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THE LAW AND THE ECONOMY: THE LEGAL TOOLBOX FOR INTERNATIONAL
ECONOMIC RELATIONS AND REGIONAL INTEGRATION
 The International Economic Law (IEL) has different types of
rules at its disposal to create the legal frameworks of the
...
 How can the law contribute to the increase in
economic flows between two or more states?
 Law can foster international ...
 The analysis of rules as instruments must be related to
the three main approaches of international rules
promoting integ...
 The obligations that accompany liberalization are strictly
limited in scope to international transactions.
 Obligations...
 Uniform rules serve integration goals extremely well, but
are very difficult to set up for at least three reasons.
o Fir...
 The first compartment of the essential “legal toolbox”
used in the regulation of international economic relations
compri...
 The expression “NTBs” encompasses two concepts that
differ from the political, legal and economic perspectives.
1. It re...
 It would seem advisable to distinguish between “non-tariff
barriers applied to international trade” and “indirect barrie...
 Two different techniques are used for enacting
international economic rules necessary for conducting
international econo...
 All legal rules have the same effect and may be equally
invoked by any person thereby affected.
o Laws have different at...
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Lecture 3 ib 404 institutional framework for international business

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Lecture 3 ib 404 institutional framework for international business

  1. 1. THE LAW AND THE ECONOMY: THE LEGAL TOOLBOX FOR INTERNATIONAL ECONOMIC RELATIONS AND REGIONAL INTEGRATION
  2. 2.  The International Economic Law (IEL) has different types of rules at its disposal to create the legal frameworks of the different sub-systems of international economic relations, including regional integration processes.  There are three main types of rules o Market access rules o Rules of uniform law o Rules of treatment  The art is to know how to combine these rules in order to achieve the objectives pursued in each case. For this, it is also essential to analyze the problems to be dealt with and to know how to distinguish between them without confusing their nature so as to be able to find the type of international rule which is more suitable to solve them. 7/6/2013 Institutional Framework Lecture 3 2
  3. 3.  How can the law contribute to the increase in economic flows between two or more states?  Law can foster international economic flows by eliminating, or at least reducing, those norms that restrict access of economic flows to respective domestic markets. o Market access liberalization may not always bring the expected results. This would respond primarily to the fact that economic flows are determined to a large extent by economic conditions. These economic conditions will remain unchanged, notwithstanding transformations in the rules governing access to different national markets. Still, the inability of market access liberalization to deliver is also closely related to strictly legal circumstances. 7/6/2013 Institutional Framework Lecture 3 3
  4. 4.  The analysis of rules as instruments must be related to the three main approaches of international rules promoting integration. 1. The first is to impose obligations on liberalization and access to markets. 2. The second is to impose certain obligations of non- discrimination on the legal framework applicable to transactions and operations covered by the agreements such as MFN status or national treatment obligations. 3. The third is to create uniform legislation establishing a common legal framework for transactions and operations covered by the agreement. 7/6/2013 Institutional Framework Lecture 3 4
  5. 5.  The obligations that accompany liberalization are strictly limited in scope to international transactions.  Obligations with regards to treatment as well as uniform or harmonized rules, apply essentially to internal transactions. They are much more intrusive politically, but experience seems to prove that integration cannot rely solely on liberalization obligations in order to make sense in legal terms. 7/6/2013 Institutional Framework Lecture 3 5
  6. 6.  Uniform rules serve integration goals extremely well, but are very difficult to set up for at least three reasons. o First, they are technically difficult to agree on because of different legal traditions and contexts of parties, making it difficult to agree even on terminology and definitions. o Second, they are intrusive in relation to the internal political process in so far as they are locked-in by international law, which precludes policy changes in internal regulation that may follow a switch of domestic governments and political majorities. o Third, they threaten the adaptability of the international scheme because they are more difficult to change than domestic rules since they require a consensus among all parties. 7/6/2013 Institutional Framework Lecture 3 6
  7. 7.  The first compartment of the essential “legal toolbox” used in the regulation of international economic relations comprises three types of rules, two of which are relatively simple to draft (those on access and treatment), and one which is considerably more complex (uniform law).  Any of them will be insufficient in itself to achieve certain policy goals, rather, the three categories of rules need to be combined. The art of international economic law thus lies in adapting the legal toolbox to policy objectives. 7/6/2013 Institutional Framework Lecture 3 7
  8. 8.  The expression “NTBs” encompasses two concepts that differ from the political, legal and economic perspectives. 1. It refers to direct barriers to trade (measures applicable at the border) that apply exclusively to imports and exports but are not tariffs (quotas, import related taxes, anti-dumping measures, licenses etc.). 2. The concept of NTBs refers to indirect barriers to trade (both domestic and international), which result from the application of domestic rules that will most likely vary from country to country. 7/6/2013 Institutional Framework Lecture 3 8
  9. 9.  It would seem advisable to distinguish between “non-tariff barriers applied to international trade” and “indirect barriers to international trade resulting from the application of internal rules”. o Non-Tariff barriers to trade refer to domestic rules of market access. Thus, such rules can be eliminated or their applicability can be narrowed, by international market access liberalization rules. o Indirect barriers to trade coming from the application of domestic laws, in turn, refer to the problem of different domestic laws governing the production and distribution of both national and foreign goods. This discrepancy generates "barriers" or “hindrances” and can result in a situation where products that are manufacturated and traded in country A, in accordance with its legislation, might not be able to be sold in country B. In principle, this difference can only be tackled at the international level with the implementation of uniform law. 7/6/2013 Institutional Framework Lecture 3 9
  10. 10.  Two different techniques are used for enacting international economic rules necessary for conducting international economic relations: 1. To insert rules on substance into the treaty that must be complied with by the parties 2. To institute some mechanism for creating new legal rules on substance within the framework of the treaty  We can refer to rules enacted by means of the first technique as “primary law” and to rules enacted by means of the second as “secondary law”. 7/6/2013 Institutional Framework Lecture 3 10
  11. 11.  All legal rules have the same effect and may be equally invoked by any person thereby affected. o Laws have different attributes and effects. Individuals are not in the same position before them. While these attributes and effects are important, they are not crucial when examining the degree of effectiveness that the law has to mould reality. o The observance of the law relies on many factors; to a great extent, it depends on “civic and political culture” which, in turn, depends on many factors and on the evolution of these factors over time. 7/6/2013 Institutional Framework Lecture 3 11

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