Do the EU and Its Court of Justice Fail to Protect “Strict Observance of International Law” (Article 3(5) TEU) in the World Trading System and in Other Areas of Multilevel Governance of International Public Goods?
© Springer International Publishing Switzerland 2015Christoph Herrmann, Bruno Simma and Rudolf Streinz (eds.)Trade Policy between Law, Diplomacy and ScholarshipEuropean Yearbook of International Economic Law10.1007/978-3-319-15690-3_11
Why Do the EU and Its Court of Justice Fail to Protect “Strict Observance of International Law” (Article 3(5) TEU) in the World Trading System and in Other Areas of Multilevel Governance of International Public Goods?
European University Institute, Via dei Roccettini 9, 50014 San Domenico di Fiesole, Italy
I met Horst G. Krenzler the first time during my work as research fellow at the Max-Planck Institute for International and Comparative Public Law in the late 1970s at Heidelberg, where Krenzler campaigned for the Liberal Democratic Party in the first direct elections to the European Parliament. During our later meetings in EC institutions at Brussels where I represented Germany as legal advisor to the German Ministry of Economic Affairs, our discussions focused less on academic than on diplomatic conceptions of international trade law and policies. This contribution in honour of Krenzler begins with a short discussion of why economic and political theories of trade agreements fail to convincingly explain the reality of international trade law. It then discusses the five major legal narratives of conceptualising, designing and interpreting international trade agreements. The Lisbon Treaty differs from all other international trade agreements by its “constitutional approach” to the regulation of the EU’s customs union and by its “cosmopolitan guiding principles” (in Article 21 TEU) for the EU’s external policies. While the Kadi jurisprudence of the Court of Justice of the European Union (CJEU) and the Solange jurisprudence of the German Constitutional Court are successful examples of European leadership for promoting rule of law in the collective supply of international public goods (PGs) demanded by citizens, this contribution criticises the frequent disregard by political and judicial EU institutions for their legal WTO obligations to provide “security and predictability to the multilateral trading system”, including individual access to justice and judicial remedies in domestic courts. The treatment of EU citizens as mere objects rather than legal subjects of WTO trade rules illustrates a systemic failure to protect international rule of law for the benefit of EU citizens in mutually beneficial international trade, including “strict observance of international law” (Article 3(5) TEU) in conformity with the cosmopolitan legal principles prescribed by EU law (Articles 3 and 21 TEU) for the EU’s external actions.
Failures of Economic Theories to Explain the Design of International Trade Agreements
According to Nobel laureate Paul Krugman, “[i]f economists ruled the world, there would be no need for a World Trade Organization. The economist’s case for free trade is essentially a unilateral case: a country serves its own interests by pursuing free trade regardless of what other countries may do.”1 Economic theories justifying the different reality of reciprocal trade liberalisation in the context of trade agreements can only partially explain trade rules and institutions, for example, the legal ranking—in the General Agreement on Tariffs and Trade (GATT 1947)—of diverse trade policy instruments according to their economic efficiency so as to increase “Kaldor-Hicks efficiency”, enabling governments to use the gains from trade liberalisation for compensating all domestic citizens adversely affected by import-competition and still be better off.2 Yet, the explanations offered by economic “terms-of-trade” theories—i.e. that governments negotiate trade agreements in order to reciprocally liberalise “optimal tariffs” and protect market access commitments against “terms-of-trade” manipulation—are inconsistent with those offered by economic “commitment theories”, according to which reciprocal trade liberalisation commitments are necessary on domestic policy grounds for overcoming political pressures from import-competing producers for “import protection” by enlisting political support from export industries benefitting from reciprocal trade liberalisation (e.g. in terms of additional export opportunities, importation of cheaper inputs). As explained by Ethier and Regan,3 there is little evidence for the claims by “terms-of-trade” theories:
that governments actually engage in systematic “terms-of-trade manipulation” exploiting “national market power”;
that they have the knowledge and political support for manipulating international prices through thousands of “optimum tariff items” aimed at improving terms-of-trade;
that the terms-of-trade tariff revenue will always outweigh the domestic costs from import protection;
that terms-of-trade considerations can explain all trade rules (e.g. prohibitions of trade embargoes, export subsidies, and of voluntary export restraints, the injury requirement for safeguard measures, third-party adjudication, etc.); and
that “politically motivated trade protection” distorting domestic prices is “politically efficient” and therefore not liberalised by reciprocal trade agreements, notwithstanding the fact that trade agreements and trade negotiators tend to focus on reducing politically motivated import protection, export subsidies and voluntary export restraints and hardly ever refer to “terms-of-trade” manipulation.
