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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