The (mis)alignment of the trade and monetary legal orders

Abstract

Commentators view the fragmentation of regulatory authority as a challenge to addressing economic issues within countries. As economic externalities and financial crises extend transnationally, the issue of the regulatory alignment of transnational legal orders (TLOs) deepens. There is some literature on the fragmentation of international law and the rise of regime complexes in international relations (Raustiala & Victor 2004; Koskenniemi 2006). But there has been little study of how different legal orders align and the implications of such alignment for national, transnational, and global social order. This chapter addresses the implications of the alignment of two legal orders, one for monetary law and one for trade law, that vary across issues over time. We address shifts in the alignment of trade and monetary law across three critical economic issues: balance-of-payments imbalances, exchange rates, and capital controls. For transnational legal ordering to be effective, the meaning and practice of legal rights and obligations must settle within national jurisdictions, and this settlement will depend in part on the coordinated alignment of different legal areas that address an issue. This chapter examines the history of the interface of these two legal areas across these three issues with the aim of building theory on how the alignment of different legal orders is important for understanding global and transnational governance and their challenges.