My own publications have always emphasised that economic theories—for example, explaining the gains from liberal trade, from undistorted market competition, “separation of policy instruments”, use of “optimal interventions” for correcting “market failures”, and efficient policy instruments for addressing collective action problems in supplying “public goods”—are important for the rational design of many trade regulations.4 Unfortunately, economists often continue to use economic models without regard to the legal context of trade policy-making. As “Pareto efficiency” (in the sense of making the government applying the trade policy measure better off and nobody else worse off) remains rare in international trade regulation, defining “efficiency” and “politically optimal tariffs” in terms of whatever policy objectives and preferences a government pursues avoids reviewing the “input legitimacy” of trade regulation, for instance in terms of democratic legitimacy, rule of law, general consumer welfare and respect for human rights. Even though such “principles of justice” are not mentioned in many functionally limited trade agreements (like WTO law), citizens and democratic parliaments increasingly insist on transparent and democratic trade policy-making for the benefit of citizens, as illustrated by the European Parliament’s refusal, in 2012, to ratify the draft “Anti-Counterfeiting Trade Agreement” (ACTA) negotiated by the EU Commission without public debate5 or, in 2014, by the French and German opposition to providing for secretive investor-state arbitration in the Transatlantic Trade and Investment Partnership (TTIP) Agreement. The political and legal goals of democratic constitutionalism to “institutionalise public reason” for the benefit of democratic people and their fundamental rights depend not only on economic, but also on political and legal justifications of trade rules, institutions and dispute settlement systems, for instance in terms of limiting abuses of political and private power and reconciling rational utility-maximisation with the common “reasonable self-interests” of citizens.6 The unnecessary poverty of more than one billion of poor people living on USD 1 per day or less, and the widespread disregard for human rights and general consumer welfare inside many WTO Members, prompt also economists to increasingly challenge reductionist conceptions of the utility-maximising homo economicus and of neglect (e.g. by advocates of “Kaldor-Hicks efficiency” focusing on potential—rather than actual—compensation of losers by winners) for equal rights and personal autonomy (e.g. in political preference aggregation sacrificing some people for the benefit of all others). “Human development approaches” emphasise that satisfaction of basic needs, “development as freedom” (e.g. to develop one’s human capacities) and fulfilment of the human rights obligations of governments are morally and legally more legitimate policy goals than authoritarian governmental preference aggregation to the detriment of general consumer welfare (which would require free trade and non-discriminatory regulation of “market failures” inside and beyond states).7
Competing Legal Narratives of International Trade Regulation
While the “terms-of-trade explanation” of trade agreements focuses on economics, the “commitment theory” perceives politics as the main explanation for reciprocal trade liberalisation commitments. Both approaches reflect (1) power-oriented “Westphalian conceptions” focusing on reciprocal agreements among sovereign states promoting “Kaldor-Hicks efficiency”. They tend to disregard that there are at least four additional, competing legal conceptions of international trade regulation proceeding from different political and legal value premises,8 such as (2) national constitutional and democratic conceptions of multilevel economic regulation promoting accountability of international economic organisations through national parliamentary control and “global administrative law” (GAL) principles; (3) multilevel constitutional approaches to trade regulation in the EU and European Economic Area (EEA) complementing multilevel political trade governance by multilevel judicial protection of constitutional rights and human rights of citizens, for instance in the 31 EEA Member States and beyond (e.g. through the EU Association Agreement with Turkey); (4) multilevel economic regulatory approaches in regional trade agreements among constitutional democracies (e.g. NAFTA) as well as in worldwide Agreements regulating not only discriminatory trade policy instruments, but also non-discriminatory “optimal economic interventions”, corrections of “market failures” as well as of “governance failures” (e.g. in the WTO Agreements on technical barriers, (phyto)sanitary regulations, trade-related intellectual property agreements, and on government procurement); and (5) cosmopolitan approaches to the regulation of transnational commercial law, investment law and regional economic integration by multilevel judicial protection of cosmopolitan rights (such as freedom of contract, property rights, freedom of arbitration, access to justice) by both transnational arbitration and national courts supervising arbitration procedures at the seat of the arbitral tribunal and enforcing arbitral awards in domestic jurisdictions. The following survey of these five “legal narratives” of commercial and trade regulation focuses on their underlying “principles of justice” justifying trade law and governance on the basis of legal and political rather than merely economic principles. In my discussions with Krenzler and other trade politicians (e.g. during my work as GATT legal counsel from 1981 to 1990), my arguments for limiting power-oriented trade policies by multilevel legal and judicial protection of cosmopolitan rights of citizens—aimed at decentralising and depoliticising international trade regulation by empowering citizens to invoke and enforce in domestic courts precise and unconditional treaty guarantees ratified by parliaments for the benefit of citizens—were regularly criticised as being politically “unrealistic” and “too academic”.9 Arguably, this “political realism” of trade diplomats reflects their self-interests in avoiding legal, democratic and judicial accountability vis-à-vis citizens for their welfare-reducing, intergovernmental protectionism and violations of treaty obligations ratified by parliaments for the benefit of citizens. In view of the functional unity of commercial, trade, investment and intellectual property transactions in the context of global “supply chains” for “international production” and distribution of goods and services, economic actors and citizens rightly criticise why commercial, investment and intellectual property rights can be enforced by citizens in domestic courts, but trade disputes continue to be “politicised” and transformed into intergovernmental disputes and potential “trade wars” among states, as illustrated by the about 15 GATT and WTO panel, appellate and arbitral rulings against EC import restrictions for bananas from 1991 up to 2012 and the more than 50 simultaneous court proceedings inside the EU persistently ignoring, at the request of diplomats, GATT and WTO dispute settlement rulings against the EC to the detriment of EU citizens, investors and traders relying on the rule of law promises of EU law and requesting access to cheaper bananas from Latin American countries in conformity with the GATT/WTO obligations of the EU.
International Economic Law (IEL) as “Westphalian Order” Protected by Power (e.g. GATT 1947)?
