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Legal Aspects of a Projected New International Economic Order: Some basic legal issues of a new International Economic Order: a Western point of view*

Published online by Cambridge University Press:  21 May 2009

Pieter VerLoren van Themaat
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Outline:***

1. Some indications on the research project of the Universities of Utrecht and Leyden on international economic organisations and legal issues of a new international economic order

2. Some legal characteristics of the existing international economic order

3. What should be new in a new international economic order?

4. The impact of the principle of State sovereignty on a new international economic order

5. Three final remarks

Type
Colloquium on the Legal Aspects of a Projected New Economic Order
Information
Netherlands International Law Review , Volume 24 , Issue 3 , December 1977 , pp. 509 - 528
Copyright
Copyright © T.M.C. Asser Press 1977

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References

*** A number of points has been worked out in more detail in the footnotes.

1. The results of this comparative analysis will be published in the course of 1977 in five volumes under the auspices of the T.M.C. Asser Institute. The five volumes together will form the first part of a series of studies in the Dutch language on international economic law. The first part of the series will contain studies on the following subjects:

Volume 1.1 A study of P.J.G. Kapteyn on the United Nations and the international economic order

Volume I.2 Organisations and problems in international trade.

1. D. C. Meerburg, The GATT

2. P.J. Slot, Technical obstacles to trade

3. W.H. Vermeulen, Agreements on raw materials

4. P. VerLoren van Themaat, The OPEC

5. R. Barents, The International Energy Agency

6. T.P.J.N. van Rijn, International cartels

7. T.P.J.N. van Rijn, Multinational enterprises

Volume 1.3 Organisations in the international monetary field and organisations for the financing of the development

1. R. Barents, Introduction to the studies on international monetary organisations

2. R. Barents, The International Monetary Fund

3. R. Barents, Regional monetary cooperation in Western Europe

4. R. Barents, Financial Support Fund of the OECD

5. R. Barents, The Bank for International Settlements

6. P.J.G. Kapteyn, Introduction to the studies on international organisations for financing development

7. R. Barents, The World Bank

8. R. Barents, Regional Development Banks

9. P.J. Kuiper, the UNDP

10. M. Bos, Development corporations

Volume I.4 Transcontinental and subcontinental regional organisations

1. P. VerLoren van Themaat, Introduction

2. R. Barents, The OEEC and the OECD

3. R. Barents, The Economic Commission for Europe

4. K.J.M. Mortelmans, The European Communities

5. P. VerLoren van Themaat, The COMECON

6. L.A. Geelhoed, Regional organisations of the developing countries

Volume I.5 Ocean regime, problems of the human environment, the food problem and the population problem

1. A.W. Koets, International fishery-organisations

2. L.J. Bouchez, The law of the Sea

3. A. Vierling, The problems of the protection of the Environment

4. W.H. Vermeulen, The FAO

5. P.H. Boogerd, The population problem

All the studies of specific international organisations will be based or a uniform scheme of analysis which, in summary, covers the following subjects:

1. The objectives of the organisation, their development in the course of time and their relations to the objectives of other organisations.

2. The scope of the organisation (ratione personae, ratione materiae and ratione temporis)

3. Institutional characteristics (including decision-making procedures and budgetary provisions).

4. Substantive law characteristics (exchange of information, procedures of consultation and nonbinding recommendations, financial incentives to follow certain policies and binding substantive rules as policy-instruments; procedures to solve conflicts; analysis of the development of policy-instruments in the course of time).

The analysis of the existing general literature on international economic law and the concluding comparative evaluation of the studies mentioned on existing international organisations and relevant problem-areas will be incorporated in the second part of the series together with an analysis of the UN resolutions on a new international economic order and a legal analysis of the possibilities to bridge the gap between the existing and a new international economic order. It is hoped to work out this second and most important part of the project in the course of 1977 and to publish the results in Dutch in 1977 and in an English version in 1978.

2. P. VerLoren van Themaat, De taak van de rechtswetenschap bij de planning van internationale economische integratie, Mededelingen der Koninklijke Nederlandse Akademie van Wetenschappen, afd. Letterkunde, Nieuwe reeks – Deel 39 – no. 3, North Holland Publishing Company, Amsterdam-Oxford-New York 1976, pp. 40.

3. See: Proposed second amendment to the Articles of Agreement, a report by the Executive Directors to the Board of Governors, International Monetary Fund, 1976, pp. 356.

