Externalities, Complexity and Justice: Exploring the New Paradigm of ‘Deliberative Trade Policy’

Abstract

The current stalemate of the Doha round clearly reveals the severe institutional deficiencies of the design of the WTO and international trade policy. This reflects economic and socio-political developments which stay in the focus of Clark’s seminal treatment of economic responsibility, namely increasing complexity and interdependence. The reality of the WTO stays in stark tension with the constitutionalist claims that have been made after its establishment. I argue that these problems partly result from adopting a wrong conceptual framework going back to Kant, coined ‘transcendental institutionalism’ by Amartya Sen. In the context of economics, this amounts to highlighting ‘efficiency’ as the ultimate beacon to evaluate institutions of international trade, against the background of general equilibrium models of ‘free trade’. The alternative approach is ‘realization-focused-comparisons’ which entail procedural justice in including diverse values and perspectives in a deliberative process judging institutional changes and their outcomes. However, I show that the existing rules and practices of the WTO already implement realization-focused-comparisons, though incompletely and messy. My example is the TRIPS: On the one hand, the implementation of the TRIPS and recently related ‘TRIPS plus’ initiatives in bilateral and plurilateral trade policy initiatives clearly aim at harmonization and hence reflect the ‘transcendental institutionalism’ stance. On the other hand, many TRIPS rules, even the basic ones, already allow for the inclusion of diverse values and conditions. What is problematic is the fact that the interpretation of these rules is only left to the dispute settlement process, thus becomes strongly path-dependent, without allowing for systematic and comprehensive deliberative processes among all affected parties beyond their representation by member governments. I propose to move from Kant to Hegel in designing the institutional setting of ‘deliberative trade policy’. Hegel offers a systematic solution to the puzzle how to reconcile the idea of national sovereignty in trade policy with the notion of a global civil society as a constitutive element of the international trade order.