National “political realism” focuses on states as main international actors in a “billiard ball model” of “international law among egoist states” driven by power politics so as to maximise national security and other “state interests”. Realists claim that, as state-centred international law reflects the status quo distribution of power rather than “principles of justice”, also “international adjudication is unable to impose effective restraints upon the struggle for power on the international scene.”10 International courts can only be effective “in those spheres which do not affect the security and existence of the state”.11 “Political disputes” over the use of force and the distribution of power underlying the applicable rules of international law risk eluding judicial control and being “non-justiciable”, as illustrated by the fact that the Permanent Court of International Justice (PCIJ) considered only once such an international dispute.12 Similarly, also national courts tended to be ineffective in constraining democratic revolutions challenging power-oriented, authoritarian legal systems (e.g. in England in the seventeenth century, America and France in the eighteenth century). Colonial and intergovernmental power politics in the context of the General Agreement on Tariffs and Trade (GATT 1947, which was not ratified by the US Congress) prior to the establishment of its Legal Office in 1982/83 illustrated the IEL dimensions of “political realism”. Many GATT rules and GATT dispute settlement rulings were not effectively implemented inside domestic legal systems (e.g. in the context of import restrictions on cotton and textiles from less-developed countries) if domestic interest groups and power-oriented majority politics objected to the adjustment costs resulting from trade liberalisation and trade regulation. As GATT 1947 was applied only on the basis of a “Protocol on Provisional Application” without ratification by national parliaments and subject to “grandfather clauses” protecting GATT-inconsistent national legislation, the first and second Directors-General of GATT 1947 (i.e. Wyndam White and Olivier Long)—albeit both lawyers by training—deliberately avoided establishing a GATT Office of Legal Affairs up to the 1980s. “Political realists” conceive of IEL as “international law among sovereign states” (e.g. GATT 1947) prioritising rights of governments over rights of citizens so as to enable power-oriented, “pragmatic intergovernmental management” of transnational economic relations. Even though GATT diplomacy aimed at remedying some injustices of colonial politics (e.g. by adding Part IV on “Trade and Development” to GATT 1947), trade diplomats often continue expressing the view of Thrasymachos in Plato’s Republic that justice is merely whatever the powerful say it is. Realist conceptions of foreign power politics in a “society of states” fail to protect justice vis-à-vis individuals, including domestic citizens participating in the global division of labour without effective judicial remedies against violations of UN and WTO agreements ratified by national parliaments for the benefit of citizens, yet ignored by most domestic courts at the request of governments interested in limiting their legal, democratic and judicial accountability vis-à-vis citizens for (inter)governmental restrictions of equal liberties and human rights in the foreign policy area.13 The military annexation of Crimea by Russia in March 2014 is a recent reminder that transnational rule of law in EU political and economic relations with Russia remains subject to opportunist power politics by Russian rulers.
IEL as Global Administrative Law Based on National Democratic Decision-Making (e.g. the Bretton Woods and 1979 Tokyo Round Agreements)?
The foreign policies of liberal states tend to be guided in diverse ways by their domestic “principles of justice”.14 “Wilsonian liberalism” believed that, following World War I, the USA could protect international peace through promoting liberal democratic values and institutions for peaceful resolution of international disputes. But the rejection by the US Congress of US membership in the League of Nations and of US acceptance of the compulsory jurisdiction of the PCIJ illustrated that also democratic people might refuse projecting national democratic and judicial institutions onto international levels of governance in a world including non-liberal and “outlaw states”. Neither under the League of Nations nor under the UN has it been possible to institute effective “world parliaments” and “world courts” with universal compulsory jurisdictions. “Democratic New Haven approaches” to US foreign policies following World War II succeeded in persuading other states to ratify the UN Charter and other agreements establishing UN specialized agencies (like the Bretton Woods institutions) on the basis of drafts prepared by the US Government, and to incorporate explicit references to “principles of justice” and “human rights and fundamental freedoms for all” into the UN Charter and other UN agreements, like UN human rights conventions and the 1969 Vienna Convention on the Law of Treaties.15 Yet, the policy-oriented “democratic participant perspective” of the New Haven School was also invoked in order to justify US legal privileges (e.g. veto rights in UN and Bretton Woods institutions), unilateral military interventions, US refusals to participate in international PGs regimes (like compulsory jurisdiction of the ICJ, the International Criminal Court, and the Kyoto Protocol on climate change prevention), and discriminatory economic sanctions (e.g. by means of Section 301 of the US Trade Act); even though constitutional and economic liberalism requires protecting freedom of trade across frontiers and correcting market failures through non-discriminatory internal regulations in order to maximise consumer welfare, discretionary trade policy powers tend to be “captured” by protectionist interest groups also inside constitutional democracies without effective judicial protection of “equal freedoms” as “first principle of justice”.16 Rawls’ proposals for a Law of Peoples justify the existing principles of UN law for the national pursuit of international justice in an international society of liberal states, non-liberal but “decent states”, outlaw states, and states burdened by unfavourable conditions,17 without proposing a theory of global justice based on cosmopolitan or communitarian principles limiting the “justice deficits” of international law. The limited “duties of international assistance” recognised in Rawls’ Law of Peoples for a non-ideal “society of states” confirm that nationalist “democratic conceptions” of IEL aim at legitimising international economic regulation in terms of parliamentary ratification and control of IEL agreements (e.g. US congressional ratification of the Bretton Woods Agreements, congressional control of financial assistance by the Bretton Woods institutions, US “fast track authority” for negotiating and ratifying the 1979 Tokyo Round Trade Agreements) without effective protection of human rights, justice and international PGs across national borders. Also American GAL proposals for promoting transparent administration and legal accountability in international organisations are often based on principles of US administrative law (like the “Chevron doctrine”’ on judicial restraint underlying Article 17.6 of the WTO Agreement on Anti-dumping) without evidence that such principles of US administrative law have become general principles of international law and fit the different legal context of international organisations eluding effective parliamentary control.
IEL as Multilevel Constitutional Protection of “Aggregate PGs” (e.g. European Economic Law)?
