Thursday, January 10, 2013

David Trubek, BRICS economies and domestic policy space

The issue of domestic policy space in the context of international economic law and policy has been a constant theme of this blog. See posts here, here and here for an overview of thoughts. Does WTO law restrict democratic, regulatory autonomy unreasonably? Is the national development paradigm unduly affected by international trade rules? Are countries sovereignty affected? Is there domestic policy space to implement policies as per a national developmental agenda? 

While many scholars have attempted to address this issue and offer contrary opinions, I found David Trubek's piece in the context of the growth of the BRICS economies particularly contextual and interesting. Titled "Reversal of Fortune? International Economic Governance, Alternative Development Strategies, and the Rise of the BRICS" he asserts that there is space within international trade rules that developing economies can use to further their developmental agendas. Taking note of the ascendancy of developing economies in interpreting WTO law especially the TRIPS Agreement, China's proactive role of State -led development within the WTO system and Brazil's innovative use of TRIPS flexibilities, Trubek avers that there is scope for a "development-friendly" interpretation of WTO law:
"All these developments suggest that Faundez’s assessment of international economic law and policy may be overly pessimistic. The emerging economies are no longer so much under the sway of the IFIs and are beginning to have some say on the rules of the game. The BRICS are finding ways to shape WTO law to fit alternative strategies. BITs have become more reciprocal and more tolerant of industrial policy. Trade bureaucrats and investment arbitrators may still come disproportionately from developed countries and/or accept neo-­‐liberal ideas. But this may be changing. And as the role of the G-­‐20 expands the BRICS should have more of a chance to influence global policy."
However, there are many questions:

1. What really constitutes a development friendly paradigm of domestic policy? Are the State and market two exclusive domains or extremities? Can we see a convergence? Do State led development paradigms always have the answers? Can they be more oppressive, at times, than market led growth? and vice versa?

2.Trade is essentially guided by national interest. In this sense, the national interest of many developing countries conflict with each other as they vie for market access for their products or protect their domestic industry from products from outside. Is BRICS co-operation possible in this difficult situation of national self-interest? Is it too optimistic to implement? Brazil is seeking inclusion of currency misalignment as an area where WTO must intervene. the country to be largely affected by this is another BRIC country - China. What implication does this have  for BRICs co-operation in re-interpreting international economic law?

3. While BRICS co-operation and overall strategy to re-interpret international trade rules to advance their national priorities may be a positive step, to expect a bonhomie may be over-optimistic. After all, national trade interests would play a crucial role in how countries would react.

Trubek himself highlights some of the limiting factors to BRICS so-operation, including this:
"The BRICS share some general approaches to development and have common interests in making some changes in international economic law. But they may not always be in agreement: for example, Papa notes that China and India have taken different stances towards the scope of BITS and appropriate processes for dispute settlement. And there may be real conflicts between these countries: thus many in Brazil have been very critical of China’s trade and currency policy."
Interesting times for a creative re-interpretation of multilateral trade rules to advance genuine, national priorities. While we may not agree with what actually constitutes "genuine, national priorities", the possibility of a creative interpretation is in itself re-assuring.

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