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2021 | OriginalPaper | Chapter

Flexibility in International Economic Law vs. Pacta Sunt Servanda

Maintaining Legitimacy Over Time

Author : Charlotte Sieber-Gasser

Published in: Democracy and Globalization

Publisher: Springer International Publishing

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Abstract

Pacta sunt servanda is a key principle in international law, which ensures order, stability and legal security in international relations. It renders commitments in international law generally binding unless a country decides to withdraw from them.

This paper argues that the protection of market access rights requires considerable flexibility in order to remain suitable for the strict application of the principle pacta sunt servanda, since market realities change quickly, therewith altering the nature of corresponding international obligations. With regard to the interpretation of the legal scope of, in particular, the general exception clauses in international economic law, otherwise inconsistent trade measures originating in a popular vote qualify in principle as ‘necessary for the protection of public morals’ (within the meaning of GATT Art. XX(a) or GATS Art. XIV(a)). Reverting to majority decisions in a popular vote on most pressing concerns regarding trade policy would, thus, provide a legal way of mending the gap between excessively static international economic law and expedient governance of trade-related issues.

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Weiler (2004), pp. 547–562.

See Ernst-Ulrich Petersmann, Between ‚member-driven’ WTO governance and ‚constitutional justice’: Judicial dilemmas in GATT/WTO dispute settlement (Florence: EUI Working Papers LAW 2018/04); Wolff (2016), pp. 187–208; Fulda (2002).

Weiler (2004), Wolff (2016), Binder (2012), pp. 909–934.

Weiler (2004), p. 548.

See Charlotte Sieber-Gasser, “Democratic Legitimation without Transparency? The Peculiar Case of Modern Trade Agreements,” SSRN, November 10, 2016, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2867597.

Particularly unclear are often the authorities and procedures needed to terminate international treaties in domestic law, as well as those to be invoked when existing treaties are revised.

See Amirfar and Singh (2018), pp. 443–459.

See Swan (1980), pp. 159–235; Koh (2018), pp. 432–481.

Generally, the Federal Council is assumed to have the authority to terminate international obligations, based on Art. 184:1 Swiss Constitution. Authority could also extend to ministries responsible for the conclusion of the respective international agreement. Even a referendum may be held to that end. See Keller and Balazs-Hegedüs (2016), pp. 712–724, 723.

Basically, the judgment clarified that authority to terminate international obligations lies with ministers alone, unless such termination results in a change in UK domestic law. In the latter case, ministers require an Act of Parliament providing for such termination. See Andrew Lang, Parliament’s role in ratifying treaties (London: Briefing Paper No. 5855, 17 February 2017, House of Commons Library); Judgment of the UK Supreme Court in R (Miller) v Secretary of State for Exiting the European Union, [2017] UKSC 5.

Helfer (2010), pp. 65–80, 69–70.

Helfer (2005), pp. 1579–1648, 1604.

In particular, the strength of good faith inherent in pacta sunt servanda, along with political and economic constraints preventing the denunciation of international obligations. See also, Helfer (2010), p. 67ff.

See Janis (1988), pp. 359–363.

See Pauwelyn (2017), pp. 1119–1126, 1121–1122.

With the notable exception of the Trade Facilitation Agreement, WTO negotiations regarding trade and development (Doha-Round), e-commerce, dispute settlement, labour migration, agriculture, energy and many more, have not delivered substantial results in over 20 years. See Mitchell and Mishra (2018), pp. 1073–1134; Wilkinson (2018), pp. 418–435; Hoekman (2011); Conrad (2011).

See Haley (2018), Serge L. Wind, “The Decline of Manufacturing in the U.S. Economy: Impacts of China’s ‚Trade Shock’, Trump’s Protectionist Tariffs, and the Drivers of Manufacturing Job Losses,” SSRN, February 22, 2017, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2919986; Auerback (2017), pp. 54–61; Rodrik (2011); Crouch (2004), Stiglitz (2002).

General Agreement on Tariffs and Trade (GATT), October 30, 1947, https://www.wto.org/english/docs_e/legal_e/gatt47_01_e.htm.

See Amrita Narlikar, “A Grand Bargain to Revive the WTO,” CIGI, May 11, 2020, https://www.cigionline.org/articles/grand-bargain-revive-wto.

See Petersmann, “WTO Governance”.

See Higgott and Erman (2010), pp. 449–470; Besson (2011), Krajewski (2010), Fakhri (2011), pp. 64–100.

In the sense of the ordinary meaning and original intent of the parties, in line with Art. 31–32 Vienna Convention on the Law of Treaties (VCLT); see Linderfalk (2007), p. 10; Ammann (2020), p. 199ff.

In light of the purpose, values, legal, social and economic goals, in line with Art. 31(1) and 31(3) VCLT; see Linderfalk (2007), p. 203ff.; Ammann (2020), p. 209f.

See Narlikar (2020).