All UN member states have adopted national (big C) Constitutions (written or unwritten) that recognise the importance of international law and institutions for the collective supply of international “aggregate PGs” demanded by citizens, including functionally limited (small c) “treaty constitutions” (sic) establishing UN specialized agencies like the International Labour Organization (ILO), the World Health Organization (WHO), the Food and Agriculture Organization (FAO) and the UN Educational, Scientific and Cultural Organization (UNESCO), whose founding treaties were explicitly called “constitutions”. Such functionally limited treaty constitutions constitute multilevel governance powers (the “enabling function” of constitutions); subject governments to legal and institutional restraints (the “limiting function” of constitutions); commit government policies to protecting PGs (like protection of human rights and “sustainable development”) through agreed regulatory instruments (the “regulatory function” of constitutions); and legitimise law and governance by “principles of justice” (the “justificatory function” of consti tutions), such as labour rights justifying ILO law, human rights to education and democratic governance justifying UNESCO law, rights to health protection justifying WHO law, and freedom from hunger justifying FAO law. Yet, the inadequate legal, democratic and judicial accountability of governments dominating UN decision-making processes entails that most UN institutions fail to protect international PGs effectively for the benefit of all citizens, like UN human rights law (HRL) and transnational rule of law for the benefit of citizens. Even though globalisation continues to transform most national PGs into international “aggregate PGs” and increases transnational interdependencies and global cooperation among citizens, communitarian and cosmopolitan conceptions of IEL have become effective only in regional free trade areas and common markets like the EU. The regional treaties establishing the EU, the EEA and the European Convention on Human Rights (ECHR) are interpreted and enforced by national and European courts as “constitutional instruments” protecting regional PGs—like the European internal market, human rights, fundamental freedoms and transnational rule of law for the benefit of citizens—for instance through “constitutional interpretations” (e.g. of “internal market freedoms”, parliamentary prerogatives and judicial cooperation) guaranteeing cosmopolitan rights of citizens, democratic and judicial accountability of governments, and “evolutionary interpretations” adjusting indeterminate rules to “cosmopolitan public reason”.18
IEL as Functionally Limited PGs Regimes Based on “Commutative Justice” (e.g. WTO Law)?
The WTO Agreement establishes multilevel, legal governance and dispute settlement systems outside the UN legal system aimed at promoting reciprocal liberalisation and regulation of a multilateral trading system based on mutually agreed “commutative justice principles”,19 like reciprocal market access commitments (e.g. GATT Articles II, XXVIII) subject to sovereign rights to protect non-economic PGs (e.g. Articles XIX-XXI GATT). Yet, similar to UN law, WTO law remains dominated by “intergovernmental decision-making” and fails to protect its treaty objectives (like “sustainable development”) effectively due to inadequate regulation of “market failures”, “governance failures” and of legal, democratic and judicial “accountability mechanisms”. WTO dispute settlement bodies recognise that WTO law does not constitute a “self-contained regime”; treaty-based IEL systems remain embedded into general and treaty law, as illustrated by the WTO provisions for cooperation with other treaty regimes (e.g. IMF law) and regulatory agencies (e.g. national and non-governmental risk assessment institutions in the field of technical and sanitary regulation). Yet, even though WTO law provides for a multilevel legal and dispute settlement system protecting also individual “access to justice” in domestic courts (cf. GATT Article X and numerous other WTO provisions), many governments limit their domestic legal and judicial accountability for harmful violations of their WTO obligations by insisting that domestic courts should not apply WTO law and WTO dispute settlement rulings for the benefit of citizens. Similarly, many free trade agreements (e.g. by the USA) remain dominated by hegemonic power politics rather than liberal and constitutional “principles of justice”.20
IEL as “Cosmopolitan Justice Regimes” (e.g. Commercial, Investment and Human Rights Law)?
Cosmopolitan conceptions of IEL21 aim at multilevel legal and judicial protection of commercial, property and other rights of citizens and transnational rule of law protecting citizens through institutionalised networks of national and transnational courts and arbitral tribunals. Cosmopolitan legal regimes—like transnational commercial and investment law and arbitration, rights-based free trade agreements like the EEA, common market and competition law agreements of the EU, international criminal law and related adjudication—have proven to protect international PGs (like transnational rule of law, fundamental rights) more effectively than “Westphalian regimes” prioritising rights of governments over rights of citizens without effective legal, democratic and judicial accountability of governments vis-à-vis adversely affected citizens.22 Similar to defining “cosmopolitan constitutionalism” by the trio of human rights, rule of law and democratic governance, transnational cosmopolitan regimes are characterised by multilevel judicial protection of individual rights, democratic governance and rule of law for the benefit of citizens, for instance through:
cooperation between national courts and arbitral tribunals in the recognition, surveillance and enforcement of arbitral awards (e.g. pursuant to the 1958 New York Convention on Recognition and Enforcement of Foreign Arbitral Awards);
cooperation among national and regional economic and human rights courts like the European Free Trade Area (EFTA) Court, the CJEU and the European Court of Human Rights (ECtHR);
the arbitration and annulment procedures of the International Centre for the Settlement of Investment Disputes (ICSID) in cooperation with national courts; or
the more than half a dozen international criminal courts complementing national criminal jurisdictions.
