Faculty View

The Changing Tide of Trade by Constance Z. Wagner Associate Professor of Law

Constance Z. Wagner, B.A. (Northwestern), J.D. (Columbia), LL.M. (Konstanz), teaches international economic law, corporate law and financial regulation at Saint Louis University School of Law. She is on the faculty of the Center for International and Comparative Law and directs the LL.M. program in American Law for Foreign Lawyers. She is affiliated faculty with the Women's Studies program at Saint Louis University. Her recent scholarship has focused on the impact of trade law and policies on women and the rise of corporate social responsibility. Professor Wagner practiced in the areas of corporate law and financial regulation in New York City before entering the teaching profession. She researched international trade law in an institute on globalization while she was a graduate student at the Universitaet Konstanz. She has been active in the American Branch of the International Law Association, International Trade Law Committee, the American Society of International Law, International Economic Law Interest Group and the Missouri Bar, International Law Committee.

The Saint Louis University Public Law Review hosted its annual spring symposium this year on Friday, April 4. This symposium, “The Changing Tide of Trade: The Social, Political and Environmental Implications of Regional Trade Agreements,” was co-sponsored by the School of Law’s Center for International and Comparative Law and the American Branch of the International Law Association. Symposium papers will be published in an upcoming special issue of the Public Law Review.

Regional economic integration is an important topic in international trade these days. Regional trade agreements (RTAs) are not a new phenomenon, but there has been an acceleration in the number of such arrangements in recent years, notably since the creation of the World Trade Organization (WTO) in 1995. The WTO predicts that this trend will continue and that 400 RTAs will be in place by 2010. At present, all members of the WTO, some 150 countries, are members of at least one RTA, with the exception of Mongolia.
The term RTA encompasses several different types of trading arrangements, including free trade agreements (FTAs), such as the North American Free Trade Agreement (NAFTA), in which member countries have agreed to reduce or eliminate trade barriers among themselves, and customs unions, such as the European Union, a deeper form of economic integration in which members also maintain common external tariffs and trade policies. The vast majority of the RTAs currently in force are FTAs.

There is some friction between the WTO regime and RTAs because RTAs discriminate against countries outside the regional arrangement, and this is inconsistent with the most-favored nation principle, one of the conceptual pillars of the WTO. Nevertheless, the WTO rules permit the establishment of RTAs, which many view as complementary to the WTO’s goal of promoting global economic welfare through trade liberalization. However, the effects of RTAs on global trade flows and economic growth are not clearly understood, nor is their impact on regional economies. RTAs are subject to regulation by the WTO and, increasingly, are being scrutinized by the WTO to determine whether they are consistent with the WTO treaties and are serving as “building blocks” rather than “stumbling blocks” to achieving the WTO’s mission of global economic welfare.

Regional trade agreements vary in their scope. Many modern RTAs concern matters other than tariff-cutting for trade in goods, including trade in services, product standards, customs administration and trade policy measures such as safeguards. Some go beyond trade policy matters to encompass rules on investment, environmental protection and core labor standards. Some of these new agreements have generated controversy and criticism, as evidenced by the recent debates regarding NAFTA among U.S. presidential candidates.

National governments enter into RTAs for both economic and political reasons, in order to increase trade and investment opportunities across national borders, but also to strengthen political ties with allies. These twin goals are evident in recent U.S. trade policy. Although the United States was a leader in the multilateral trade negotiations under the General Agreement on Tariffs and Trade that eventually led to the establishment of the WTO, U.S. trade policy is increasingly being dominated by bilateral and regional FTAs. The FTAs currently in force to which the United States is a party include NAFTA, the Dominican Republic - Central American Free Trade Agreement (DR-CAFTA), and bilateral FTAs with Israel, Jordan, Singapore, Chile, Australia, Morocco and Bahrain. Bilateral FTAs have also been concluded with Peru, Colombia, Oman, Panama and South Korea. Other negotiations have been undertaken but have either failed or are currently dormant, including the effort to establish a Free Trade Area of the Americas and to conclude bilateral agreements with Malaysia, Thailand, the
South African Customs Union and the United Arab Emirates.

