The Use of Economics in International Trade and Investment Disputes: A Coherent Way Forward

Abstract

In this paper we assess the quality and coherence of the use of economics in dispute settlement in two fields of international economic law: international trade and international investment law. We argue that four economic concepts are frequently used and/or of critical importance for both international trade and investment law. Those concepts are the concepts of “likeness”/”like circumstances”, causality, “necessity” and damage calculation. We highlight differences in the way in which economics has been applied to assess these concepts and argue that coherence in the use of economics can be increased by reassessing the way in which economics is brought into submissions by parties and the processes that are relevant for adjudicators when interpreting economic evidence. We argue that a common set of guidelines for submitting quantitative evidence in WTO or investor-state dispute settlement proceedings can contribute greatly to setting quality standards and to creating trust as to the reliability and acceptability of economic evidence submitted to adjudicators. In an appendix to this paper we make suggestions as to what such guidelines could look like. 1 This paper was partly authored with support from the project ‘Dispute Settlement in Trade: Training in Law and Economics’ ( www.dissettle.org ), a Marie Curie Initial Training Network funded under the EU Seventh Framework Programme (Grant Agreement No FP7-PEOPLE-2010-ITN_264633). The paper draws heavily on the contributions to the forthcoming volume Jansen, Pauwelyn and Carpenter (Eds.): “The Use of Economics in International Trade and Investment Disputes”, Cambridge University press, and all the contributors to that volume are herewith thanked. The authors would also like to thank Manuel Sanchez Miranda for editorial assistance. All errors and omissions remain the authors’ and views expressed are personal and do not reflect the views of the institutions they are affiliated to. 2