Transnational trade law leaves little scope for policy-…

Globalisation skeptics tend to believe that the transnational trade regime is biased towards the interests of the advanced nations – but empirical evidence shows that rich-country governments do not always prevail in WTO disputes. Brazil, for instance, has a track record of successfully arguing its case. On the other hand, the USA has lost cases before the WTO.

As Nitsan Chorev of Brown University argues, the global trade regime has become quite efficient in enforcing rules. Nonetheless, she does stress that it is biased. The regime serves those private-sector firms that are interested in accessing foreign markets. Whether they are based in rich or poor countries does not matter much – so long as their national government is capable of representing their interests before the WTO.

However, the global trade regime is not entirely defined by the WTO. Even disputes over investor rights – something not regulated by the WTO – may have a judicial dimension, as around 900 bilateral agreements include rules on such matters. The International Center for the Settlement of Investment Disputes (ICSID) in Washington D.C. is in charge of handling disputes between countries signed up to such agreements and private investors from abroad.

According to David Schneiderman of the University of Toronto, this arrangement severely limits poor-country administrations. He points to the example of Cochabamba. After massive price hikes at the turn of the century, the people in this Bolivian town rebelled against the privatisation of the local water utility. The scheme collapsed in practical as well as political terms.

But even though the authorities had made sure in the contract that only Bolivian law would apply, the Bolivian government soon found itself in a legal dispute before the ICSID. The private sector investor, a consortium dominated by the San Francisco-based multinational Bechtel, had simply moved its headquarters from a tax haven to a country which had an investment treaty with Bolivia. Before the ICSID, the corporation had the upper hand. Bechtel only dropped it claims of several million dollars after an international civil-society campaign pressed it to do so. Schneiderman worries that in most cases, revolts and international campaigns will not set right such policy failures.

At the conference “Law and society in the 21st century” in Berlin in late July, Cesar Rodriguez-Garavito of the University of the Andes elaborated on labour relations in Central American sweatshops. According to his research, human rights are useful as a common base for non-governmental organisations and trade unions from various countries to form campaigning networks. On the other hand, he warns, this base is rather weak. One reason is that the fundamental rights listed in national constitutions normally do not directly deal with labour conditions, whereas trade law transcends national jurisdiction. Moreover, Rodriguez-Garavito reports, labour unions tend to disagree with human-rights agencies about goals and strategies, and so do organisations from poor and rich countries.

From an East-Asian perspective, globalisation looks brighter. According to Ji Weidong of Kobe University, the Chinese government is increasingly interested in the rule of law. Its approach to market regulation has so far been laissez-faire in general and dirigist in particular cases. A more predictable legal environment would be healthy – and not only in business terms. The Japanese professor stresses that China is on the road to functional differentiation, allowing for more autonomy in societal spheres such as academia or the legal system.

The conference in Berlin was held at Humboldt University by the Law and Society Association of the USA and the Research Committee on the Sociology of Law, an international body. Co-sponsors included socio-legal associations from Germany, the UK and Japan. Boaventura de Sousa Santos from the University of Coimbra appreciated that globalisation made possible an event attended by 2500 scholars from 70 different nations. However, he also pointed out that two panellists from Angola and Colombia who were to discuss social movements did not make it to Berlin. They had not been granted visas. (dem)