Multilevel cooperation among domestic and international courts in their joint enforcement of transnational legal orders can promote mutually beneficial, transnational cooperation among citizens, governmental and non-governmental actors for the collective supply of PGs (like common markets, human rights, transnational rule of law). But multilevel “judicial governance” must remain embedded into intergovernmental cooperation and transnational governance networks of regulatory agencies (like central banks, competition authorities, food safety, environmental and other regulatory agencies) subject to legal, democratic and judicial accountability mechanisms promoting legitimacy and domestic political support.23 Justification of multilevel governance in terms of protecting cosmopolitan rights and transnational cooperation among sub-state actors (e.g. in the context of transnational “supply chains” for “international production” of goods and services like energy and food security, and cooperation among Hong Kong, Macau and Taiwan as sub-state WTO Members recreating a common market with China) can reinforce the “constitutional functions” of multilevel rules and institutions for protecting international PGs demanded by citizens.24 It requires national, regional and worldwide tribunals to engage not only in more “judicial comity” in jointly clarifying—through “dynamic judicial interpretations” with due respect for democratic rule-clarification—the constitutional, legislative, executive and international legal limits of multilevel governance affecting fundamental rights of citizens, such as privacy rights neglected by mass surveillance of personal data by unaccountable security agencies and their private-sector partners, property rights of savers and investors affected by one-sided “economic justifications” of monetary and financial under-regulation or secretive “intergovernmental restrictions” (like unpublished “voluntary export restrictions”) undermining rights of citizens and of parliaments. Multilevel judicial governance in IEL should promote mutually coherent interpretations of the “principles of justice” underlying UN, WTO, regional and national legal systems and exercise judicial deference vis-à-vis legitimately diverse regulations and “reasonable disagreements”, for instance if—in Euro governance adjudication—economists from the European Central Bank invoke “economic demand side” justifications of using central bank powers broadly for shifting economic adjustment costs onto Eurozone countries with current account surpluses (like Germany), and reject “economic supply side” arguments that the lack of deflationary “demand side deficits” justifies keeping economic adjustment pressures on over-indebted Eurozone economies persistently violating the EU budget, debt and economic convergence disciplines.
How to Reconcile the Diverse Economic and Legal Methodologies? The Example of EU Law and Politics
Most EU citizens remain “rationally ignorant” of the economic, legal and political complexities of intergovernmental decision-making and political compromises in EU, UN and WTO institutions. They rather evaluate the EU institutions and their multilevel economic governance in terms of the unique promises of EU law that the
“Union is founded on the values of respect for human dignity, freedom, democracy, equality, the rule of law and respect for human rights” (Article 2 TEU), “in which decisions are taken as openly as possible and as closely as possible to the citizen” (Article 1 TEU); and
“the Union’s action on the international scene shall be guided by the same principles which have inspired its own creation, development and enlargement, and which it seeks to advance in the wider world: democracy, the rule of law, the universality and indivisibility of human rights and fundamental freedoms, respect for human dignity, the principles of equality and solidarity, and respect for the principles of the United Nations and international law” (Article 21 TEU).
The EU Charter of Fundamental Rights (ECFR) protects—in conformity with national and international HRL and also WTO law—comprehensive guarantees of “access to justice” for “everyone”25 and governmental duties of justifying “[a]ny limitation on the exercise of the rights and freedoms recognised by this Charter” as being legally necessary for protecting the fundamental rights and general interests of EU citizens.26 Hence, the EU institutions and EU Member States have to justify also their EU, UN and WTO decision-making in terms of “cosmopolitan principles of justice” that are easier to understand for citizens than intergovernmental decision-making in distant UN and WTO institutions. Also the diverse policy proposals by academics for EU, UN and WTO reforms (e.g. for EU representation in UN institutions, reforming Eurozone governance on the basis of “the principle of subsidiarity” rather than federalism, supervision of over-indebted Eurozone Member States by the “troika” of the IMF, the European Commission and the European Central Bank) should more clearly reveal and justify their value premises so that citizens can evaluate and democratically discuss the legal coherence, “financial risks” and redistributive effects of, for example, EU monetary and financial regulations. My own publications proceed from the principles underlying EU citizenship and democratic governance that:
in constitutional democracies like the EU Member States, citizens are the “democratic owners” and “principals” of all governance institutions (as “agents” with limited, delegated powers), whose legitimacy derives from respecting, protecting and fulfilling human and constitutional rights of citizens, other “principles of justice”27 and democratic “public reason” recognised in EU law;
as UN HRL, the WTO dispute settlement system and EU law protect individual rights of “access to justice” and to public justification of governmental restrictions of equal freedoms and require “strict observance of international law”28 and mutually consistent interpretations, claims by EU governments to “freedom of manoeuvre”29 to violate international UN and WTO agreements ratified by parliaments for the benefit of citizens require justification in terms of fundamental rights of EU citizens, as illustrated by the Kadi jurisprudence of the CJEU protecting human rights in the foreign policy area30; and
conflicts of interests among EU citizens insisting on “access to justice” and EU institutions limiting their legal, democratic and judicial accountability vis-à-vis citizens (e.g. for welfare-reducing violations of WTO guarantees of non-discriminatory conditions of transnational competition and rule of law) require citizen-oriented public justifications which citizens—as democratic authors and addressees of legitimate law—can accept as “public reason” rather than mere intergovernmental power politics violating EU law (like disregard for more than a dozen of GATT/WTO dispute settlement rulings against the EU in the “banana dispute” from 1991 to 2012 without effective EU legal remedies of adversely affected EU citizens and EU Member States interested in complying with WTO law and avoiding legal responsibility for EU majority decisions violating international law).
