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.

Strategic Litigation at the WTO

A recent paper by Tilman Kruger on "The Judicialization of Governance in the WTO: Strategic Litigation as an Explanatory Factor?" throws up very interesting issues about the role of the Appellate Body of the WTO, a rule based system vis a vis a power based system, "judicial activism" of the adjudicatory bodies, the impact of the failure of political negotiations on judicial decision making, interpretation of Agreements in the light of global realities when political deadlock fails to suitably legislate to reflect business realities. 


The political and judicial organs have been the two sides of the multilateral organisation. However, with the Doha Development Agenda facing an impasse and consensus looking bleak atleast till the economic downturn subsides, observers believe that the judicial organ has played a decisive part in laying down the "law" for countries to follow. While a majority of decisions are based on a safe "textual" interpretation of the provisions, it is inevitable that instances of creative interpretations and "judicial activism" find their way in Appellate Body decisions. Also when there is ambiguity in the trade agreements and the ambiguity does not get resolved by political consensus and amended rules, the judicial organs have to perforce play the role of interpreting the rules in the light of their understanding of reality and law. It is akin to national judicial bodies "judicial activism" when the legislative or executive branch fails to deliver. However, there are dangers of this judicial activism from political resistance to non-compliance.

Another important point that is made by Tilman is the concept of "strategic litigation" in promoting judicialization of the WTO. Alvaro Santos too in his brilliant piece had alluded to strategic lawyering by Brazil to further its domestic agenda at the WTO. 

Tilman compares the U.S. and EU attitudes towards engaging the WTO to strategically litigate to further their long term interests. the ability to "strategically litigate" at the WTO depends on a variety of factors, especially domestic ones. The paper argues that the Eurpoean Commission's Director General of Trade is far more independent to initiate disputes at the WTO level thatn the USTR which is constrained by domestic political compulsions. This would be true of many other countries. Explaining the importance of "strategic litigation" (using the WTO judicial process to pursue long term interests), the author notes:

"Viewed through the lens of strategic litigation, important shifts in the evolution of WTO governance and its judicialization did not result from a conspiracy of some sorts, blatant judicial activism or an unfettered influence of powerful WTO members. At the same time, they are more than just the results of one or another form of judicial interpretation. In the incidents discussed, the strategic behavior of litigants brought the Appellate Body in a position in which it modified and developed aspects of WTO law and governance. WTO dispute settlement proceedings thus served as an effective forum for the shaping of WTO governance – in the court room, not in the green room."

A few important points that this paper highlights:

1. The importance of judicialization of the WTO in light of the complex political deadlock of the Doha round needs no emphasis.

2. Judicialization can range from over active engagement of member states to an Appellate Body engaging in creative interpretation of Agreements.

3. Developing countries may have a few points to take from the strategy EU or Brazil undertakes in this regard. While there is a constant domestic criticism that WTO is leading to an erosion of sovereignty, can developing countries explore the possibility of engaging in strategic litigation at the WTO to further their domestic development agenda. Trachtman has argued that the WTO offers sufficient policy space for countries to implement their domestic policy space. Can this be channelized to engage the WTO, in the judcial body, with strategic litigation to achieve long term, development goals? What would it entail domestically for developing countries to achieve this?

4. The tension over judicialization underlines the dichotomy between a rule based and power based system. While both are important constituents of the system, a tilt in either favour may be disastrous for the multilateral system. It would be the responsibility of member countries to engage in continuous dialogue to ensure that the balance is not breached. More decisions should be the result of the court room rather than the green room, but to gain wider consensus and implementability the role of negotiation and political consensus is equally important, perhaps not of the green room variety.


5. The ability to engage in "Strategic litigation" is also dependent on a variety of domestic factors. Primary amongst them is what importance WTO litigation is given in the political and bureaucratic circles in the context of a country's development agenda as well as economic strategy. How is it perceived domestically as well as what level of engagement exists in understanding and comprehending the potential it has to achieve its purpose. Further, the level of independence the agency representing the country at the WTO has in terms of taking decisions to strategically litigate is also important. Is it taken at the political level (legislative or executive) or at the bureaucratic level. This would decide to a large extent the degree of strategic litigation as well as the shift from an adhoc based system to a more long term view of the possibilities.