4. Op. cit., (footnote 2), p. 132 and 145–150Google Scholar and further literature mentioned there. The principles have to be understood here in the sense of legal principles, as implemented by positive international law and not in the sense of principles of natural law or ethics or in the sense of the famous slogan of the French revolution, even if these other meanings have their influence on the development of positive law, as I pointed out in my first interim report.

5. So in article 57 of the EEC Treaty the principle of national treatment with regard to the right of establishment led to the obligation to provide for mutual recognition of diplomas, certificates and other evidence of formal qualifications and also for coordination of the provisions of Member States concerning the access to various occupations and professions. This means a movement from equal treatment from a national point of view towards equal treatment also from an international comparative point of view. The most-favoured nation clause led logically to multilateral negotiations in the framework of the GATT with a certain amount of international harmonisation of tariffs and non-tariff obstacles to trade. With regard to developing countries it led, moreover, to a preferential regime in order to compensate for present unequal chances. Both the EEC Treaty and GATT present many other interesting examples of the trend towards greater substantive equality or equivalence between various nations. See for an analysis of the further development of the equality principle in the Charter of economic rights and duties of States: M. Virally, La Charte des droits et devoirs économiques des Etats, notes de lecture, in: Annuaire Français de Droit International 1974, 72–77.Google Scholar

6. Koopmans, T. (ed.), Constitutional protection of equality, A.W. Sijthoff–Leiden 1975, passim.Google Scholar

7. See in this sense already B.T. Blagojević, Quelques caractéristiques du droit économique international actuel, Revue internationale de droit comparé 1968, 207–273 and even earlier Roling, B.V.A., International law in an expanded world, Amsterdam 1960.Google Scholar

8. As I have pointed out in my study on COMECON, mentioned in footnote 1, it is in fact the combination of State owned means of production with a national central-planning system which inevitably leads to a strict concept of national economic sovereignty and the rejection of international organisations with supranational powers. See also my contribution in French to the “Mélanges Fernand Dehousse” (1977).Google Scholar

9. Komplexprogramm für die weitere Vertiefung und Vervollkommnung der Zusammenarbeit und Entwicklung der sozialistischen ökonomischen Integration der Mitgliedsländer des RGW, Dokumente RGW, Staatsverlag der Deutschen Demokratischen Republik, Berlin 1971 and the results and difficulties mentioned for example by van Brabant, J.M.P., Essays on planning, trade and integration in Eastern Europe, Rotterdam 1976Google Scholar; Steffens, R., Integrationsprobleme im Rat für gegenseitige Wirtschaftshilfe, Hamburg 1974Google Scholar, Szawlovski, R., The system of the international organizations of the Communist Countries, Leyden 1976Google Scholar and Seiffert, et al. , Sozialistische ökonomische Integration, Rechtsfragen, Staatsverlag DDR, Berlin 1974.Google Scholar

10. This does not mean that a “one-State one-vote system” as it exists for example in the General Assembly of the United Nations should be considered as the ideal solution. Already because of the number of States such a solution would make the decision-making process unworkable. At least the preparatory negotiations on decisions to be taken should be carried through by a workable number of three to ten delegations, representing the various relevant groups of countries, e.g. three groups of developing countries and three groups of developed countries. There will be no chance of a desirable merger between, for example, GATT and UNCTAD, if no such solution is envisaged. See also note 11.

11. The practice of both the COMECON and the OECD that not-interested countries should not exclude solutions between interested countries solves some of the problems of a principle of unanimity, which could be seen as a logical consequence of the principle of sovereign equality of all States. With regard to organisations with over 100 Member States such a solution however is not sufficient to assure a workable decision-making process. The wording of article 10 of the Charter of economic rights and duties of States, moreover, seems to leave room for other solutions, like those existing in the International Monetary Fund. As indicated already in the previous note such other solutions should provide however in any case for an equitable representation of the various main countries or groups of countries with specific and largely parallel interests. One could think here of the 10 regions of the world mentioned in the second report to the Club of Rome (M. Mesarović and Eduard Pestel, Mankind at a turning point, 1974, in many languages) with five countries or groups of countries of the developed world (North America, Western Europe, Eastern Europe, Japan and Australia) and five countries or groups of countries of the third world (Latin America, Middle East and Northern Africa, Tropical Africa, South Asia and China). A subdivision of the third world in three groups of various degrees of development might also be appropriate for certain problem areas.