Need for Respecting Legitimate “Methodological Pluralism”
In contrast to consequentialist economic approaches focusing on utility maximisation by the rational homo economicus and on his instrumental use of “rule by law” (e.g. based on “law and economics”), legal jurisprudence focuses on the reasonableness of human beings (homo ordinans) insisting on “principles of justice” and constitutional justifications of the legal input-legitimacy and democratic output-legitimacy of the use of legislation, administration, judicial remedies and private law by governments and citizens. Lawyers use the term legal methodology as referring to the respective conceptions of the sources and “rules of recognition” of law, the methods of interpretation, the “input legitimacy”, functions and systemic nature of legal systems and of their relationships to other areas of law and politics. The necessary respect for legitimate “methodological pluralism” (e.g. in terms of competing jurisprudential conceptions of positive law, natural law and sociological conceptions of law, “monist” or “dualist” legal doctrines of the relationships between national and international legal systems) requires more comprehensive “balancing” of public and private interests in determining “public reason”, “rule of law” and legitimate “Community interests” inside the EU as well as in interpreting the common “principles of justice” justifying UN, WTO and EU law.31 Such respect argues for reconciling and integrating the five competing doctrinal approaches to IEL (as discussed above) in light of the EU law requirement to promote “cosmopolitan constitutionalism” also in the EU’s external actions.32 Hence, the EU’s UN and WTO policies should use the EU’s “soft power” and “normative power” more actively for exercising “cosmopolitan leadership” in multilevel governance of international PGs demanded by EU citizens by interpreting the “constitutional principles” common to UN, WTO and EU law for the benefit of citizens in order to justify EU law and governance as legitimate exercise of power. National courts and the EU Court of Justice rightly interpret EU law as a cosmopolitan legal system whose “primary rules of conduct” (e.g. the internal market law) and “secondary rules of recognition, change and adjudication” derive their legitimacy from protecting human and constitutional rights of citizens, transnational rule of law and democratic governance for the benefit of citizens.33
In EU external relations, public and private interests inside the EU often diverge as to how the EU law requirements of promoting “strict observance of international law”34 and the EU’s “cosmopolitan constitutional law” principles (e.g. in Article 21 TEU) should be reconciled with the fact that UN and WTO law also protect power-oriented conceptions of “sovereign equality of states” (e.g. based on factual governmental control over a population in a recognised territory). Neither UN nor WTO law effectively limits “state sovereignty” by protecting the multilevel legal obligations of all UN Member States to respect “popular sovereignty” and “individual sovereignty” as recognised in UN HRL. EU law has not conferred any explicit powers on EU institutions to violate international law to the detriment of EU citizen interests in “rule of law” and a rules-based “social market economy” based on “strict observance of international law”.35 Hence, the political claims by EU institutions for “freedom of manoeuvre” to violate international treaties ratified by parliaments—without offering adversely affected citizens and EU Member States effective judicial remedies—are increasingly contested by citizens, national governments and the Court of Justice36; this is illustrated also by the persistent violations of the budget, debt and economic convergence disciplines of EU law37 by most Member States of the European Monetary Union ushering in the financial, economic, social and democratic EU crises since 2008 at the expense of private savings and fundamental rights of EU citizens. Systemic disregard by EU institutions and member state governments for the rule of law requirements of EU constitutional law also risk undermining the democratic legitimacy of EU law, the fundamental rights of EU citizens, economic and social welfare and political support for EU integration.
Need for Reconciling Legal, Economic and Political Methodologies
Just as the different legal narratives of IEL reveal diverse jurisprudential and doctrinal conceptions of legal systems, also economists are confronted with methodological controversies resulting from competing value premises (e.g. regarding the relationship between governmental and private interests). “Constitutional economics” focuses on utilitarian “Pareto efficiency” in the sense of governmental duties to maximise individual preference satisfaction (methodological individualism). “Welfare utilitarianism” focuses on maximising the aggregate individual welfare levels proceeding from the assumption that promoting national welfare (e.g. in terms of gross domestic product (GDP)) will lead to higher levels of individual preference satisfaction. Yet, most economists evaluate and interpret UN and WTO agreements on the basis of “Kaldor-Hicks efficiency” focusing on government preferences justifying governmental policies if the expected social benefits exceed the expected social costs and make it possible for agents to whom benefits accrue to compensate those bearing net costs. European competition, customs union and internal market law and its rights-based interpretation by European courts—with due regard for “law and economics” (e.g. in competition and environmental law and policies) and also for the human rights obligations of governments to protect equal freedoms as the “first principle of justice” (Rawls) and general consumer welfare for the benefit of all citizens—illustrate the widespread recognition inside EU law and policies of the need for reconciling the diverse economic, constitutional and international legal approaches to economic regulation.38
“Realist” political scientists continue to view international relations as dominated by power politics requiring prioritisation of national interests (notably in national security).39 As the EU institutions lack a common military “hard power” and are constitutionally committed to promoting “community interests” rather than state interests, political analyses of the EU’s role in international politics tend to focus on the civilian “soft power” of the EU (e.g. in terms of promoting common EU and UN policy objectives through financial assistance, know-how, market access opportunities) and its “normative power” (e.g. in terms of justifying multilevel governance in terms of “cosmopolitan constitutionalism”) to influence foreign policies through normative justifications and economic assistance (e.g. based on the “human rights clauses” in international agreements of the EU with more than 130 third countries) rather than through physical force.40 Just as economic integration inside the EU has aimed at promoting also legal and political integration beyond utilitarian economic justifications, so the EU’s Common Commercial Policy has also promoted political and legal policy objectives. For instance:
The EU model of rights-based, multilevel constitutionalism has transformed the EU into the most successful “civilian power” for multilevel, democratic governance of international “aggregate public goods” (such as protection of common markets, “democratic peace” and peaceful settlement of disputes inside the EU and EEA). The EU remains the only regional organisation that has successfully realised the “4-stage sequence” of constitutional, legislative, administrative and judicial “institutionalisation of public reason” (Rawls) not only inside constitutional democracies but also on the level of regional law and institutions governing integration among 500 million EU citizens.
The EU’s multilevel human rights guarantees as codified in the EU Charter of Fundamental Rights, like the accession of the EU to the UN Convention on the Rights of Persons with Disabilities (2009) and to the ECHR,41 continue to develop multilevel human rights guarantees in European governance far beyond those of any other international organisation.
