With the increased proliferation of RTAs since the early 1990s, the focus of most investigations on multilateralism and regionalism has been on the impact of the ‘new regionalism’ on the multilateral trade system.2
For example, the view from the UNCTAD is that ‘In terms of the international trading system, the concern is that the proliferation of RTAs may lead to erosion and possible fragmentation of the multilateral trading system into some kind of federal system composed of semi-
1 See chapter two, section 2.2.
2 For in-depth write-ups on the relationship between the new regionalism and the multilateral trade system, see generally Lorand Bartels and Federico Ortino (eds), Regional Trade Agreements and the WTO Legal System (OUP 2010). See also Frederick M Abbott, ‘A New Dominant Trade Species Emerges: Is Bilateralism a Threat?’ [2007] JIEL 571; Lena Lindberg and Claes G Alvstam, ‘The Ambiguous Role of the WTO in Times of Stalled Multilateral Negotiations and Proliferating FTAs in East Asia’ (2012) 17 Intl Negot 163, 163–187.
68 autonomous “stumbling” trading blocs.’3
This study considers a different perspective to the issue, which is, how the relationship between the ‘new regionalism’ and the multilateral trade system affects the institutional configuration of federal systems in relation to international trade participation. This important question provides the background context within which the allocation of constitutional powers between central governments and SFGs on matters of international economic relations is considered in this thesis.
Different discussion points have emerged from the evolving relationship between multilateralism and regionalism in the international trade system. Extensive research has been carried out with a focus on the impact of regionalism either as a stepping stone or a hindrance to the multilateral system.4 Other scholars have focused on the ways in which coherence can be achieved between the two competing systems of international trade.5 Another dimension to the scholarship has centred on the emergence or otherwise of a constitutional order in the international trade system.6 This chapter will address this point, albeit in a limited sense. Specifically, awareness about some of the arguments for and against the existence of a constitutional order in the international trade system will be useful in this chapter, because it is significant evidence which outlines distinct characteristics of the current dispensation of international economic relations.
The scope of the arguments in this chapter will be focused on highlighting the evidence which points to the emergence of a new dispensation of international
3 Philippe De Lombaerde and Luk Langenhove, ‘Developing Countries’ Participation in Regional Integration: Trends, Prospects and Policy Implications: UNCTAD’ in Philippe De Lombaerde and Luk Langenhove (eds), Multilateralism, Regionalism and Bilateralism in Trade and Investment (Springer 2006) 7. For in-depth studies on this perspective of the multilateralism – regionalism relationship see generally Chad Damro, ‘The Political Economy of Regional Trade Agreements in Bartels and Ortino (eds) (n 2) 24; William Watson and Viet D Do, ‘Economic Analysis and Regional Trade Agreements’ in Bartels and Ortino (eds) (n 2) 16 – 17.
4 The scholarships on these debates are considered in chapter two, section 2.5.
5 See WTO Report, The WTO and Preferential Trade Agreements: From Co-Existence to Coherence
(WTO Publications 2011) 164 – 196; Henry Gao and Chin Leng, ‘Saving the WTO from the Risk of Irrelevance: The WTO Dispute Settlement Mechanism as a "Common Good" for RTA Disputes’ [2008] JIEL 899; Matthew Schaefer, ‘Ensuring that Regional Trade Agreements Complement the WTO System: US Unilateralism a Supplement to WTO Initiatives?’ [2007] JIEL 585.
6 The ‘constitutionalisation debate’ was introduced in chapter two, section 2.3.2. It will be further addressed in this chapter in section 3.3.2 infra.
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economic relations which has a ‘contraction effect’ on the allocation of powers in federal systems in their participation in the world economy. ‘Contraction effect’ is used in the context of the shrinking foreign affairs powers of the central government due to the intrusiveness of the expanding scope of international economic regimes.7 It is argued that due to the characteristics of the international economic system in the current dispensation, the role of central governments as the embodiment of the sovereign status of nation-states on matters of international economic relations is diminishing.8
The issues which will be considered in this chapter include:
1. Globalisation as a facilitator of changing patterns in the relationship between multilateralism and regionalism in international trade
2. The effect of the new wave of regionalism on the dynamics of international trade participation
3. The distinguishing characteristics of the current dispensation of international economic relations.
There is a broader context of evolution in the international system which has facilitated the changes occurring in the international economic system. For example, it is pertinent to recognise globalisation as a major geopolitical change which has redefined international relations in the 21st century. Globalisation has served as a facilitator for an expansion in the scope of international economic norms and the consequential incursion of these norms into the domestic policy arena of federal systems.
7 This concept is based on the ‘disaggregation of the state’ theory developed by Slaughter. See Anne- Marie Slaughter, ‘The Real New World Order’ (1997) 76 (5) Foreign Affairs 183, 184ff 194-195. See also Edward T Hayes, ‘Changing Notions of Sovereignty and Federalism in the International Economic System: A Reassessment of WTO Regulation of Federal States and the Regional and Local Governments within their Territories’ (2004) 25(1) Nw J Intl L & Bus 1.
8 For a summary of the arguments which suggest that the orthodox view of central exclusivity in foreign relations is questionable in light of globalisation and changing notions of sovereignty see JH Jackson, ‘Sovereignty-Modern: A New Approach to an Outdated Concept’ (2003) 97 Am J Int L 782;
See generally, JJPascoe, ‘Time for a New Approach? Federalism and Foreign Affairs after Crosby v.
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3.2.1 Globalisation as a Facilitator of the Current Dispensation of