12. Behrmann, J.N., Towards a new international economic order, Atlantic Papers 3/1974, 48Google Scholar, prefers another distinction between seven problem areas: 1) raw materials and energy, 2) agriculture, 3) industry and technology, 4) foreign investment, 5) rules of competition and the role of the free market, 6) international trade and 7) exchange rates. Our seven new pillars of wisdom in combination with the old problems of international trade and international monetary and financial problems seem however to correspond better with the various resolutions and new activities of the United Nations, with the various reports for the Club of Rome and with other recent literature. See also C.F. Bergsten (ed.), The future of the international economic order; an agenda for research, Lexington (Mass.)-Toronto-London 1973 and R.N. Gardner, The hard road to world order, Foreign Affaris 1974, 572Google Scholar, to mention only some of the first Western publications on this subject.

13. On this major point I do not agree therefore with the remarkable report to the Club of Rome of Tinbergen, J. (coord.), Reshaping the International Order, New York 1976 (RIO Report), 82Google Scholar, which expresses the following point of view: “Decisions with external effects, that is, decisions which have consequences for others that those taking the decisions, must be taken at a level implying these others, that is at a higher level. Generally, then, the optimum level of decisionmaking is the one where external effects are negligible. This implies that some types of decisions – those with global consequences – must be taken by international fora representing the world's population. The international order must be organized accordingly”. With the present degree of interdependence of all problem areas mentioned and of all countries of the world, this concept would ask for an amount of transfer of sovereignty to a strong world government which seems neither possible nor desirable. Not possible for political, sociological and legal reasons (the concept of sovereign equality in the Charter of economic rights and duties of States). Not desirable, because hardly any room would be left for peoples with different traditions and cultures to shape their own social, economic, political and legal systems as soon as these systems would have external effects. Such external effects for instance are normally inherent to their overall-budget and fiscal policy, as became clear in the European Communities. Because the existence of the problem of interdependance cannot be denied however, this centralizing concept is a major challenge for lawyers to work out alternative solutions to implement the principle of solidarity in an interdependent world. In fact our close cooperation with Professor Tinbergen was the main reason for starting our own research project and we continued to cooperate throughout the development of our two projects.

14. Cf. the spreading trend towards regionalism in France, Germany, Italy and the United Kingdom (in the latter case called devolution) and the spreading trend towards functional decentralisation and participation of interested subjects.

15. Op. cit (note 2), p. 38–40. In our final report these very provisional indications will have to be reconsidered and worked out in the light of our comparative analysis of existing international economic organisations and some amount of new theoretical thinking.

16. See footnote 13 and the long range proposals in the cited RIO report for a World Treasury (p. 133), a World Food Authority (p. 138), a World Trade and Development Organization (p. 144), a World Agency for Mineral Resources (p. 147), a World Technological Development Authority (p. 154), an authority for the supervision of the statutes of transnational enterprises (p. 160), the less ambitious proposals for an International Industrialization Institute (p. 143), for the protection of the human environment (p. 165) and the management of the oceans (p. 172). Our scepticism about most of these proposals however does not exclude our opinion that the arguments for these proposals should be taken very seriously. As I mentioned before, our discussions with Professor Tinbergen were indeed the main challenge for starting our research project and for its further development. Moreover on pp. 103 and 104 the RIO report itself recognises that secondbest solutions might be indicated and it mentions at that place five guiding principles for generating decision-making alternatives which correspond largely to the types of coordination given in our uniform scheme of analysis of existing international organisations (cf. footnote 1, point 4 of the summary of our scheme of analysis with point (a) of the guiding principles on p. 104 of the RIO report). The paragraph of the RIO report on the legal aspects of the new international order (pp. 114–117) also reflects some of the conclusions of our comparative analysis of existing organisations, but on other points of this paragraph our study has led already or may still lead to different conclusions. The aims and methods of research pursued in the two projects in fact gave an advance in time to the RIO project.

