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6 Eur. J.L. & Econ. 5 (1998)

handle is hein.journals/eurjlwec6 and id is 1 raw text is: 1 European Journal of Law and Economics, 6:5-37 (1998) Af © 1998 Kluwer Academic Publishers Trade Liberalization and Regulatory Diversity: Reconciling Competitive Markets with Competitive Politics MICHAEL TREBILCOCK Faculty of Law, University of Tronto ROBERT HOWSE Faculty of Law, University of Tronto Abstract This paper questions the more extreme or indiscriminate claims for international harmonization or policy convergence with respect to many areas of within-the-border domestic policy diversity. The welfare implica- tions, both domestic and global, of policy harmonization or convergence are highly ambiguous in many contexts. Proponents of more extreme forms of international harmonization of domestic policies also severely discount the importance of competitive governments and politics as a form of demand revelation. A third premise is the distinction between unilateralism and contractarianism, which argues for the adoption of ground-rules in inter- national trade treaties that minimize the extent to which harmonization can be induced by judicial fiat on the one hand, or threats of unilateral sanctions on the other. A final premise is that despite the achievements of the European Union in promoting positive integration, the supranational institutional structures of the EU do not exist now or in the foreseeable future in other international trade and investment contexts, which severely limits the transferability of the EU experience, and argues instead for an elaboration of the negative integration approach that has historically characterized the position of the GATT on NTB's. In the light of these premises, the paper then goes on to examine objections by countries of destination to domestic policies of countries of origin, including (a) anti-dumping duties; (b) competition/anti-trust: export cartels; (c) subsidies and countervailing duties; (d) environmental policies; (e) labour standards. The paper then reverses the perspective and examines objections by countries of origin to domestic policies of countries of destination, including (a) domestic subsidies; (b) competition/anti-trust policies; (c) intellectual property; (d) health, safety, environmental, and conservation measures. The paper concludes by arguing for a refined principle of National Treatment, with appropriately defined exceptions thereto as the framework for evaluating allegations of non-tariff barriers with respect to domestic policy measures beyond or within a particular country's borders. While this conclusion would not, of course, preclude negotiations among countries for mutually beneficial forms of harmonization of domestic policies, it would seek to minimize the threat points that each country brings to these negotiations so as to reduce the risk of coerced forms of harmonization reflecting asymmetric bargaining power, or worse, coerced forms of dis- criminatory managed trade arrangements. Keywords: GATT National Treatment, Technical Barriers to Trade, Harmonization JEL Classification: K20

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