Trade and... Problems, Cost-Benefit Analysis and Subsidiarity

Abstract

This article analyses the conflict between trade values and other values ('trade and ... problems'), such as environmental protection, labour rights or free competition, as It Is addressed by the principal legal devices available to address such conflicts ('trade-off devices') In the dispute resolution context In the European Union, the GATT/World Trade Organization system and In the United States federal system. These trade-off devices Include anti-discrimination rules, simple means-ends rationality tests, least trade restrictive alternative tests, proportionality tests, balancing tests and cost-benefit analysis. A separate cost-benefit analysis methodology Is developed to choose among these devices In particular circumstances. From the simple standpoint of maximization of the sum of benefits of trade and of regulation, cost-benefit analysis would, tautologically, be selected. However, full cost-benefit analysis is nowhere In use as a trade-off device. This paper begins to explain this apparent paradox by suggesting reasons, including administrative, distributive, moral and theoretical concerns, why this approach Is not applied. It then explores these reasons In order to evaluate retreats from full cost-benefit analysis to the trade-off devices actually in use. Finally, the author seeks to comprehend these trade-off devices as determinants of the allocation of regulatory jurisdiction between central and component governments: of