The Transformation of the World Trading System through the 1994 Agreement Establishing the World Trade Organization

Abstract

How can governments be induced to use their foreign policy powers in a peaceful and welfare-increasing manner? Mankind has so far failed to find a convincing answer to this question and has paid dearly for this failure with centuries of war, welfare-reducing abuses of government powers and unnecessary poverty. There is also a long history of abuses of trade policy powers in a mutually impoverishing manner generating international conflicts and 'trade wars'. Due to inadequate constitutional safeguards, governments cannot pursue national economic welfare as their dominant trade policy objective. Since import restrictions operate by taxing domestic traders and consumers for the benefit of 'rent-seeking' producer interests, and often limit the freedoms and property rights of domestic citizens without effective parliamentary and judicial control, the lack of an effective 'foreign policy constitution' can undermine also the 'domestic policy constitution' and its general constitutional restraints on the taxing, regulatory and spending powers of governments. The regional EC integration law was uniquely successful in securing peace, economic welfare and individual liberty among the EC Member States through 'supranational' legal and institutional guarantees of rule of law, 'market freedoms', non-discriminatory competition and judicial protection of individual rights. But most governments seem to believe that the 'constitutional approach' of EC law cannot be extended to the foreign policy powers of the EC nor beyond the regional context of European integration.