What is Free Trade? The Real Issue Lurking Behind the Trade and Environment Debate
127 Pages Posted: 24 Mar 2000
Date Written: March 14, 2000
This article argues that a fundamental question, "What is free trade?," lurks behind the ongoing debate about the relationship between international trade law and competing legal regimes. It also lurks behind much of the confusion in the Supreme Court's dormant commerce clause jurisprudence under the United States constitution, sometimes mentioned as a model for international trade law. Yet, the literature has remarkably little to say about free trade's definition, although it contains volumes about the reasons for free trade.
This article explores three possible concepts of free trade, trade free from discrimination against foreign companies, trade free from coercion, and trade free from restraint, i.e. laissez-faire, primarily in the context of trade and environment disputes. Only free trade defined as trade free of discrimination offers a legitimate conception of free trade that the World Trade Organization (WTO) can credibly administer. The misunderstandings between environmentalists and free traders reflect trade law's tendency to amalgamate the anti-discrimination, anti-coercion, and laissez-faire concepts. Free traders tend to think of trade law as primarily aimed at policing discrimination, while environmentalists tend to think of it as aimed at laissez-faire, the least legitimate concept. The trade law provides some support for both views. Indeed, prominent trade and environment cases combine holdings moving toward laissez-faire and anti-coercion concepts with dicta disavowing any such move.
Recognizing the conceptual question lurking behind "trade and" debates opens up the possibility of thinking about the debates as searches for an appropriate definition of free trade. Until now, most scholarship on the subject has treated these debates as a search for the scope of permissible exceptions to free trade, assuming (wrongly) that "free trade" has a simple agreed upon meaning.
A concept of free trade as trade free from discrimination will only appear legitimate if the definition of discrimination is reasonably intelligible. The WTO has used a very ad hoc approach to discrimination. This article develops a concept of bright line discrimination to show that a more coherent approach is at least possible. Adoption of bright line discrimination would require some narrowing of the scope of free trade in order to enhance its legitimacy.
The search for an appropriate definition of free trade is absolutely central to making progress in understanding "trade and" debates. This article seeks to spark a debate about this neglected question.
JEL Classification: B1, B0, B3, F0, F, I0, I1, K2, K3, N5
Suggested Citation: Suggested Citation
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By Tomer Broude