The EU accession and “neighbourhood policies”, and the EU’s accommodation of third countries (like the EFTA countries) requesting participation in the EU’s internal market without joining the supranational EU institutions, remain models for peaceful change based on respect for legitimate “constitutional pluralism” and “cosmopolitan constitutionalism” (e.g. limiting internal market regulation by fundamental rights and judicial remedies of EU citizens).
Many regional economic institutions (like the Andean Common Market, Mercosur, the CARIFORUM-EU Economic Partnership Agreement) emulate the rules-based EU institutions (e.g. compulsory international adjudication) rather than power-oriented alternatives (like NAFTA institutions).
As the legal and democratic context of European integration remains unique, other regional or worldwide economic integration regimes are unlikely to adopt the “EU model” of multilevel economic, legal and democratic governance of transnational PGs. But the pro-EU demonstrations by democracy advocates in the Ukraine illustrate the “normative power of attraction” of EU association and accession policies empowering people to enjoy multilevel protection of fundamental rights and rule of law through transformative EU agreements. Yet, just as “in economics … very little attention is given to the theory of the individual”,42 the diverse foreign policy approaches discussed above—such as “national political realism” focusing on states and state interests, “liberal international institutionalism” focusing on reciprocally agreed rules and institutions for intergovernmental supply of international PGs, and alternative cosmopolitan and constitutional approaches to multilevel governance of international PGs focusing on the reasonableness of individuals and on their democratic “public reason”—often proceed from diverse political conceptions of individuals, governments and of multilevel “governance” without clarifying their mutual interrelationships and “overlapping principles of justice” as recognised in UN, WTO, EU and national legal systems.43 The disagreement as to what procedural, distributive, corrective and commutative “climate justice” and “common, but differentiated responsibilities” require in restricting greenhouse gas emissions, or the political opposition against liberalising free movements of persons in the EU (e.g. so as to restrict perceived “welfare tourism” by Romanians, Bulgarians or economic migrants from Africa), in free trade agreements with the USA (e.g. US opposition against immigration from Mexico) and under Mode 4 of the WTO’s General Agreement on Trade in Services, illustrate the “constitutional value problems” underlying international economic regulation.
Need for Interdisciplinary Clarification of the “Principles of Justice” Underlying IEL
The EU sets a worldwide example, as recognised by the conferral on the EU of the 2012 Nobel Peace Prize, for the practical possibility of realising the “Kantian moral imperative” of transforming intergovernmental power politics into “democratic peace” based on respect for “constitutional pluralism” as well as “cosmopolitan constitutionalism” underlying European economic law and HRL. The tensions between power-oriented and normative approaches to designing, evaluating and justifying EU external actions are reflected in many negotiations on EU participation in UN and WTO decision-making. For example, Anglo-Saxon arguments in favour of “pragmatic ad hoc solutions” for the diverse EU policy objectives in UN institutions (e.g. UN Security Council reforms, and “human rights approaches” to reforming international economic regulation as suggested by the UN High Commissioner for Human Rights) and for maximising EU values through “double memberships” of both the EU as well as of EU Member States (e.g. as two complementary sources of legitimacy and power in the FAO, WTO and in other international institutions with “double membership” of the EU and its Member States) are often challenged by warnings of “too much pragmatism” and “ad hoc policies” that can cause too many “bad precedents” exploited by vested interest groups. The contrast between, on the one side, the rights-based Kadi jurisprudence of the CJEU annulling EU regulations implementing UN Security Council sanctions against alleged terrorists on grounds of violations of fundamental rights44 and, on the other side, the WTO jurisprudence of the CJEU denying rights of EU citizens as well as of EU Member States to judicial protection of EU compliance with WTO obligations and WTO dispute settlement rulings, including rights to compensation of injuries caused to EU traders by lawful trade sanctions in response to EU violations of WTO law,45 appears likewise influenced by the diverse constitutional traditions of interpreting constitutionalism as “constitutional contracts” among institutions (e.g. the “Bill of Rights” enacted by the British Parliament in 1689 and accepted by the new King as a “constitutional limitation” so as to uphold the nation’s “ancient rights and liberties”) rather than as “social contracts among equal citizens” establishing governments with constitutionally limited powers deriving their legitimacy from protecting fundamental rights of citizens (e.g. following the American and French human rights revolutions of the eighteenth century). EU law defines constitutional democracy in terms of constitutional rights of citizens rather than in terms of English traditions of “parliamentary freedom to regulate”, and protects also “the freedom to conduct a business in accordance with Union law”.46 Hence, Anglo-Saxon arguments against judicial protection of EU “market freedoms” and other fundamental rights in the external trade relations of the EU’s customs union47 are difficult to reconcile with the comprehensive EU guarantees of fundamental rights and transnational rule of law. As EU law does not confer powers on the EU to violate international treaties ratified by parliaments for the benefit of citizens, persistent EU violations of GATT/WTO obligations and of related GATT/WTO dispute settlement rulings require a higher burden of justification as being necessary for protecting legitimate EU community interests than “political question theories” inside national constitutional democracies like the USA, especially if such EU violations of the “rule of law” undermine consumer welfare, non-discriminatory conditions of competition and equal rights of EU citizens and redistribute “protection rents” to powerful interest groups.48 In view of the comprehensive EU guarantees (e.g. in Article 47 ECFR) of individual rights to effective judicial protection and remedies in the EU, the CJEU’s reluctance to comply with legal binding judgments of other international courts (including WTO Appellate Body rulings against the EU), and the Court’s unconvincing claims that the “nature and structure” of the WTO Agreement as well as of the UN Convention on the Law of the Sea (UNCLOS) exclude rights of EU citizens and of EU Member States to invoke and enforce clear and precise WTO or UNCLOS treaty obligations in domestic and European courts, raise similar questions of justice and justification of EU violations of international law without adequate legal and judicial remedies for adversely affected EU citizens.49
