Second Generation Flanking Policies: Addressing Extraterritorial and Non-Economic Costs of Trade Liberalization

30 Pages Posted: 8 Feb 2024 Last revised: 17 May 2024

See all articles by Timothy Meyer

Timothy Meyer

Duke University School of Law

Date Written: February 7, 2024

Abstract

Flanking policies—policies that aim to address potential negative effects of trade liberalization, and/or the concerns of domestic stakeholders regarding those negative effects, and that are either legally or factually linked to trade liberalization—have been a critical component of international trade policy since at least 1962, when President Kennedy proposed the Trade Adjustment Assistance (TAA) program in the United States. Over the years, however, flanking policies have changed. This Article documents a shift from first-generation flanking policies to second-generation flanking policies and analyzes the challenges for international law that the emergence of second-generation flanking policies poses.

Specifically, as I use the term here, first-generation flanking policies target negative economic effects, or costs, of trade liberalization experienced within the enacting country. TAA in the United States and similar programs elsewhere are the paradigmatic examples. By contrast, second-generation flanking policies target non-economic costs that arise outside of the enacting country. Second-generation flanking policies thus have an inherently extraterritorial component. Examples include the European Union’s Carbon Border Adjustment Mechanism, Deforestation-free Products Regulation, and the United States’ Uyghur Forced Labor Prevention Act.

These second-generation flanking policies portend significant changes for international trade law. First, because these flanking policies directly target foreign activity, they often employ more trade-distorting policies—tariffs, imports bans, and associated administrative hurdles for imports—than first-generation flanking policies, which more often relied on domestic subsidies. Second, they reflect a significant reorientation of jurisdictional limits in international trade law. Whereas jurisdiction in international economic law has historically been based primarily on a territorial link to productive activity, these policies target production but jurisdictionally rely on a territorial nexus with consumption of goods and services.

Keywords: international trade, international economic law, trade liberalization, carbon border adjustments, WTO, jurisdiction

JEL Classification: K10, K32, K33

Suggested Citation

Meyer, Timothy, Second Generation Flanking Policies: Addressing Extraterritorial and Non-Economic Costs of Trade Liberalization (February 7, 2024). Duke Law School Public Law & Legal Theory Series No. 2024-10, Available at SSRN: https://ssrn.com/abstract=4719749 or http://dx.doi.org/10.2139/ssrn.4719749

Timothy Meyer (Contact Author)

Duke University School of Law ( email )

210 Science Drive
Box 90362
Durham, NC 27708
United States

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