The Elusive Pursuit of a Transnational Legal Order
Chapter 6: Self-spite in the Regulation of International Trade
In Chapter 3, we saw that states are in general reluctant to submit themselves to a system of compulsory dispute resolution between one another. For powerful states, there is little to be gained: a third party adjudicatory regime can never achieve as attractive an outcome as unilateral exercise of that state’s military or economic power. For all states, there may be value in the political theatre of such a court: but where strong state interests are involved, states will inevitably ignore rulings that go against them. There is simply too much at stake in one’s domestic politics to abide by the rulings of a court that has no effective sanction for non-compliance. Thus international courts are weak, and optional. In this chapter, we address an apparent counterexample to this logic. Apart from being a forum for trade negotiations, the World Trade Organisation is primarily an international court, to which all 153 of its members are required to submit. It exists to resolve disputes between sovereigns relating to government regulation of international trade. Given our analysis so far, why do states agree to such a regime? The answer is that the system is not what it appears. To understand how international trade became the subject of legal regulation, a short detour into the economic history of the subject is appropriate. THE POLITICAL ECONOMY OF INTERNATIONAL TRADE Mercantilism, an economic theory that emphasises the importance of exports over imports, and the value of trade surpluses, was prevalent in Europe through to the...
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