International Economic Regimes Research Articles

Global economic order and global economic governance

Abstract This issue of the Oxford Review of Economic Policy explores the origins of the US-led liberal multilateral economic order in the post-war world and the threats which that order now faces, drawing on contributions from two different groups of people—academic international relations (IR) scholars and international economists. This introductory essay attempts to weave the various strands of this intellectual collaboration together. First, it provides a narrative history of how economic collaboration emerged in the aftermath of the Second World War. Second, it describes the nature of the global economic governance that emerged and provides a new formal framework for analysing it, making use of the idea of ‘concerted unilateralism’. Third, it explores how contemporary challenges—a broadening of policy requirements, the rise of economic nationalism, and the rise of China as a new hegemon—mean that the global economic order is now in flux. And finally, it concludes with a general observation that runs through the paper: that IR scholars are inclined to analyse international economic regimes, economists to study particular policy proposals, and that these two perspectives can—and should—complement one another.

An illiberal economic order: commitment mechanisms become tools of authoritarian coercion

Globalization did not negate state power. It changed the toolkit. We expected the norms and incentives of the liberal economic order to push regimes in places like China and Russia to democratize. Instead, authoritarianism appears to be thriving. This article argues that authoritarians have learned how to take advantage of the institutions underpinning globalization for their own illiberal ends. They use courts in major economic powers to negate the effects of international institutions and to target their political competition. They subvert our expectations by repurposing the basic premises of liberalism – predictability and openness. The article demonstrates these claims by examining how the institutions of multiple international economic regimes, which were designed as constraints, have been turned into offensive tools. The findings illustrate that International Political Economy (IPE) scholars need to begin analyzing how governments learned these tactics and whether we can reconcile the contradictions they exploit.

For profit or strategic purpose? Chinese outbound energy investments and the international economic regime

Abstract Chinese foreign energy investments are facing increasing opposition based on concerns that they are made with an ulterior strategic motive. Some states have been seeking to block the access of Chinese companies to their market and, for existing investments, to international arbitration, by portraying them as instruments of the government. It is important for China’s participation in the international economic system that its energy companies are not automatically excluded because of suspicion of China’s motives, but are subject to a nuanced assessment in which national and international economic law has a role to play. To distinguish strategic from commercial projects, this article analyses the Chinese regulation of outbound energy investments based on international principles of economic governance. The objective is to identify channels of political interference with investment decisions, by focusing on regulatory approval, state guidance and corporate governance.

Special Economic Zones in International Economic Law: Towards Unilateral Economic Law

ABSTRACT The international economic regime has entered a new phase of reassertion of sovereignty by States. While States continue to show respect for the values of international (economic) law, the institutionalization of these values has devolved from the international (to the regional) to the domestic level of governance. A new form of ‘unilateral economic law’ is thus gaining importance in the development of international and domestic laws and institutions. However, it remains largely understudied. This article discusses the development and proliferation as well as the importance of special economic zones as a new form of unilateral economic law in the overall system of international economic law. This article identifies four types of economic unilateralism: classical unilateralism, embedded unilateralism, sustainability unilateralism, and national security unilateralism. The new special economic zone unilateralism represents a middle ground between the two extremes of unilateral liberalization and aggressive unilateralism. Accordingly, special economic zone unilateralism introduces a new layer in the overall system of international economic law. First, special economic zones embody a new compromise between the State and the market. The State-controlled promotion of trade and investment taking place through special economic zones represents a complex compromise between the liberalization and protection of economic sovereignty. Second, the spatiality of trade and investment promotion through special economic zones is different from that of international economic law. The liberalization of trade and investment does not take place for the whole country but for an isolated jurisdiction within the broader national jurisdiction, while the focus is on the supply side rather than the traditional input factors of production. Overall, the new special economic zone unilateralism provides insights into the future of international economic law as envisaged by States. Special economic zones have been employed by States both as an alternative and as a complement to trade and investment promotion through the instruments of international economic law.

Сервитизация промышленности: новая реальность

A significant increase in the use of services is observed for some industries in GVCs (Global Value Chains). The paper has shed light on important dimension of the servitization which is the sale and export of services by manufacturing firms, often bundled together with goods. Firm-level data confirm that many firms are involved both in the production of goods and services and that there are complementarities between these activities. Not only manufacturing firms are involved in the distribution, transport and logistics services needed for their international operations in GVCs but also, they provide installation, maintenance, repair services as well as a variety of other business support and complementary services that increase value for their customers. The servitization has important policy implications, particularly when taking into account the fact that trade in services is generally more restricted than trade in goods. As the lines between goods and services are blurred, economic policy today might be more challenging than in the past, particularly for companies moving to new business models that imply more interactions with customers and a more intensive use of digital technologies. Services themselves are split into different modes of supply for which there are different levels of economic policy. A closer look at the mechanisms of value creation in the case of services suggests that there are still the needs of new economic policy addressed at business models described as value networks or value shops. As technologies become more disruptive and more companies move to ‘servicified’ GVCs, the need for a more consistent international economic policy regime, particularly at the multilateral level, will become more urgent.

