Lex Mercatoria



  toc   scroll    txt   pdf   pdf    odt    A-Z  Document Manifest   home 
<< previous TOC next >>
< ^ >

The "Transnational" Political Economy:

A Framework for Analysis.[*]

Jarrod Wiener, University of Kent at Canterbury[**]


Private International Trade Law:

The Positivist Perspective.

The Autonomist Perspective.

The Sources of the Lex Mercatoria: "Lex", or "Principa".

Applicability and Coercive Force.

"Delocalised International Commercial Arbitration":

Preliminary Observations:

Public International Trade Law.

Normative, Structural Imperatives of the Transnational Political Economy.

Conclusion: The Agenda for Research:




Sovereignty, Authority, and Governance:





SiSU Metadata, document information


SiSU Manifest, alternative outputs etc.

The "Transnational" Political Economy: - A Framework for Analysis.

Jarrod Wiener

copy @ Lex Mercatoria

The "Transnational" Political Economy:

A Framework for Analysis.[*]

Jarrod Wiener, University of Kent at Canterbury[**]

Public International Trade Law.

Parallel with the processes of harmonisation at the level of private international law is a similar process at the level of public international commercial law, which is being driven by states.

In response to the policy errors of the interwar period, the GATT was established in 1947 with the principal aim of liberalising world trade by reducing the level of tariff barriers and eliminating quantitative restrictions.  75  The 1930s had seen a period of competitive tariff increases, particularly between the United States and the British Commonwealth. The US Smoot-Hawley Act of 1930, though not the most protectionist of the US trade acts, followed the Wall Street crash of 1929 at a time of great economic uncertainty, and indicated that the United States would safeguard its own interests above those of the system as a whole. A result of log- rolling the US Congress, the Smoot-Hawley Act showed that US legislators would be sympathetic to domestic producers by safeguarding the home market for their goods by erecting tariff walls to imports.  76  Britain and the Commonwealth countries responded to this in 1932 at the Ottawa Conference by implementing the Commonwealth System of Imperial Preferences, which built a preferential tariff zone which excluded the United States. This contributed to a sharp decline in the US share of international trade from 13.8% in 1929 to 9.9% in 1933 and contributed to the general international malaise, which some in the US administration believed to have fuelled fascism and to have contributed to the onset of the Second World War.  77 

To avoid the errors of the 1930s, to assist in postwar economy recovery, and to institutionalise a liberal international trade order so that a discriminatory system could never again be constructed to exclude it, the US set about establishing the Bretton Woods international economic institutions, among which was the GATT.  78  As a result of successive rounds of GATT negotiations, market access has become in many areas a matter of international scrutiny, and the perception of the tariff has changed from a strictly internal corrective to a legally controlled device. The GATT has established a process of negotiation wherein states progressively committed themselves to the further liberalisation of international trade, and has instituted a climate where producers in one state now have a legitimate right to expect a degree of access to the market of another consistent with agreed schedules.

It is important to note that the GATT, as its name suggests, related mainly to tariffs on industrial goods. These were the product of industry, which provided necessary employment, and which were required for reconstruction. Hence, manufactured goods occupied the attention of the postwar drafters of the GATT. And, with tariffs at an average level of 40% in the late 1940s, there was ample material for negotiation in the successive negotiating rounds. Within an atmosphere of rapid economic growth, it was relatively easy, politically, to reduce tariff levels by a few percentage points, on average, whilst still maintaining some protection on the most politically sensitive products.

Steadily, the GATT performed its mandate. However, by removing the principal element for its very existence, this threatened to create new difficulties. This was particularly so in the early 1980s, which began in the worst recession since the 1930s. GNP grew on average in OECD countries by 1.3% in 1980, 1.2% in 1981, and 0.3% in 1982, the slowest average rate of any three years in the postwar period. In 1982, the volume of world trade fell by 2%, the first time that the volume of trade failed to grow, let alone reversed, since the GATT was established.  79  In 1982, the growth of the US economy was the slowest among OECD countries at -2.6%. Unemployment reached 10.7% and was concentrated in import-competing industries, notably in automobiles at 23.2%, and in steel where it was 29.2%.  80  Organised labour and disaffected industries sought protection. Petitions to the US International Trade Commission (ITC) for escape clause, antidumping (AD) and countervailing duty (CVD) remedies increased exponentially from an annual average of 50 in the late 1970s to 100 in 1983 and 1984.  81  Sympathy to them all would have signalled to the international community that the government was abdicating leadership over the domestic economy by externalising difficulties of adjustment and deflecting burdens onto others. However, by not being sympathetic to them channelled their demands to Congress to enact protectionist legislation.  82 

The Reagan administration needed to channel the attention of Congress away from considering a protectionist trade act, and towards the prospect of negotiated market access. Consistent with the "bicycle theory" of international trade, liberalisation efforts cannot stand still: if momentum for liberalisation is lost, the edifice falls down. As Jagdish Bhagwati explained: "The many GATT rounds... proved effective in dealing with the ever-present protectionist pressures from Congressmen; they served to counter these pressures on the grounds that succumbing to them would imperil ongoing...negotiations. An ongoing, continual set of rounds was thus tactically wise."  83 

