Review Essay: What Makes the International Investment Rules Regime Undemocratic?
German Law Journal, Vol. 10, No. 8, pp. 1309-1320, August 2009
13 Pages Posted: 12 Aug 2009 Last revised: 22 Sep 2011
Date Written: August 12, 2009
In Constitutionalizing Economic Globalization, Schneiderman mounts an attack on 'new constitutionalism.' New constitutionalism has been described as 'the political/juridical form specific to neoliberal processes of accumulation and to market civilization.' It is a pre-commitment strategy that prevents future governments from taking measures contrary to the political project of neoliberalism by 'removing key aspects of economic life from the influence of domestic politics within nation states.' New constitutionalism manifests itself through a web of international treaties that provide stringent legal protection to foreign investment (such as the investment chapter of the North American Free Trade Agreement (NAFTA) and the international regime of Bilateral Investment Treaties (BITs)). These agreements usually contain a series of legally-enforceable mechanisms that limit the power of government and legislatures to intervene in the market, binding them to a version of economic liberalism and narrowing in important ways their field of political possibilities. New constitutionalism involves a set of rules that act as a 'disciplining check on democratic deliberation.' In this review, we would like to focus in what we think is Schneiderman's main claim through Constitutionalizing Economic Globalization and his principal criticism of new constitutionalism: that nobody asks the people whether they think it is worth it for their country to become a party to this web of international trade treaties. Schneiderman argues that this results in limiting their representative’s decision making power and their capacity to regulate the economy. For him, this is a big cost in terms of collective self-government. We want to suggest that Schneiderman picks the wrong target: the real problem for collective self-government is not 'new constitutionalism,' but the inherent aristocratic nature of representative democracy. New constitutionalism is just another undemocratic product of an anti-majoritarian scheme.
Moreover, we think that Schneiderman's focus on the fact that investment and trade treaties impose limits on the scope of a state's legislative jurisdiction tends to obscure the deficiencies of representative democracy. These kinds of limits, after all, are not exclusive of this type of agreement, but of international treaties in general and are usually thought as a legitimate exercise of state power. This is why we think that the strongest parts of Schneiderman's analysis are those instances in which he directly attacks the investment rules regime in substantive terms (the injustices and bad results its produces, etc.), rather than his emphasis on the limits the regime imposes on democratic and majoritarian processes. Schneiderman may or may not be right about his attacks on neoliberalism; in any case, that is where the action lies. Even when they constitute a central part of investment treaties (and in that respect one might even characterize them as substantive), voluntarily imposed constraints on the decision making power of a country´s democratic institutions through international treaties are not necessarily problematic from a democratic perspective.
Keywords: Democracy, Investment Rules Regime, BITs, Schneiderman, Representative Democracy, International Treaties
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