17. See articles 1, 2, 4, 7 and 26 of the Charter of Economic Rights and Duties. Article 1 as a matter of fact already states that every State has the sovereign and inalienable right to choose its economic system as well as its political, social and cultural system in accordance with the will of its people, without outside interference, coercion or threat in any form whatsoever. Apart from a great number of duties of international solidarity and cooperation in the Charter which do not affect this basic principle of internal sovereignty, there is only one real exception to this principle. Article 16, first paragraph, states indeed, that it is the right and duty of all States, individually and collectively, to eliminate colonialism, apartheid, racial discrimination, neo-colonialism and all forms of foreign aggression, occupation and domination, and the economic and social consequences thereof, as a requisite of development.… It is the duty of all States to extend assistance to them (id est: the countries, territories and peoples affected, V.v.T.). Paragraph 2 of the same article adds, that no State has the right to promote or encourage investment mat may constitute an obstacle to the liberation of a territory occupied by force, but this paragraph does not seem to cover all the cases mentioned in the first paragraph.

As a general rule however article 26 states clearly that all States have the duty to coexist in tolerance and live together in peace, irrespective of differences in political, economic, social and cultural systems and to facilitate trade between States having different economic and social systems. Article 4 still more clearly states that no State shall be subjected to discrimination of any kind based solely on differences in political, economic and social systems and this rule applies to international trade as well as to other forms of economic cooperation.

Of course, one should keep in mind that the Charter cannot yet be considered as positive law. Nevertheless, like the existing international economic order, it seems to exclude as a general rule the idea, dear to the U.S. Congress and to some political parties in the Netherlands, to link political conditions (like the respect of fundamental human rights or parliamentary democracy or internal social justice) to international economic transactions. That this idea is incompatible with the existing international economic order with regard to trade seems to result clearly from the provisions of GATT, like the most-favoured nation clause and from the underlying philosophy of a comparative-cost-principle as guiding principle of a market-economy. Even if one admits mat a rule of non-discrimination in the existing international economic order permits or even prescribes the unequal treatment of unequal cases in proportion to the unequalities of the situation, one has in mind only unequal economic situations. Apart from internationally accepted exceptions of public order the most-favoured nation clause or any other economic rule of non-discrimination does not seem to permit discrimination on political grounds. Even if the Charter were postive law, at the present stage of my understanding, it would not lead me to other conclusion with regard to a new international economic order, as laid down in this Charter. With regard to international trade and other forms of economic cooperation this seems to follow from the quoted general rules of articles 4 and 26 of the Charter. With regard to foreign investments Article 2 of the Charter says clearly that foreign corporations should act in conformity with the economic and social policies, the political system and the laws, rules and regulations of the host State. Apart from the quoted exception in Article 16 which, like the other articles of the Charter, cannot yet be considered as binding international law, the Charter therefore does not allow discrimination on the ground of either the political or social system of the country concerned. Such discrimination would on the contrary be yet another form of neo-colonialism, which is clearly forbidden by article 16. We should not forget that our Western ideas on democracy, fundamental human rights, social justice, etc. are not or not yet shared by the vast majority of the world. Convinced as we are of the invoked values we should not try therefore to impose them on other countries. Finally, from a more practical point of view, national initiatives of this kind will hardly have much effect in the countries concerned if they are not participated in by most of the other suppliers to or buyers from those countries where the regime does not conform to our basic values. This is an additional reason why we should give up this idea, in any case if it is not based on internationally agreed concerted practices. Of course, at the present state of international law those considerations do not from a purely legal point of view preclude a State from obliging its inhabitants to discriminate against other countries in such cases as are not covered by international prohibitions of discrimination. The Dutch hesitation (for practical purposes refusal) in 1976 to grant export credit facilities for the export of nuclear installations to South Africa may be a case in point The same might be true for the discriminatory application of aid to developing countries in relation to their social, legal or political system, even if this practice seems hardly to be in conformity with the guiding principles of the Charter of economic rights and duties of States.

18. In the same sense J. Castaneda, La charte des droits et devoirs économiques des Etats, note sur son processus d'elaboration, Annuaire Français de Droit International 1974, p. 54.Google Scholar

