Ten Lessons from 'Institutional Economics' for Designing Multilateral Trade and Investment Institutions
37 Pages Posted: 3 Jun 2020
Date Written: 2020
Why were procedural and substantive trade rules – but not investment agreements – transformed into multilateral treaties following World War II? Why do state-capitalist conceptions of international economic law (e.g. in China’s bilateral Belt and Road Cooperation), neo-liberal conceptions (e.g. in US trade agreements) and ordo-liberal conceptions (e.g. in European free trade agreements) result in such different legal and institutional designs of trade and investment agreements? The ten sections of this paper discuss ten lessons from institutional economics for the legal design of multilateral trade and investment institutions, with due regard to the increasing geopolitical rivalries among Anglo-Saxon neoliberalism, European ordo-liberalism and authoritarian state-capitalism (e.g. in China and Russia). It concludes that maintaining the worldwide legal and dispute settlement system of the World Trade Organization (WTO) - and interpreting its regional and national exception clauses broadly in order to reconcile diverse, national and regional institutions of economic integration and of ‘embedded liberalism’ - remains in the interest of all WTO member states. Multilevel trade and investment adjudication are of constitutional importance also for the transformation of the global division of labor into a carbon-free economy mitigating climate change. Yet, its institutional design is increasingly challenged not only from neo-liberal and state-capitalist, but also from ordo-liberal constitutional perspectives.
Keywords: Constitutionalism; embedded liberalism; institutional economics; ordo-liberalism; neo-liberalism; WTO
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