In the past, there was a wealth of US export interests in which the executive could cultivate support behind its liberalisation programme to countervail protectionist forces, to or mobilise "export politics". However, the tariff, the traditional concern of the GATT, had been all but outlawed through seven MTNs, bringing average tariff levels in developed countries down to approximately 5.4% in the early 1980s. The use of Non Tariff Barriers (NTBs) - such as technical standards and lisencing procedures - had grown in the 1970s, and were given some attention in the Tokyo round in the late 1970s. However, as the GATT Work Programme identified, these comprised over 800 government policies which occupied a very grey area between legitimate social policy (ie., safety standards) and protectionism, which mandated much tedious technical negotiation simply on definitions.  84  This was not an issue that would stimulate pro-liberal interests. To generate the kind of support required to launch a new MTN required the mobilisation of new exporters with tangible interests. Services, trade related investment measures, and high technology products, and the protection of intellectual property rights - areas in which the US did have a competitive advantage - provided fertile ground to cultivate export interests behind the programme of further liberalisation. According to the Office of the US Trade Representative, US trade in services accounted for $110 billion in foreign earnings in 1981. In that year, the US maintained a trade surplus in services of $38.9 billion, in contrast to a merchandise trade deficit of $27.8 billion.  85  The US' European partners, despite much acrimony over the issue of agriculture, especially with France, realised that they would benefit from the liberalisation of the trade in services and the protection of intellectual property rights, particularly France, which was the world's second largest exporter of services.

The Uruguay round therefore embraced these new issues. The launching of the Uruguay round was an effort by the US and European states to arm themselves with an excuse for not granting protection to domestic interests, and to cultivate countervailing export interests. This was due, in part, to the realisation that the closure of the 1930s could not be repeated; that the mounting trade conflicts - at that time, over a variety of agricultural products, steel, automotive parts, consumer electronics - needed to be channelled into an institutional framework of constructive negotiations, lest they spill over into political relations; that there was a need to reinvigorate the GATT process for political reasons; and by the sheer realisation that national economies would benefit from rules in these new areas.

In addition to the congruence of state interests, the role of transnational interests in international agenda-setting for the Uruguay round can not be ignored. There were numerous European firms, such as Siemens, Glaze or Credit Agricole who supported the multilateral effort. But in addition, American multinational corporations with a presence in Europe - particularly Amex and Citibank which organised the Coalition of Service Industries - facilitated the lobbying of multiple European capitals. There existed an interlocking network of transnational chambers of commerce and other special-interest organisations involved in various activities in pressure politics, and in disseminating information by financing research jointly at the American Enterprise institute for Public Policy Research in Washington and the Trade Policy Research Centre in London.  86 

Thus, rather than promoting insular behaviour, the deleterious situation of the early 1980s, and the common interests at the sub-national, national, and transnational levels made imperative a new multilateral trade negotiation, and to succeed, these negotiations needed to attempt to make rules for new areas of trade. Through the conclusion of the Uruguay round in 1994, states have relinquished voluntarily their sovereign control over trade policy in a number of new area, thus increasing the mandate of the GATT. The following section now turns to the level of normative structures in an attempt to tie the two levels of public and private trade law into a coherent framework for analysis.

 75. Redfern and Hunter, op. cit., pp.118-120; also Lando, op. cit., p.757.

 76. William W. Parks, "Control Mechanisms in the Development of a Modern Lex Mercatoria", in Carbonneau, op. cit., pp.109-138.

 77. Mustill, op. cit., p.154.

 78. Bond, in Gaillard, op. cit., p.80.

 79. Gaillard, op. cit., p.75.

 80. Bond, in Gaillard, op. cit., p.80.

 81. See generally: Gerard Curzon, Multilateral Commercial Diplomacy: The General Agreement on Tariffs and Trade and its Impact on National Commercial Policies and Techniques, Michael Joseph, London, 1965; Kenneth Dam, The GATT: Law and International Economic Organisation, University of Chicago Press, Chicago, 1970; and John Jackson, The World Trading System: Law and Policy of International Economic Relations, MIT Press, London, 1992.

 82. See E.E. Schattschneider, Politics, Pressure, and the Tariff: A Study in Free Private Enterprise in Pressure Politics, as Shown in the 1929-1930 Revision of the Tariff, Prentice- Hall, New York, 1935; and Charles Kindleberger, The World in Depression, 1929-1939, Allen Lane and Penguin Press, London, 1973.

 83. Cordell Hull, The Memoirs of Cordell Hull, Vol.I., Hodder and Stoughton, London, 1948, p.354.

 84. See Richard N. Gardner, Sterling-Dollar Diplomacy in Current Perspective: The Origins and the Prospects of our International Economic Order, Columbia University Press, New York, 1980; Clair Wilcox, A Charter for World Trade, The Macmillan Company, New York, 1949; and William Adams Brown, Jr., The United States and the Restoration of World Trade: An Analysis and Appraisal of the ITO Charter and the General Agreement on Tariffs and Trade, The Brookings Institution, Washington D.C., 1950.

 85. Joan Eldelman Spero, The Politics of International Economic Relations, 3rd.ed., St. Martin's Press, New York, 1985, p.117.

 86. OECD, National Accounts 1960-1988, OECD, Paris, 1990; Spero, op. cit., p.118.

  toc   scroll    txt   pdf   pdf    odt    A-Z  Document Manifest   home 
<< previous TOC next >>
< ^ >

Lex Mercatoria -->

( International Trade/Commercial Law & e-Commerce Monitor )

W3 since October 3 1993
1993 - 2010

started @The University of Tromsø, Norway, 1993
hosted by The University of Oslo, Norway, since 1998
in fellowship with The Institute of International Commercial Law,
Pace University, White Plains, New York, U.S.A.



Ralph Amissah

Lex Mercatoria