This year’s Public Law Review symposium was planned as a forum in which leading scholars in the area of international trade law could address the social, political and environmental implications of the proliferation of RTAs, with a special emphasis on the FTAs that the United States has entered into in recent years. The conference was organized around three thematic panels and also included a keynote speaker, Commissioner Irving A. Williamson of the United States International Trade Commission, who addressed the role of the Trade Commission in FTA negotiations and the process by which the U.S. government determines the relevance of its national economic interests, including its development concerns, in such negotiations.

The first panel, which I moderated, focused on “Recent RTAs in a Legal, Economic and Political Context.” Professor Armand de Mestral, Jean Monnet Chair in the Law of International Economic Integration and Co-Director of the Institute of International Studies, McGill-Université de Montreal, presented an overview of the global development of RTAs, including historical, economic and legal analyses of the process that has resulted in a so-called “spaghetti bowl” of trade agreements. Professor David A. Gantz, who is the Samuel F. Fegtly Professor of Law and Director of International Trade and Business Law at the Rogers College of Law at the University of Arizona, spoke about the Bipartisan Trade Deal concluded in May 2007 between the Bush administration and Democratic congressional leaders to resolve long-standing differences over U.S. trade policy relating to the negotiation of FTAs. Professor Chi C. Carmody, Associate Professor and Canadian Director, Canada-United States Law Institute, University of Western Ontario School of Law, addressed the use of the WTO transparency mechanism for RTAs as a means to examine the accommodation of such trade arrangements within the global trading system. Finally, Professor Jorge Perez, Professor of Law and International Studies at the Universidad Central de Venezuela, examined three RTAs involving South American countries: the U.S.-Colombia Free Trade Agreement, the Southern Common Market (MERCOSUR) and the Bolivarian Alternative for the Americas (ALBA). These represent three different models of trade liberalization within the region, with varying environmental, social and political consequences.

The second panel discussion, moderated by Professor David L. Sloss, was “Implications of RTAs: Issues of Social Justice, Development and Human Rights.” Professor Raj Bhala, Rice Distinguished Professor at the University of Kansas School of Law, spoke about issues of social justice within FTAs and suggested that a paradigm shift from economics to human dignity might be in order and would result in greater accommodation for human, labor and environmental rights than currently exists. Professor Cherie O. Taylor, Professor of Law from the South Texas College of Law, discussed bilateral FTAs as a “second best option” for developing countries, focusing on the asymmetries between developed and developing countries in negotiating and implementing such agreements. I examined gender analysis of international trade agreements as a tool to redress the gender-differentiated effects of recent FTAs entered into by the United States, with a particular emphasis on investment and labor rights issues.

The third panel, moderated by Professor Douglas R. Williams, concerned the “Implications of RTAs: Environmental, Labor and Other Social Issues.” Professor Karen E. Bravo, Assistant Professor of Law, Indiana University School of Law - Indianapolis, spoke about the treatment of labor liberalization, namely the free movement of persons across national borders, in four regional trade agreements: the Caribbean Community and Common Market (CARICOM), MERCOSUR, NAFTA and DR-CAFTA. Professor Sanford E. Gaines, Professor of Law and Director of The Utton Transboundary Resource Center at the University of New Mexico School of Law, analyzed the potential for strengthening environmental protection programs and environmental cooperation through RTA negotiations, focusing on the examples of the European Union, NAFTA, DR-CAFTA and other U.S. RTAs. Professor Chris Wold, Associate Professor of Law and Director of the International Environmental Law Project at Lewis & Clark Law School, critiqued the use of the North American Agreement on Environmental Cooperation (NAAEC), the NAFTA environmental side agreement, as a model for the environmental component of more recent FTAs that the United States has concluded.

The conference drew a large audience of academics, practitioners and students, and there was lively discussion during the question and answer sessions following each panel presentation. We look forward to the publication later this year of the conference papers written by this outstanding group of scholars.