19. As the British statesman Balfour declared in 1903, the international economic flow of goods, services and investments is made possible by a bedding which is not created by nature, but by a system of international treaties (P. Ruegger, Völkerrecht und Wirtschaft, Schweizerische Vereinigung für Internationales Recht, Druckschrift no. 26 (1932), p. 7, free translation by the author). Authors such as G. Erler (Grundprobleme des internationalen Wirtschaftsrechtes, Göttingen 1956 and G. Schwarzenberger (Standards of International Economic Law, The International Law Quarterly 1948, p. 405) make clear that those international treaties since the Middle Ages were based on some simple long-term legal standards. Even if these legal standards fluctuated somewhat with changing economic policies and sometimes were interrupted, they were not drafted in terms of changing short-term economic interests. Therefore they could remain in force for considerable periods, many of them for over a century, their main principles even for many centuries. A more quantitative and short-term economic approach of both national and international economic law (negotiations on quotas, tariffs, quantitative exchange regulations etc. in the field of international economic law) got the upperhand however during the great depression of the thirties of this century. Some major principles of GATT and the European Communities seem to return however to the old tradition of the priority of some basic legal principles.

20. See my studies, mentioned in footnote 8.

21. David, R., Les grands systèmes de droit contemporains, sixième édition, Dalloz-Paris 1974Google Scholar. See however also my first interim report, mentioned in footnote 2), pp. 36–37 and the somewhat different appreciation of this aspect by Friedmann, W., The changing structure of international law, London 1964, pp. 297–316Google Scholar. On the other hand, the importance attributed by developing countries to the non-binding resolutions of the United Nations on a new international economic order and the legal conceptions of OPEC, as analysed in my study on OPEC, mentioned in footnote 1, might support again the viewpoint of David.

22. This latter notion is preferred by van Gerven, W., Schets van een Belgisch Economisch Grondslagenrecht, SEW 1971, pp. 404–428Google Scholar and Wetboek Economisch en Financieel Recht, Gent/ Leuven 1973 (loose leaf edition of Belgian economic law in three volumes). I used the term myself in my inaugural address “Het coordinatie-beginsel als coordinerend beginsel van het sociaal-economisch recht”, Kluwer-Deventer 1968. As a point of fact the chosen system of coordination of economic decisions (by the market or by State-interventions or by a combination of the two) is certainly the main characteristic of any economic order. Nevertheless, in combination with the legal principles of freedom and equality I prefer now the term “solidarity” because it more clearly includes also legal obligations to take into account the interests of others without any provision for their implementation by economic-policy interventions. This is true, for example, for the many obligations to cooperate with other countries, and with regard to the obligation to increase the net amount of financial flow from official sources to developing countries, provided for in the Charter of economic rights and duties of States. In the EEC Treaty too the notion of coordination is used only in the more restrictive sense of procedures for the coordination of State policies, and does not cover either the coordination by the market, or the coordination of the conduct of enterprises by common policies, or obligations such as those laid down in article 103, first sentence, article 104, or article 107, first paragraph. The term therefore, if useful in the broad sense in which it is used in my inaugural address, may lead to confusion and does not cover all the aspects implied by the notion of solidarity. Its use should be restricted to procedures of coordination of decisions by procedures of consultation or interventions by a coordinating body.

23. See footnote 2.

24. In fact, experience seems to show that the outcome of trade negotiations between the developed countries may be harmful to developing countries, e.g. because by maintaining nontariff barriers and higher duties on processed goods than on raw materials, they do not take into account sufficiently the growing needs of export of developing countries. The tariff systems of the developed countries on the contrary should encourage the processing of raw materials and agricultural products by the developing countries themselves.

25. Narjes, K.H. in his report to a conference held in Rome on 12–13 10 1976Google Scholar at the occasion of the 25th anniversary of the NATO college in that town, quoted at length in Europe Documents no. 918 of 28 October 1976 (pp. 3–5).

26. Cases 6/72 and 59/75.

27. See for a very detailed study of this complicated problem: Schüller, A., Osthandelspolitik als Problem der Wettbewerbspolitik, kritische Bestandsaufnahme und Neuansatz für die Aussenwirtschaftpolitik gegenüber Zentralverwaltungswirtschaften, Athenäum-Verlag-Frankfurt 1973, pp. 360Google Scholar. One of the problems in this respect is of course how to set up such a countervailing power or control system without affecting the market mechanism within the Western world more than is absolutely necessary. Another problem results from the fact that within the European Communities such a system should be set up for the whole territory of the Common Market, even if the implementation of such a system could be largely decentralised, as the COMECON Statemonopoly system is also decentralised. On the other hand, the examples of existing centralised buying agencies for the needs of Western States show that centralisation of exports does not necessarily exclude the maintenance of competition on the internal level of the countries concerned with regard to the products to be exported.