Thomas Cottier, Challenges ahead in International Economic Law, Journal of International Economic Law, 2009, p. 1-13
a) Background
The text is an editorial, written by Thomas Cottier as member of the board of editors of the Journal of International Economic Law following the shock of the financial crisis of 2008 which occurred in the context of globalised financial markets and deregulation. According to John. H. Jackson: “The policy path through the many facts and circumstances which have good or bad effects on world economic situations, and thus on international economic law, is extraordinarily complex and unclear. This landscape truly needs some roadmaps, but few of these exist and those that are used are often misleading.” The text is a critical assessment of the unexpected and fundamental threat of the financial crisis of autumn 2008 to the trading system of the world today. At the centre of this text is an agenda for further research in law based on lessons learnt from the financial crisis. The article provided the foundation for more extensive research on the relationship of trade, finance and monetary affairs. It eventually resulted in two edited volumes on the subject.
b) Summary
^The financial crisis of autumn 2008 called into question the preoccupation of the trade law community with WTO law. The “open trading system is threatened from an angle from which it is badly prepared, and from which no disciplines of comparable importance and effectiveness are in place in international economic law … it risks being outflanked, ambushed and stabbed in the back”: of course this is not new. Since the Dutch tulip bubbles in 1613, up to the most recent crisis, ten truly major financial crises with comparable characteristics have occurred and influenced international trade. Thomas Cottier says that for many years the triade of multilateral institutions seemed to work in a supportive manner. Yet, place and sequence of crisis have been increasing since World War II. No less than eighteen financial crises and bubbles burst, both minor and larger ones on a national or regional scale have been reported during that time. Since 1995 alone, there have been five to six crises.
The fundamentally different legal approach between trade and monetary and financial affairs in international economic law may partly be due to diverging power structures and the nature of the subject matter. It seems paradoxical that financial services are among the most regulated businesses in domestic law, but that no rules of such significance exist on the global level for the most advanced global players. According to Cottier, trade and finance, in the end, will need virgin regulatory approaches and legal structures. Trade lawyers so far have left the monetary part of the equation largely off their radar and outside their field of interest. The lawyers developed interesting institutional and constitutional issues in monetary affairs, but left policies entirely to economists. These financial crises show a loss of faith in the professional economist, to which the field of monetary affairs was assigned. The crucial point is that the overall system failed to take preventive action. The lawyers will observe that the economic fundamentals upon which current approaches to international monetary policies and financial law – or a lack of it – are based upon theory, which did not stand the test of the day.
Lawyers, according to Cottier, can no longer be prepared to leave matters as before. Advised by economics, the lawyers have failed to do their homework as a legal community. Cottier’s push for a joint effort and campaign rests upon the findings of science and scientists in the field of globalization. The financial crisis therefore, is also a crisis of social sciences, in particular of law, economics and international relations theory. This “epitomizes the failures of a strict disciplinary tradition of fragmentation and specialization, and the lack of truly interdisciplinary research”; the crises will hopefully have a profound effect, and offer a chance to rethink and improve the global economic system and its legal instruments.
The text identifies five challenges that need to be dealt with: (1) there needs to be a deepening of the relationship between international economic law and economic needs; (2) debate on horizontal problems of fragmentation and functionalism of international organizations and different regulatory fields in international economic law needs to be accelerated; (3) the continuing challenge of appropriate vertical allocation of powers facing international economic law means that the emerging doctrines of constitutionalization and multilayered governance will be of assistance in shaping new regimes, in particular in financial and monetary affairs ; (4) it is an obvious necessity to debate the proper structures of legal research and teaching; (5) finally there is a need to rethink the priorities in research and its role in international policy- making .