Rule-Based Trade 2.0? The Rise of Informal Rules and International Standards and How They May Outcompete WTO Treaties

Abstract

One of Professor Jackson’s many legacies is his role in moving the international trade system from a “power-oriented” to a “rule-oriented” regime. The core feature and underlying goal of a “rule-oriented structure”, Professor Jackson explains, is “creating greater predictability, redressing unfair power imbalances, and preventing escalating international tensions”. The focus of “rule-based trade 1.0” is, therefore, on output and effect (predictability and stability of rules; their neutral application to all), not on input and content of the rules in the first place (who defines the rules, how were they adopted, are the rules welfare enhancing, coherent and adapted to new developments?). This contribution highlights how, since the turn of the millennium, we have witnessed stagnation in the formation of traditional treaty rules combined with a rise in informal rules and international standards. While the nature of the rules is thereby changing profoundly -- new actors, new processes, new outputs -- the contribution’s main claim is that the output and effect of the new type of rules being created (e.g. their effectiveness) may well match, and at times outcompete, that of traditional GATT/WTO rules. At the same time, these new (informal) rules and standards may also be more (rather than less) legitimate and coherent in terms of input and content. This potential evolution is described as a move from “thin state consent” (rule-based trade 1.0) to “thick stakeholder consensus” (rule-based trade 2.0).

Keywords: WTO, rule-based trade, informal law, rule of law, international standards, soft law