For example, the Comprehensive Economic and Trade Agreement (CETA), October 30, 2016, http://trade.ec.europa.eu/doclib/docs/2014/september/tradoc_152806.pdf; or the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), March 8, 2018, https://www.mfat.govt.nz/en/trade/free-trade-agreements/free-trade-agreements-in-force/cptpp/comprehensive-and-progressive-agreement-for-trans-pacific-partnership-text-and-resources/. See also Davor Jancic, “The Democratic Puzzle of ‘Living’ Megaregional Agreements: TTIP and TPP,” SSRN, February 20, 2019, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3329301.

See von Staden (2012), pp. 1023–1049; Barbara Cooreman, “Extraterritorial Environmental Concerns and Public Morals: Testing the Limits of Article XX(a) GATT after Seals,” SSRN, October 13, 2015, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2673464.

See Tran (2010), pp. 346–359; Doyle (2011), pp. 134–167.

See also Art. 27 VCLT: ‘A party may not invoke the provisions of its internal law as justification for its failure to perform a treaty.’

For more details on the core principles of international economic law, see Herdegen (2016).

See Van den Bossche (2019).

Lehne (2019).

Understanding on rules and procedures governing the settlement of disputes (DSU), Annex 2 of the WTO Agreement, April 15, 1994, https://www.wto.org/english/tratop_e/dispu_e/dsu_e.htm.

Petersmann, “WTO Governance,” 3–4; Lehne (2019).

William Alan Reinsch, Jack Caporal and Jonas Heering, “Article 25: An Effective Way to Avert the WTO Crisis?, Center for Strategic and International Studies CSIS,” CSIS, January 24, 2019, https://www.csis.org/analysis/article-25-effective-way-avert-wto-crisis; Charlotte Sieber-Gasser, “Please, Reboot – Small Economies and the WTO Appellate Mechanism in Times of Trade War and COVID-19,” SSRN, September 16, 2020, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3692352.

Payosova et al. (2018), p. 3; Glöckle and Würdemann (2018), pp. 976–982; Sieber-Gasser, “Please, Reboot”.

Lehne (2019), p. 105.

See Hoekman and Mavroidis (2019), Lehne (2019), p. 109ff.

Lehne (2019), p. 114.

See Schroeder and Schonard (2001), pp. 658–664.

Since its entry into force in 1995, more than 551 disputes were brought to the WTO-dispute settlement body. See also Bhatia (2018), Fiorini et al. (2019).

von Engelhardt (2005), p. 17.

See Charlotte Sieber-Gasser, “Handelsbeziehungen Schweiz – EU im globalen Kontext,” sui generis, January 21, 2020, https://doi.org/10.21257/sg.116; Sieber-Gasser, “Please, Reboot”.

This remains true even if FTAs endeavor to modernize trade rules to the extent of rendering market access rights more dynamic and of encompassing additional regulatory areas related to trade, such as labor rights, the protection of the environment and of the climate, human rights and digital trade, as well as data protection; in particular commitments in trade in goods and in services are always building on their WTO origins, given that FTAs are required to comply with conditions set out in Art. XXIV GATT and Art. V GATS. Also, von Engelhardt (2005), p. 24.

Agreement on Agriculture (AoA), April 15, 1994, https://www.wto.org/english/docs_e/legal_e/14-ag_01_e.htm.

General Agreement on Trade in Services (GATS), April 15, 1994, https://www.wto.org/english/docs_e/legal_e/26-gats_01_e.htm.

Agreement on Technical Barriers to Trade (TBT), April 15, 1994, https://www.wto.org/english/docs_e/legal_e/17-tbt_e.htm.

Agreement on the Application of Sanitary and Phytosanitary Measures (SPS), April 15, 1994, https://www.wto.org/english/docs_e/legal_e/15sps_01_e.htm.

Agreement on Government Procurement (GPA), April 15, 1994, https://www.wto.org/english/tratop_e/gproc_e/gp_gpa_e.htm.

Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), April 15, 1994, https://www.wto.org/english/docs_e/legal_e/27-trips_01_e.htm.

Agreement on Trade Facilitation (TFA), December 7, 2013, https://www.wto.org/english/docs_e/legal_e/tfa-nov14_e.htm.

Marrakesh Agreement Establishing the World Trade Organization (WTO Agreement), April 15, 1994, https://www.wto.org/english/docs_e/legal_e/04-wto_e.htm.

See also Petersmann, “WTO Governance”.

See Sieber-Gasser, “Democratic Legitimation”.

See WTO (2019), p. 42.

For more details, see Rodrik (2011).

von Engelhardt (2005), pp. 14–15.

Fulda (2002), p. 86.

Petersmann, “WTO Governance,” 3.

Petersmann, “WTO Governance,” 6.

Weiler (2004), p. 561.

E.g. GATT Art. XX and GATS Art. XIV.

GATT Art. XX.

European Communities – Measures Affecting Asbestos and Asbestos-Containing Products, WT/DS135/AB/R, 12 March 2001.

United States – Measures Concerning the Importation, Marketing and Sale of Tuna and Tuna Products, WT/DS381/AB/RW, 20 November 2015.

Confirmed, e.g. in US – Dolphin I, US – Dolphin II, and US – Shrimp.

More recently e.g. EC – Seals, Brazil – Taxation, or US – Tariffs (China).

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