Public International Law: Chapter XVII - International Economic Law

 International Economic Law

What is international economic law?

  • Recent developments have made international economic law a distinct part of international law. 
    • Beyond the regulation of interstate trade, the law has moved into the creation of international institutions, formulation of definite rules governing a wide range of economic matters, and the establishment of methods of dispute resolution. 
    • Moreover, international economic law affects not only states but also multi-national corporations. 
    • Likewise, globalization of economic matters have affected traditional notions of sovereignty. 
  • It can thus be seen that international economic law can involve a broad range of transactions, regulations and litigation which cannot be adequately reflected in one definitional formula.
    • As one writer has noted, ninety percent of international law activity is economic international law although it does not have the glamour of such subjects as use of force, human rights, or intervention. 
  • The (Third) restatement of Foreign Relations Law has this statement: 
    • “The law of international economic relations in its broadest sense includes all the international law and international agreements governing economic transactions that cross state boundaries or that otherwise have implications for more than one state, such as those involving the movement of goods, funds, persons, intangibles, technology, vessels or aircraft.” 
  • Because of this broad range, four characteristics can be pointed out. 
  1. International Economic Law is obviously part of public international law. 
    • Treaties alone make this so. 
  2. International Economic Law is intertwined with municipal law. 
    • The balancing of economic treaty law with municipal law is important. 
  3. International Economic Law requires multi-disciplinary thinking involving as it does not only economics but also political science, history, anthropology, geography, etc. 
  4. Empirical research is very important for understanding its operation.
Important economic institutions. 
  • After the Second World War, the economic advisers of the United States and of England led an effort to establish mechanisms which could avoid the repetition of the protectionist policies of the 1930s. 
  • The effort led to the Bretton Woods Conference of 1944. 
    • The conference had two main objectives:
      1. to advance the reduction of tariffs and other trade barriers, and 
      2. to create a global framework designed to minimize economic conflicts. 
  • Out of this conference were born the:
    1. International Monetary Fund (IMF) 
      • whose function was to provide short-term financing to countries in balance of payments difficulties; 
    2. International Bank for Reconstruction and Development (World Bank) 
      •  designed to provide long-term capital to support growth and development; 
    3. International Trade Organization (ITO) 
      • which was intended to promote a liberal trading system by proscribing certain protectionist trade rules. 
  • The intended function of the ITO was eventually taken over by the General Agreement on Tariff and Trade (GATT) and its successor the World Trade Organization (WTO). 
    • The GATT and the WTO are the most important trade oriented institutions. 
    • They shape domestic import and export laws which impact on international trade on goods and services.
    • GATT went through a series of modifications Rounds with the Uruguay Round of 1994 as the final one. 
    • The final agreement proposed the establishment of a World Trade Organization (WTO) which would oversee the operation of GATT and a new General Agreement on Trade and Services.
Key Principles of International Trade Law. 
  1. Agreed tariff levels. 
  2. The most favored nation principle (MFN).
  3. Principle of national treatment.
  4. Principle of tariffication.
1. Agreed tariff levels. 
  • The GATT contains specified tariff levels for each state. 
  • Each state agrees not to raise tariff levels above those contained in the schedule. 
  • But these can be renegotiated.
2. The most favored nation principle (MFN).
  • The MFN clause embodies the principle of non-discrimination. 
  • The principle means that any special treatment given to a product from one trading partner must be made available for like products originating from or destined for other contracting partners. 
  • In practice, this generally refers to tariff concessions. 
3. Principle of national treatment. 
  • This prohibits discrimination between domestic producers and foreign producers. 
  • In practice, this means that once foreign producers have paid the proper border charges, no additional burdens may be imposed on foreign products. 
4. Principle of tariffication.
  • This principle prohibits the use of quotas on imports or exports and the use of licenses on importation or exportation. 
  • The purpose of the principle is to prevent the imposition of non-tariff barriers. 
  • But GATT provides for exceptions on a quantitative and temporary basis for balance of payments or infant industry reasons in favor of developing states.
Exceptions to key principles. 
  • The GATT itself contains many exceptions to the key principles. 
  • Some of the exceptions are general in nature such as those referring to:
    • public morals,
    • public health,
    • currency protection,
    • products of prison labor,
    • national treasures of historic,
    • artistic or archeological value, and
    • protection of exhaustible natural resources.
  • Specific: There are also security exceptions and regional trade exceptions.
    •  Of special significance for the Philippines are the exceptions for developing nations:
Tañada v. Angara, G.R. 118295, May 2, 1997
WTO Recognizes Need to Protect Weak Economies
  • Whether the GATT is going to be detrimental to local industries and constitutes grave abuse of discretion in its implementation. NO
  • The Court ruled that it was not going to be detrimental because of the exceptions it provides to developing nations because of its view towards raising standards of living and optimal use of world resources for sustainable development, and lets the developing countries have a share in economic trade through reciprocal or mutual advantages. For example, the WTO gives developing countries a more lenient treatment by aiding and protecting their domestic industries.

Dispute Resolution. 
  • A Dispute Settlement Body (DSB) has been established by the WTO Agreement. 
  • It consists of the General Council of the WTO and operates under the Understanding on Rules and Procedures Governing the Settlement of Disputes 1994 (DSU). 
  • Each state has a right to the establishment of a Panel. 
  • The DSU has also provided for a permanent Appellate Body, consisting of persons with recognized expertise in law, to handle appeals from a Panel decision. 
Expanding Scope of International Economic Law. 
  • The Uruguay Round of 1994 has expanded the scope of the multilateral trade regime. 
  • It now includes:
    • intellectual property
    • services
    • sanitary and 
    • physiosanitary measures and investment
    • strengthening of the rules on subsidies, countervailing duties and antidumping. 
  • As can readily be seen, IEL has become a very specialized field. 
  • Most significantly too, it is affecting the sovereignty of states and their capacity to give force to national policy objectives.

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