Consistent and Recurring Use of External Legal! Norms: Examining Normative Integration of the FCTC post-Australia – Tobacco Plain Packaging

The Framework Convention on Tobacco Control (FCTC) has emerged as international consensus concerning legally binding trade measures related to tobacco products. Nevertheless, the tobacco industry along with various WTO Member States have regularly argued that certain FCTC compliant measures conflict with various obligations arising from the WTO and international investment agreements. Normative conflicts between the FCTC and international economic law crystalize at the dispute resolution stage. This article analyses WTO and investor state dispute settlement (ISDS) disputes concerning tobacco control measures (TCMs), including Australia – Tobacco Plain Packaging, and shows consistent, recurring, and increasing use of the FCTC by tribunals who reliably uphold non-discriminatory TCMs on public health grounds. Despite a general hesitancy to formally integrate external legal norms in international legal systems, this article posits that the regularity of reliance on the FCTC, not only for evidentiary issues, but also for substantive legal analysis, evidences normative integration of the FCTC in international economic legal regimes. In line with the principle of systemic integration, international tribunals should consider the FCTC not only as factual reference, but also as legal norms when relevant.

ЗАСТОЙ В ВТО КАК ПРОЯВЛЕНИЕ КРИЗИСА ГЛОБАЛИЗАЦИИ

The present crisis of globalization, which has found one of its manifestations in the crisis of the multilateral trading system, is a growth crisis that arose during the restructuring of the international economic regime. The need for such restructuring is due to the development of transnational production, the deepening of economic interdependence and the weakening of the US as the leader of the world economy. The international economic regime is understood as a system of rules for international economic interaction, including both these rules themselves and the mechanisms that ensure their establishment and implementation. The theory of hegemonic stability, which explained the development of the international economic regime in the past century, in the present century gives way to the theory of interdependence, especially complex interdependence. China will not replace the United States as a guarantor of the stability of the international economic system, not because it is not ready or not capable, but because the new economy needs a new regime that meets the needs of the global market. The US is withdrawing from the role of the guarantor of stability not only because they feel weak relative to their competitors but also because no country is able to play this role in the conditions of growing globalization. As interdependence deepens the stability of the international economic regime will increasingly rely on a system of global governance. The main elements of this system that emerged at the previous stage will undergo changes which are already partly occurring in the IMF, the World Bank and the global financial architecture as a whole. The WTO also needs to be reformed. The most obvious steps of WTO transformation include abandoning the consensus and single undertaking principles in decision-making, enhancing the role of plurilateral agreements, revising the special and differential treatment provisions, expanding the scope of issues beyond traditional trade, harmonizing between the WTO legal system and new norms introduced by mega-regional agreements. The growing complexity of interdependence increases the need for coordination not only between countries, but also between major interest groups, as well as elements of the system of global governance. It seems appropriate to ensure a coherent and coordinated process of transformation of the WTO, the IMF and other parts of the system of global governance. There is a demand for transparent mechanisms that allow to represent interests of transnational businesses, wage earners, consumers and representatives of other participants of the social contract that is to be transformed with the growth of globalization.

The Belt and Road Initiative (BRI) in the context of China’s opening-up policy

ABSTRACT[Background]: China’s economy currently shifts its development pattern from investment/export-led to consumption/domestic demand-led growth. In a new stage of domestic-oriented development, what role is expected of China’s opening-up policy? It is no longer just a means to obtain foreign currency and technology but for China as an economic superpower to enhance its role in global governance. The Belt and Road Initiative (BRI) proposed by General Secretary Xi Jinping in 2013 is regarded as a new grand strategy in a new stage of China’s opening-up policy. [Purpose]: This article attempts to position the BRI in China’s opening-up policy focusing on its growing role in global governance of major international economic regimes. [Main Argument]: This article consists of three parts. The first part deals with China’s responses to major international economic regimes. The second part considers the purpose and development of the BRI from a viewpoint of China’s opening-up policy. The third part investigates into China’s development aid/finance in the BRI as a case study of its attitude toward an international regime of this kind. [Conclusions]: As far as the development aid/finance in the BRI is concerned, China’s behavior to form an economic area led by it is a new challenge to existing international economic regimes. As the largest beneficiary of free trade system, however, China does not seek for fundamental restructuring of current international economic regimes. It must be the most favorable scenario for China to taste the fruits of free trade system and to form its dominant economic area in the backyard.

