The Use of Economics in International Trade and Investment Disputes
We started to work on this book when the world still seemed to be okay for those looking at it through the lens of international economics or international economic law. True, the world had been shaken by the global financial crisis a few years before. True, the Doha Round negotiations were stalled. But the global financial crisis had triggered international collaboration on taxation to an extent never seen before. In addition, a number of highly ambitious regional integration agreements were being negotiated that were attempting to bring themes like trade, investment and domestic regulation under one umbrella.
Today, the benefits of globalization are openly being questioned. Negotiations on so-called mega-regionals have been put on hold and some argue that the world is moving towards “dis-integration” or increased protectionism. One criticism that has been very effective in rallying opponents against globalization is that globalization implies “rules being enforced by judges abroad” or that “national sovereignty is jeopardized by international disputes settlement systems”.
The volume we present here thus deals with a theme that is currently contentious and unpopular in many places. Those who have already made their mind up that closing their economy is the best thing to do, should probably stop reading here and not consider buying the book. But those who expect that businesses in their country still want to go global or that their country still stands to gain from exports or from foreign direct investment may want to have a closer look at this volume, because it deals – as the introduction states in its title – with a topic that is “complex, contentious but oh-so-important for the sustainability of trade and investment treaties”.
The themes discussed in “The use of economics in international trade and investment disputes” are intimately linked to some of the most popular criticisms against international economic rules and their enforcement. What is the basis for determining that competitors are treated “fairly” and not discriminated against? How is the damage calculated that a private foreign investor can claim to recover when its business suffers from a new national policy? And why would a foreign investor or trading partner be allowed to claim any compensation at all if a government introduces a new policy that voters may consider legitimate? How is the decision taken that such a policy is unfair or discriminatory?
Those are fundamental questions and consumers, workers and voters who are supposed to be beneficiaries of trade and investment treaties have the right to ask these questions. Contrary to what some may think, lawmakers have not ignored these questions when designing such treaties. The questions have been taken into account and led to rather sophisticated constellations of legal texts.
Applying such texts to real-life cases, however, is not straight forward and has at times put dispute settlement systems under significant strain, like in the case of the so-called Hormones or biotech products disputes (US-EC) at the WTO or the ISDS cases regarding regulation of cigarette marketing (Phillip Morris – Australia, also a WTO dispute) or the phasing out of nuclear energy (Vattenfall – Germany).
Because of the complexity of such cases and because of their importance for the broad public, it is desirable that dispute settlement systems are put under scrutiny. This is what we have done in this volume, together with the practitioners and academics who have contributed to it, each from their own point of view and with their own focus, but all with the objective of making international economic dispute settlement stronger and better.