Modern Free Trade Agreements From Law And Development Perspective - A Critical Appraisal

Abstract

The main purpose of this paper is to show that a variety of institutional models of capitalism does not necessarily stand in opposition to improved systems of cooperative economic governance and to the future development of the international trade regime. The goal of deeper integration at the regional level (for example, the European Union), at the transatlantic cooperation level (the most recent Transatlantic Trade and Investment Partnership initiative) and at the global level (the incomplete Doha development round) should not be a simplified process of just removing the remaining trade and non-trade barriers. The goal should be to secure more balanced, inclusive and sustainable development at the regional level, in the context of transatlantic cooperation and especially at the global level. In international trade talks, it is frequently underestimated that any kind of trade agreement, no matter how carefully crafted, creates strong distributional effects. In promoting trade agreements, mainly the positive effects and benefits are highlighted, while the negative effects and losses are mostly overlooked. As witnessed in recent decades, the trade agreements lack sufficient safeguards to compensate the industries, employees and local communities that lose their competitive edge. Subsequently, new rounds of trade talks at the global, transatlantic or regional levels start to lose their appeal in the eyes of large segments of workers, farmers, small entrepreneurs, consumers, environmental non-government organizations and others. The one-sided effects of trade liberalization in recent decades have frequently led to a concentration of economic benefits and technological advancements in the hands of a relatively small number of the most competitive regional areas. Many other regions, localities and large segments of society remain excluded from the benefits of deeper economic and legal integration.The difference between the post-war development of international legal trade regimes and the context of the most recent free trade initiatives is that the disparate effects of trade liberalization tend to also become more visible in the most advanced economies in the world, in the United States and the European Union. This trend requires rethinking of trade arrangements that would provide adequate instruments, tools and policies when needed for restructuring. Careful calibration of such instruments, tools and policies not to distort, but to strengthen international trade, is something that can be called a “Bretton-Woods compromise” for the 21st century. It could provide an international legal framework conducive to long-term sustainable development and more resilient in different types of international financial crises that may appear in the future. The most important challenge in the process of deepening and widening the economic and legal integration is how to disseminate economic, technological, financial and other benefits to the excluded regions and parts of the population. The prevailing notion that any deepening of economic integration may lead to the race to the bottom via undermining the existing economic and social security should be addressed by policymakers. Comprehensive efforts to disseminate the benefits as widely as possible should be applied at the local, national and international levels. In doing so, local communities should be encouraged to launch different development strategies suitable to their comparative advantages, their potential and their needs.