The Future of International Economic Law

This book comprises fifteen specially commissioned contributions from the Editorial Board of the Oxford Journal of International Economic Law in celebration of the Journal's tenth anniversary. The contributions examine various issues confronting the international economic regime today, and cover a wide range of international economic institutions such as the IMF, the World Bank, and the WTO. It pays particular attention to examining the WTO and its regulatory scope, its systemic and structural deficiencies, its role in development and in liberalising trade in services, its tense relationship to regionalism and to trade-related issues such as environment, competition and dispute settlement in the field of investment. The contributions are authored by leading academics in the field, including lawyers, economists, and political scientists who come from a range of developed and developing country backgrounds. This book constitutes a reflection by important individuals on almost all the major contemporary issues facing the WTO today, and therefore represents a snapshot of the key lines of thinking among many of the leading legal scholars of the WTO and international economic regime which are likely to guide the field in the years to come. This is a book edition of the special 10th anniversary third issue of vol. 10 of the Oxford Journal of International Economic Law September 2007 Contributors to this volume - William J. Davey, University of Illinois College of Law Hector R. Torres, Alternate Executive Director, IMF, Washington DC Frank J. Garcia, Boston College Law School Debra P. Steger, University of Ottawa Thomas Cottier, World Trade Institute, Berne Daniel C. Esty, Yale Law School Ernst-Ulrich Petersmann, European University Institute, Italy Seung Wha Chang, Seoul National University, Korea Frederick M. Abbott, Florida State University College of Law Matthew Schaefer, University of Nebraska Gary Hufbauer, Peter G. Peterson Institute for International Economics, USA Sherry Stephenson, Acting Director of the Institute of Trade, Tourism, and Competitiveness, OAS Joel P. Trachtman, The Fletcher School of Law and Diplomacy at Tufts University, USA Andrew Green, University of Toronto, Faculty of Law Michael Trebilcock, University Professor, Faculty of Law, University of Toronto Steven Charnovitz, George Washington University Law School David J. Gerber, Chicago-Kent College of Law Won-Mog Choi, Ewha Womans University, Korea

Trade, Investment and Climate Change: How International Economic Disputes in Renewable Energy are Shaping New Norms of Regime Interaction

This paper analyzes renewable energy-related international economic disputes – both at the World Trade Organization (WTO) and investor-State dispute settlement (ISDS) before an arbitral tribunal as provided under investment treaties – to establish how their adjudication is redefining the norms of interaction between the international legal regimes for trade, investment and climate change. First, it will highlight how dispute settlement in international economic law is sensitive to the current realities of climate change and driving countries to secure greater regulatory space for renewable energy under newly negotiated trade and investment agreements. Second, it will analyze how changing geopolitical relations in the international economic regime are shaping shifts in the concept of differentiation under the climate regime. It uses the illustrative example of India, which increasingly finds itself at the crossroads of trade, investment and climate change, to argue that the blurring of lines between developed and developing countries’ measures in the renewable energy sector, as witnessed through renewable energy-related trade and investment disputes, have had an effect in diluting the concept of differentiation within the climate regime.

International Cooperation: The Scope and Challenges of International Environmental Agreements

The present study explores the complex system of international relations in the promotion of international cooperation when addressing environmental problems. The global environmental challenges call for the immediate action of the international actors. The evolution of environmental diplomacy and the multitude of international environmental Conferences and the agreements adopted prove, on the one hand, the emergence of a field of international environmental governance, which is not yet clearly defined, and, on the other hand, the turn of Humanity towards the principles of sustainable development, with the simultaneous respect of its three pillars, the environmental, the societal and the economic ones. Despite, however, the increase in international environmental institutions, in the targets set, and in the legal documents, i.e. the international environmental agreements, the results of this proliferation are not always positive. The enforcement of these accords remains a riddle to solve. Policy instruments can play an important role in initiating incentives and ensuring more successful outcomes of compliance. The international economic regimes and the non-state actors can also contribute in enhancing international environmental cooperation.

