to Core GATT Principles –
Rules of non-discrimination (principle norms of WTO)
- MFN treatment obligation – (Article I:1) – logic behind this
is equality of competitive opportunities for like imported
products from all members
- National treatment obligation (Article III)
Rules on unfair trade
Rules on conflict between trade liberalisation and other
societal values and interests (exceptions):
- Main exception is Article 20 – but application of measures
must not constitute a means of arbitrary or unjustifiable
discrimination or a disguised restriction on international
trade
- Article XXI Security Exceptions
Institutional and procedural rules (decision-making, trade
policy review, dispute settlement)
Rules on market access
- Rules on tariff barriers
- Rules on non-tariff barriers
, - Market access is how you control what comes into your
border: How WTO does this is same as GATT – all goods
are scheduled and bound and governments must comply
with tariff bindings and cannot go above this
- Basic rule governing tariff negotiations (every single good,
pens, shirts, cheese) is done through MFN treatment
obligation of GATT article 1 meaning reciprocity and
mutual advantage – you treat your trade partner as if they
were your most favourite
- GATT imposes a general prohibition on quantitative import
and export restrictions – accept trade restrictions but
done through tariffs as they can be negotiated
- Developing economies wanted to be able to impose
quantitative restrictions; Western world developed
through use of such restrictions as if you don’t allow
certain goods to come in you can foster domestic
industries
- Effects of tariffs: consumer pays more, domestic markets
produces more and government gets a revenue
Certain rules accord for developing countries to have
specialised and differentiated treatment:
- Debate atm about what a developing country is (US vs
China)
Creating the WTO
GATT 1947 replaced by WTO 1994
Consensus decision-making is central to WTO:
- Unless a member explicitly objects, the decision is taken
- NO voting needs to take place
- John Jackson 1998: The practice…. Is that some countries
that have difficulty with a particular decision will
nevertheless remain silent out of deference to countries
with a substantially higher stake in pragmatic economic
consequences of a decision
- Ohara: Explains how developing countries wanted votes as
they would’ve outnumbered the global north in some
decisions, so consensus was developed to avoid this
- A lot of WTO is about making rules, addressing concerns
of quitter voices (interstate institution) and creating a
forum for all governments to be heard
Dispute settlement system of WTO:
- If, in committees, a resolution to any conflict cannot be
found, any government may bring a complaint to WTO
- In GATT, disputes were resolved by votes
GATT to WTO Dispute Settlement:
WTO dispute settlement system is more successful than GATT
because it creates a specific understanding, automatic
compulsory interstate jurisdiction and adjudication, articles,
, unlike GATT which was very generic
Before WTO system it was very adhoc; now has more clearly
defined processes, strict time limits, stronger enforcement
capacity
Under the GATT if one government disagreed, the report
would never come into fruition for the whole; so losing party
would never agree to GATT panel report but under WTO
system this is not the case; it is accepted by dispute
settlement body unless there is consensus among members
not to take relevant decisions (reverse consensus)
Object and purpose of WTO dispute settlement system:
- DSU Article 3.2 – ‘providing security and predictability to
the multilateral trading system’ ‘ preserve the rights and
obligations of members under covered agreements’
‘clarify existing provisions in accordance with customary
rules of interpretation of public international law’ (USA
say they do much more than clarify and actually interpret
and make law)
Institutions:
Dispute Settlement Body
- Membership
- Adopt reports
WTO dispute settlement panels
- Composed of 3 trade experts
- First instance ad hoc tribunals
Appellate body
- Permanent appeals tribunal of 7 judges
- Appellate review of issues of law
Steps of dispute settlement process:
1) Consultations
2) Panel proceedings
3) Appellate Body Proceedings (unavailable)
4) Implementation and enforcement
- All steps and rules have deadlines eg initial report meant
to be made in 3 months
- You have to have a specifically identifiable measure that is
the issue at hand (DSU Article 6.2)
- Interpretation: DSU Article 3.2 and Article 31(3)(c) Vienna
convention ‘relevant rules of international law applicable
in the relations between parties shall be taken into
account
- Eg US – Shrimp WTO 1998 – had to interpret ‘exhaustible
natural resources’ and ‘sustainable development’;
Appellate Body relied on different international law, using
other areas of international law to interpret WTO law
within the agreements, but that is distinct from ability to
bring a claim based on non WTO law
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