The Use, Nonuse and Abuse of Economics in WTO and Investor-State Dispute Settlement
Georgetown University Law Centre; Graduate Institute of International and Development Studies (IHEID)
August 30, 2012
WTO Litigation, Investment and Commercial Arbitration – Cross-fertilization and Reciprocal Opportunities, Goldman, Romanetti & Stirnimann (eds.), Kluwer, 2013, Forthcoming
What is the role of economic evidence and arguments in WTO and investor-state dispute settlement? Both regimes epitomize the search for an international rule of law and legal stability. At the same time, both trade and investment agreements are economic contracts. Economics provides insights not only in lawmaking but also in law application, both fact establishment and legal interpretation. The influence of economic evidence and arguments, including quantitative studies, is on the rise in both fields. It spans far beyond damage calculations and decisions on appropriate trade retaliation. In the WTO: like products, less favorable treatment, subsidies and general exceptions. In investor-state arbitration: economic necessity. And in both regimes many more provisions lend themselves to input from economics. Such input can provide more robust, empirically sound and predictable outcomes. This, in turn, can broaden the support and legitimacy of both the trade and investment regimes. At the same time, reliance on economics does not come without risks. Core caveats and limits are: (1) economics must be filtered through legal criteria, (2) methodological discipline, (3) for communication purposes, ‘keep it simple’; (4) due process, (5) avoid or disclose value judgments. The cases and controversies discussed in this contribution indicate progress made but highlight that a lot of work must still be done to conform to ‘best practices’.
Number of Pages in PDF File: 38
Keywords: law and economics, WTO, arbitration, investment law, expert evidence, social sciences
JEL Classification: A11, A12, A13, K33, K41
Date posted: September 5, 2012 ; Last revised: October 25, 2012
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