Punishing preferences

It pays to look critically at analogies between the way we manage conflicts in municipal law and the management of conflicts between governments over trade policies. Although micro-economic concepts translate well from the interaction of individuals to the interaction of ‘sovereigns’ the legal parallels are much weaker than they seem. I share “John Quiggin’s view”:http://www.johnquiggin.com/archives/001598.html about the free exercise of personal choice. He argues, reasonably, that he should be permitted to express his own preference for risk in deciding whether to consume or avoid GM foods and that labeling laws should help him to make a well-informed choice. He calls this the principle of subsidiarity—although I wish he wouldn’t1. John then “takes the idea to a higher level”. bq. If Australians, contrary to my preference, decide to ban GM foods altogether, then that is our decision to make and we should not be subject to punishment by bodies such as the World Trade Organisation. I have two arguments with this. First, the WTO does’nt punish anyone or anything. It has no code of laws, no prosecutorial powers and has no interest in retribution. If you’d like to know more, see my book: “The WTO Guide to Dispute Settlement”:https://secure.vtx.ch/shop/catalog_type.asp?shop=wto&language=E&rayon=ansprep_eng. An extract and FAQ from the book are also available on my “World Trade Rules”:http://www.inquit.com/wtr/disputes site. Second, taking personal liberties ‘to a higher level’—that is, assuming that some sort of liberty analogous to personal liberty exists among nations—seems dubious to me. It’s a common assumption among critics of WTO that leads to a lot of passionate arm-waving in which appeals to ‘sovereignty’ get thrown around with abandon[⇒ related story]. But I think it’s wrong for two reasons:
# Our respect for an individual’s freedom to make moral choices does not justifiy an expectation that sovereigns should be similarly free to make ‘democratic choices’ in the global trade regime. Sovereigns aren’t ‘individuals’: they aren’t moral agents with “inherent rights” or obligations in the same sense as a natural person. To talk as if they were is almost always misleading. Sovereigns are, rather, expressions of the power of a state to rule and, possibly, to impose it’s will outside it’s own territory.
# The ‘global trading sytem’ is not a plentiful natural resource, like fresh air, or an emergent characteristic of civilization, like good manners. Far from it. The multilateral trading system, I’ve argued here[⇒ related story] and elsewhere, is a public good that has been—and is continuously—deliberately created, in large part by sovereigns’ acceptance of the constraints of the WTO rules. Like all public goods, sovereigns (and, ultimately, private individuals) who are the principal beneficiaries of the WTO’s regime would, in the absence of the rules, tend to under-invest in its maintenance because ‘open’, ‘fair’ and ‘transparent’ trade policies and regulations are expensive to create, but non-rivalrous, non-excludable goods once created. Just as our respect for individual liberties in the municipal sphere is bounded by the need to maintain e.g. civil peace or safety, so the trading system’s tolerance of the liberty of sovereigns to chose whatever trade measures they consider good is bounded by the need to maintain an open trading system in which arbitrary, or protectionist or disproportionate policy measures can not be automatically sanctioned in the name of ‘sovereign choice’ or ‘democratic subsidiarity’ or similar slogans. Balancing the right of governments to preserve e.g. “public order” or “morals” or “scarce natural resources” and the interest of the global community in a trading system based on transparent, minimally-distorting, non-discriminatory trade regulations is very difficult. Almost every test of the WTO’s provisions on this point (particularly the exceptions procedures such as Article XX of GATT or the SPS Agreement) has proved to be a hard case. The “GMO Case(link to the WTO document trail on the GMO dispute between the USA and EU)”:http://www.wto.org/english/tratop_e/dispu_e/dispu_subjects_index_e.htm#gmos that JQ mentions will undoubtedly be another. Experience shows that it is sometimes very difficult to discern the border between arbitrary action that (probably) has a protectionist motive from an expression of “national preference” or a “necessary health measure”. Should the USA be permitted to protect it’s tuna-fishing fleet from Mexican competition by the enforcement of a rule supposedly preserving dolphin populations? Should Australia be permitted to hermetically seal-off its banana growers from world market competition in order to protect jobs in regions where the only other employer seems to be the rapidly declining sugar industry? I don’t see the arbitration of these cases in WTO as a threat or an imposition. I think it’s one of the greatest benefits of the world trading system that ‘jaw, jaw’ replaces you know what.

1 “Subsidiarity” is an ugly old piece of “Catholic social dogma”:http://www.euabc.com/index.phtml?word_id=879, _masquerading_ as an argument about State respect for individual conscience. During the tenure of Jaques Delors as the President of the EU Commission the concept was suborned by the “_consistory_ of Brussels”:http://www.jeanmonnetprogram.org/papers/95/9510ind.html to mean, effectively, shirking responsibility at the top by pushing decisions on expensive or unpopular programs down to the lowest levels of the multi-tiered Eurocracy where they could remain hidden (and unaccountable).

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