Collective economic diplomacy of global south: India's role

After Second World War the international economic regimes and institutions were dominated by northern developed countries. Since the first decades of independence itself, India has questioned this inequality and argued for New International Economic Order. But power asymmetry between north and south made voice of developing countries far from heard. After end of the Cold War, international order changed and new economic powers from the Global South emerged as a challenge to the dominance of the developed countries. New international organisations like BRICS became a platform for coordinating the agenda of the emerging developing countries in international platforms like WTO. Out of BRICS countries, India has unique feature of rapid economic growth and the experience of many decades of the active leadership role among developing countries. India tries to increase its influence among other developing countries through financial aid and other ways. Major concern is after become members of G-20, whether these developing countries still stand for the developing countries or would join with side of developed countries as a discriminator and it would create a new south within Global South.

Konkurenceschopnost národních ekonomik - kritická reflexe konceptu

This article is a contribution to the discussion of national competitiveness as a concept for analysis of international economic relations. The main goal is the critical reflection of the concept. We consider the Paul Krugman's and Richard Baldwin's remarks regarding the problems associated with using competitiveness as an analytical concept still valid when restrained to the domain of neoclassical economics. Moreover - even though the competitiveness is widely accepted as an analytical concept - we believe a number of problems associated with its current use exist (both in theory and in process of policy formations). Mainly, there is confusion between the micro and macro-economic understanding of concept which stems from confusion between individual and national/territorial level of analysis. We also believe that even if new trade theory (increasing returns and strategic trade) is taken into account, it is quite problematic to formulate policy recommendation for structural and industrial policy on its grounds. When the assumptions of neoclassical economics are loosened, the concept of competitiveness might prove valid. Finally we stress than even if this is the case the sensitiveness of the most of recommendations for competitiveness promotion to retaliation and potential damage resulting to international economic regime from its enforcement is rather high.

‘Development-Orientated Perspectives on Global Trade Governance: A Summary of Proposals for Making Global Trade Governance Work for Development‘

This working paper draws together the priorities and proposals set forth in the book 'Making Global Trade Governance Work for Development', and places them in the context of current policy debates and the scholarly literature.The book's overarching argument is that the way global trade is governed can facilitate or hinder the prospects for reaching rules and arrangements that benefit developing countries. Yet, to date, the visibility of development perspectives in the scholarly debates on global trade governance has been weak. Together, the contributors to this book provide concrete guidance on what a development agenda for global trade governance might include. They both reinforce and supplement development - oriented proposals already on the table. For the purpose of this book, governance is broadly defined to include the suite of processes, principles, and norms as well as the institutional architecture through which rules and practices for managing global trade are made, implemented and enforced.The paper begins with a review of the policy context for discussion of global trade governance and institutional reform of the WTO and the rise of debates on development and trade governance. It then outlines the scope of the broader literature on global trade governance and WTO reform, of which the development dimension is one part. It also reviews the main contours of debate on trade and development, noting that these debates have a considerable impact on the thrust of development agendas for trade governance reform. The heart of the paper draws together development-oriented proposals from across the book, showing where and how they build on or diverge from existing proposals. It highlights four thematic areas where clear development priorities and proposals for improved global trade governance exist.The first theme places global trade governance in the context of global economic governance more broadly. It draws attention to the many components of trade governance, highlighting a range of relevant multilateral, bilateral and regional arrangements, as well as the relevance to trade governance of the many international economic, social and environmental regimes that impact development.The second theme addresses expectations about roles and responsibilities of developing countries in trade governance, the diversity of developing country priorities and strategies, their efforts to organize themselves collectively, and their relationships with national stakeholders at. The third theme identifies proposals for strengthening multilateralism in global trade and WTO reforms that would benefit developing countries. In light of the practical challenges of integrating development priorities into WTO negotiations and the subsequent implementation process, proposals in this area relate to the goals and principles underpinning the WTO, the scope of the WTO agenda, its functions (such as dispute settlement, monitoring, and capacity building, among others) and the role of the Secretariat.A fourth theme is devoted to proposals for improving the fairness of processes of trade negotiations at the bilateral, regional and multilateral level. The chapter concludes with the question of political strategy for making global trade governance work for development.

The Failure of the International Trade Organization (ITO): A Policy Entrepreneurship Perspective

The paper aims to look at the developments that led to the demise of the ITO initiative in the years immediately after World War II. At the heart of the paper is the critical appraisal of the ITO episode from the policy entrepreneurship perspective. We identify six policy entrepreneurship functions that are necessary for the creation of the effective international economic governance structure and liberal international trade regime, and that have to tackle the issues of ideational consensus building, management of policy negotiations (by means of leadership and coordination), construction of appropriate and suitable negotiation proposals, attainment of ongoing political support of initiatives, and making policy formulation process commensurate with a broader economic and political context. It is shown that the failure of the ITO is attributed to inadequate exercise of policy entrepreneurship.

