Legalization in Global Economic Governance: Why is money different to trade?
Karen J. Alter and Stephen C. Nelson, Northwestern UniversityCTEI Speaker Series and GGC Colloquium
Maison de la Paix, Geneva
- Karen J. Alter, Professor of Political Science and Law, Northwestern University and Permanent Visiting Professor, iCourts, University of Copenhagen
Stephen C. Nelson, Associate Professor of Political Science, Northwestern University
- Theresa Carpenter, Executive Director, Centre for Trade and Economic Integration
The remarkable growth of international trade in goods and services over the past four decades was accompanied by another transformation: the development of increasingly specific legalized international agreements. The WTO and its Dispute Settlement Understanding (DSU) is often pointed to as the apotheosis of the trend toward “harder” legalization of international arrangements in the realm of trade. The governance of the international monetary system, by contrast, has remained less legalized; international agreements are mostly ad hoc, non-binding “pledges” rather than deep contracts with strong obligations. What explains this qualitative difference in the governance of the international trade and monetary systems? This draft paper highlights our puzzle, defines key concepts, and briefly summarizes the divergent trends of legalization in the domain of trade and finance. We break down the analysis into historical periods, which allow us to also investigate how major structure changes–the proliferation of new states, the rise of newly industrialized economies, the relative decline of US economic and political dominance, and the advent of financial globalization has influenced the process of legalization.
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