Modern brain research and constitutional philosophy emphasise the need for reviewing the spontaneous “fast thinking” of rational egoists guided by “basic instincts”, traditions and value preferences by more reasonable “slow thinking” of responsible citizens.50 Similarly, harmful “external effects” caused by utility-maximising pursuit of self-interests by rational economic and political actors must remain constitutionally restrained by “checks and balances” (e.g. legal, democratic and judicial accountability mechanisms) protecting the reasonable common interests and constitutional rights of citizens adversely affected by “rational egoism”, majority politics and non-inclusive “intergovernmentalism” driven by public and private utility maximisation. The more globalisation transforms national PGs into transnational “aggregate PGs” (like human rights, rule of law, democratic governance, and mutually beneficial monetary, trading, environmental and security systems) that national legal systems can protect only in close cooperation with international law and institutions, the more multilevel governance problems must be resolved in conformity with transnational rule of law protecting the common core of “human rights and fundamental freedoms for all”51 recognised in UN, WTO, EU and national legal systems, with due respect for legitimate “constitutional pluralism”, “subsidiarity principles” and “duties to protect” sovereign rights of peoples and individuals to regulate their diverse private and public, national, transnational and international “contexts of justice” in legitimately diverse ways (e.g. by protecting higher standards of human rights at local, national and regional levels of governance than in UN institutions).52 Just as the American and French human rights advocates in the “democratic revolutions” of the eighteenth century had good reasons to interpret constitutionalism as “social contracts” among citizens on “principles of justice” (e.g. as pronounced in the 1776 US Declaration of Independence rejecting British feudal and colonial disregard for human rights, and the 1789 French Declaration on the Rights of Man and the Citizen also rejecting colonial slave trade and other feudal human rights violations), EU citizens have good reasons in the twenty-first century to prioritise their constitutional rights and the emerging, multilevel “human rights constitution” over the limited, delegated powers of all governance agents and the “regulatory capture” of intergovernmental decision-making in UN and WTO institutions without effective protection of PGs demanded by citizens.53
Why Does the EU Fail to Protect Transnational Rule of Law in Multilevel WTO Governance Through “Consistent Interpretations” and “Judicial Comity”?
The universal recognition by all UN member states of human rights, including rights to democratic governance based on participatory, representative and deliberative democracy, has entailed increasing recognition of the need for rule of law in national and international legal systems for multilevel governance of transnational aggregate PGs demanded by citizens; for, democratic self-government of citizens remains an illusion if democratically adopted Constitutions, legislation and international agreements approved by parliaments for the benefit of citizens are not respected, and complied with, by the legislative, executive and judicial branches of governments. Multilevel governance systems for the collective supply of functionally limited international PGs—e.g. through UN, WTO and EU law and policies promoting mutually beneficial monetary, trading, development, environmental, communication and legal systems for a global division of labour—cannot operate effectively and legitimately without respect for democratic self-determination, rule of law, access to justice and corresponding duties of states and autonomous customs territories (like the EU, Hong Kong, Macau and Taiwan as independent WTO Members) to protect human rights. All legal systems of “primary rules of conduct” and “secondary rules of recognition, change and adjudication”54 require clarification and progressive development through legislation, administration, impartial dispute settlement and adjudication that citizens can recognise and support as democratically legitimate. Hence, the UN Charter and the WTO Agreement—similarly to the Lisbon Treaty—constitute, limit and regulate legislative, administrative and judicial powers and justify their legitimate use by duties to protect human rights (e.g. Articles 1, 55 and 56 UN Charter), “raising standards of living, ensuring full employment and a large and equally growing volume of real income and effective demand”, and “the optimal use of the world’s resources in accordance with the objective of sustainable development”.55
Rule of Law as a Constitutional Principle of EU Law and Guiding Principle for the EU’s External Actions
Due to the universal recognition of human rights, most constitutional democracies, European courts, other regional organisations and also the UN now acknowledge the difference between power-based “rule by law” and constitutionally limited “rule of law”, the latter deriving its legitimacy from protection of human rights, democratic governance and other principles of justice.56 Since the 1986 judgment by the CJEU in Les Verts v Parliament 57 and the explicit confirmation by EU Member States of “their attachment to the principles of liberty, democracy and respect for human rights and fundamental freedoms for all and of the rule of law” in European Union treaties (e.g. in the Preamble of the 1992 Maastricht Treaty, Article 6 of the 1997 Amsterdam Treaty, Article 2 of the 2007 Lisbon TEU), the “rule of law” has become recognised as a constitutional principle limiting all EU powers.58 Article 21 of the Lisbon TEU prescribes respect for human rights, democracy and rule of law also as guiding principles for the external policies of the EU. Yet, the normative impact of EU “rule of law policies” and actions at the international level and their effectiveness have remained limited, for instance in the EU enlargement and neighbourhood policies, the EU’s foreign and security policies, and the EU’s commercial, financial and development policies vis-à-vis third countries.59 The EU, like the Council of Europe60 and more recently also UN institutions, constantly links the rule of law to the principles of human rights and democratic government as interconnected and interdependent principles of law.61 Yet, even though the Kadi jurisprudence of the CJEU has transposed the Solange jurisprudence (e.g. by the German Constitutional Court and the European Court of Human Rights) to the EU implementation of UN Security Council sanctions in order to protect human rights and rule of law as “essential elements” of EU law and of the human rights conditionality of many EU agreements (e.g. the Cotonou Agreement), the political EU institutions and also European courts persistently disregard rule of law as a WTO legal and dispute settlement principle.