The Death of the Trade Regime

Jeffrey L. Dunoff^*

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Abstract

In recent years, `trade and' issues - such as trade and labour and trade and environment - have moved from the periphery to the centre of the trade agenda. But meaningful multilateral agreement in many of these areas has proven elusive. Why are these issues so intractable? Can the trade system accommodate these new issues - or do they call into question fundamental premises of the trade regime? This article explores these issues by analysing the challenges that `trade and' issues pose to the leading economic, game theoretic and political science understandings of the trade regime. I show how, by presenting different and oftentimes novel types of difficulties, `trade and' issues problematize the accuracy and appropriateness of the assumptions underlying these models. But models and ideas - particularly those embedded in international institutions - often have political implications, and this article outlines some of the political consequences of the efficiency model's triumph. Finally, I argue that World Trade Organization panels risk delegitimizing WTO dispute resolution if they continue to address `trade and' issues, and detail a strategy that panels can use to advance both the conflicting values present in `trade and' disputes and the WTO's institutional legitimacy.

In recent years, `trade and' issues - such as trade and labour and trade and environment - have moved from the periphery to the centre of the trade agenda. But meaningful multilateral agreement in many of these areas has proven elusive. Why are these issues so intractable? Can the trade system accommodate these new issues - or do they call into question fundamental premises of the trade regime? This article explores these issues by analysing the challenges that `trade and' issues pose to the leading economic, game theoretic and political science understandings of the trade regime. In particular, by presenting different and oftentimes novel types of difficulties, `trade and' issues suggest that, in each instance, the model has identified the wrong problem. Second, the `solutions' offered by each model rests upon a number of assumptions about the nature of states international markets and/or the international system. But `trade and' issues pose foundational questions regarding the accuracy and appropriateness of the assumptions underlying these models. But models and ideas - particularly those embedded in international institutions - often outlive their original purposes; more importantly, they have political consequences. I discuss some of the ways in which the ascendency of the economic model and growth of the trade regime affects domestic politics. In particular, I argue that while the expanded trade regime affects the autonomy of all nations, it is likely to place greater pressures on `liberal' governments, which are more likely to pursue policies to support domestic employment, and to `reward' conservative governments which pursue contractionary policies. Finally, I turn to the resolution of the `trade and' disputes at the World Trade Organization. By focusing on the institutional constraints facing WTO panels, and the highly contested nature of `trade and' issues, I argue that panels risk delegitimizing WTO procedures if they continue to address `trade and' issues. I then detail a strategy that WTO panels can use to advance both the conflicting values present in `trade and' disputes and the institutional legitimacy of the WTO.

* Visiting Associate Professor of Public and International Affairs, Woodrow Wilson School, Princeton University; Associate Professor of Law, Temple University School of Law. I am grateful to Jane Baron, Scott Burris, Steve Charnovitz, Kyle Danish, Dan Esty, Theresa Glennon, Rick Greenstein, Laura Little, Richard Parker and Paul Stephan for valuable comments on earlier drafts. Work on this article was supported by summer research funding provided by the Temple University School of Law.

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