When do NGOs Matter? Activist Organisations as a Source of Change in the International Debt Regime

Who drives change in international economic regimes? While mainstream International Political Economy scholarship has traditionally focused on the major players within states and markets as the key sources of political and economic change, recent studies have sought to highlight the important role that is also played by a wider range of social actors. A common point of reference here is the activities undertaken by non-governmental organisations (NGOs), with the campaign to put debt relief for heavily indebted poor countries on the global agenda being often cited as the exemplar of a civil society success story. This article explores the mechanisms through which the international sovereign debt regime for the world's poorest and most indebted economies has changed over the last 15 years, with increasing acceptance that large-scale debt relief was appropriate for a select group of countries leading to the establishment of the heavily indebted poor countries (HIPC) Initiative in 1996 and the Enhanced HIPC Initiative in 1999. Through tracing how international NGOs were able to shape the reform agenda with respect to the international sovereign debt regime for low-income countries, the article seeks to enhance our understanding of when, why, and how NGOs can potentially act as an important source of change in international economic regimes.

Susanne Soederberg, <em>Global Governance in Question: Empire, Class and the New Common Sense in Managing North South Relations. </em> Winnipeg and London: Arbeiter Ring Publishing and Pluto Press, 2006, 206 pp., $24.95 paper.

<p>Academics and activists who have followed the discussions of globalization in the World Social Forum literature and in progressive publications will readily agree with Soederberg that globalization does not simply signify an “inevitable and unstoppable” (26) process. In focusing on the concept of global governance, she contributes to the critical problematization of an international economic regime which all too frequently is treated as benevolent in its consequences and independent of politics. Soederberg strongly resists mythological descriptions of global (and regional) financial and other economic regimes, by pursuing an historical - materialist analysis of the emergence of the relevant organizations and institutions, always identifying the role of power, political influence and political planning in their construction. She nimbly walks the reader through a plethora of institutions which even the informed lay-person and political activist will not know how to distinguish. She obviously possesses enormous knowledge of their workings and their history. In this sense this is a very useful book to read, particularly for those who are not specialists in the fields of international relations, Third World development or the politics of international financial institutions.</p>

The Canada‐US border and culture: How to ensure Canadian cultural sovereignty

Present means of communication, emerging technologies, and the specifics of cultural goods and services tend to confer on the Canada‐US border a virtual character. Such technological developments, increasing economic continentalism, and the application of existing international trade rules, all combine to make more problematic the preservation of a distinctive Canadian culture. What is at stake is the maintenance of a distinctive political community on the North American continent. A fundamental challenge is to preserve Canadian cultural sovereignty, understood as the ability to promote cultural industries. An exemption of culture from the purview of the North American free trade regime has proved inadequate. Canada is ever more dependent on the United States which has used its leverage to oppose cultural policies. American interests have also been reflected in multilateral trade provisions that do not allow for exceptions in favour of national cultural policies. Rather than the exclusion of culture from international economic regimes, what are required are compromises that would ensure the conditions for effective cultural policies. The instruments of Canada's cultural policy may have to be revised accordingly. As the cultural community has tended to be inward looking and to disregard the overall imperatives of Canadian foreign policy, a further challenge in terms of policy setting is to ensure a better coordination of the views of the cultural and diplomatic communities.

Problematic Lucidity: Stephen Krasner's “State Power and the Structure of International Trade”

Stephen D. Krasner's article in this journal in 1976, “State Power and the Structure of International Trade,” defined the agenda for years of scholarship by being both lucid and problematic. Krasner presented a clear puzzle but manifestly failed adequately to answer the questions that he raised. His key proposition, that strong international economic regimes depend on hegemonic power, was supported by only half of the six cases that he discussed. Yet the cogency of Krasner's formulation of the argument, and the pungency of his rhetoric, led “State Power” to serve as a focal point in a coordination game among three major constituencies in the international political economy field. Liberal transnationalists, statist realists, and their audiences all benefited from Krasner's lucid specification of the issues. As a result of research prompted by Krasner's article, we understand the relationship between international political structure and economic openness much better than we did before it appeared.

Books in review

Discovering the Americas: The Evolution of Canadian Foreign Policy By James Rochlin University of British Columbia Press, 1993, 300 pp. Canadian Foreign Policy and International Economic Regimes Edited by Mark Zacher and Claire Cutler University of British Columbia Press, 1992, 360 pp.