THE END OF TRADE AND INVESTMENT LAW AS WE KNOW IT: FROM SINGULARITY TO PLURALISM Poul F. Kjaer (Copenhagen Business School) Chapter 6 (page 67 – 71) in Alvaro Santos, Chantal Thomas and David M. Trubek (eds.): World Trade and Investment Law Reimagined: A Progressive Agenda for an Inclusive Globalization (London: Anthem Press, 2019). The global trade and investment law regime is disintegrating. It is becoming increasingly impossible to speak of a singular regime spanning the globe; instead there are now several regional-based regimes with quite distinct characteristics. A rethinking of trade and investment law (TIL) needs to take this insight as its point of departure and is possible only by understanding the structural composition and direction world society is taking and the deep-seated cultural and social (including political) structures and contexts within which it operates. Both orthodox and heterodox TIL relies on assumptions concerning the state of the world and the driving forces behind it, but those assumptions need to be subjected to scrutiny and substantial rethinking. For heterodox TIL, critical globalization studies (CGS) has emerged as a central counter narrative to the neoliberal globalization discourse of the preceding decades. CGS rightly points out the deficiencies of the neoliberal paradigm and the problems created through increased inequality, the straightjacking of policy choices and the volatility created in the world economy due to the boom-and-bust culture installed through liberalization of capital 1 markets and the like. But by digging a bit beneath the surface of policy discourses and practical politics, a number of structural transformations can be observed that might also need to be considered when rethinking TIL. The core paradox we are dealing with is that increased globalization has implied an increase rather than a decrease in global diversity. A future-oriented TIL therefore should be thought of in the plural, not in the singular, as it is likely to fragment into a number of regional TIL regimes based on very different philosophies and institutional setups. The End of the Western-Centric World Claiming that the world is at a tipping point easily becomes tiresome—all ages and eras believe they live through a “special moment.” However, we may indeed be experiencing a tipping point. The breakdown of the Eurocentric world is now being followed by the breakdown of the Western-centric world. The Eurocentric world started to collapse in the late nineteenth century with the rise of the United States, and later Japan and the Soviet Union, and became manifested in the mid-twentieth-century decolonization processes. Today the concept of the West is disintegrating, with Europe and the United States moving steadily apart in political, economic, social and cultural terms and becoming strangers. Furthermore this development unfolds with the rise of non-Western powers, most notably China, greatly exacerbating the consequences. The rise of non-Western powers means that the relative centrality and weight of the West in the world is rapidly declining. The image of the secretary of state for international trade in the United Kingdom begging for a post-Brexit trade deal in India, the former jewel of the empire only 70 years ago, illustrates how much and how fast the tables have turned. The United States, the successor state to the British global empire, might not experience as rapid and deep 2 a downfall as the United Kingdom, but the rules of the game have changed for the United States and will most likely continue to change. The Absence of an Anchor Nation From the Dutch in the seventeenth century to the British and then to the Americans, the global economy has relied on an anchor nation, which has served as the center of the global economy, its currency acting as the global reserve currency, creating and propping up the global economy’s institutional architecture, including the institutions of TIL. In the emerging global constellation, however, no anchor nation is in sight. China, in spite of its seemingly impressive growth, will not be able to take over the anchor nation role for a range of political, economic, social and cultural reasons. An anchor nation typically possesses economic, political and institutional power, as well as cultural and ideological dominance. Even if China’s economic clout continues to increase, transforming such importance into political power embedded in global institutions tailor-made for its needs tends to be a long and protracted affair. Measured by GDP, the United States became the largest economy in the world in the late nineteenth century, but it was not until more than 50 years later, after World War II, that a US-centered institutional architecture with global reach was established. At the time the United States also embodied a way of life and advanced political ideology with global attraction, an ideology and culture that in principle was universal in nature and as such could be transposed to other parts of the world. Chinese authoritarian nationalism does not possess such a pull factor. Engaging with China is a necessity, and many countries, especially developing ones, are likely to continue to increase their engagement with China, but few people outside of China dream of living a Chinese way of life. 3 Limits to Chinese power are also likely to emerge and be reinforced. China has become a dominant player and can now exercise influence globally, but its capacity to exercise real power with few restraints and from a dominant position is likely to be limited to the East Asian and Pacific part of the world as neither the United States nor Europe will accept unrestrained Chinese power in their respective backyards. The United States is fighting a rearguard action and is essentially left with the choice to reconfigure its role and self-understanding as a global actor in either a graceful or pathetic manner. The Obama administration took the first route, and the Trump administration is taking the second. The long-term structural implications will, however, remain the same. The United States will continue to be a crucial and essential actor for the foreseeable future but will not enjoy the primus inter pares position of the past. The European Union might become a more coherent strategic actor with its shrinking post- Brexit providing a stronger sense of strategic purpose. But even if the speed of integration and the degree of internal coherency is increased, it is unlikely to take over the anchor role. No single state or community of states will, in other words, be able to fulfill the role of an anchor nation. It is, of course, not the first time in history that a world with competing powers exists, but even in the era of the great power rivalry prior to World War I and during the Cold War, a single nation—the United Kingdom and subsequently the United States—served as the anchor nation for the institutional infrastructure of the global economy. It is unlikely that any nation will fulfill this role in the future. 1 1 Ole Wæver, “International Leadership after the Demise of the Last Superpower: System Structure and Stewardship,” Chinese Political Science Review 2, no. 4 (2017): 452–76. 4 The paradox of globalization is that it is producing global disintegration and increased diversity rather than increased integration and uniformity. The world is likely to be made up by a number of centers with overlapping political, economic, social and cultural regimes, with none of them acting as a singular global anchor. These centers will be within one another’s horizons but without the fraternal spirit that early modern European competing monarchial states shared with one another. From TIL in the Singular to TIL in the Plural One of many consequences of this development is that we need to speak of TILs, not TIL. The evolution of TIL from 1945 onward was largely based on a relatively homogenous set of rules propped up by the United States. The future will most likely be characterized by different TIL regimes with each regional center developing its own version on the basis of the cultural, political and economic universe their institutions operate within. Lawyers specializing in World Trade Organization (WTO) law may need to find new interests as a global singular rule-based system withers away. This development started when the General Agreement on Tariffs and Trade (GATT) transformed into the WTO, changing the system from a US monopoly to a US/EU duopoly. As the breakdown of the Doha Development Round, launched in 2001, reveals, this duopoly was short-lived as countries like China, Brazil, India and South Africa refused to engage with terms dictated by the West. Although the WTO dispute settlement system has continued to work until recently, providing a basis for a gradual shift of power toward non-Western powers, the overall architecture of the system has not been reformed. The major players are likely to develop TIL philosophies that correspond to their own societal structures and ways of life. The GMO saga between the European Union and the United 5 States, and China’s prioritization of economic growth with little interest in the environmental, social and human rights dimensions of TIL, are cases in point, because in different ways, they both reflect different understandings of TIL’s purpose and limits. Rethinking the Rethinking of TIL The academic discourse on TIL does not seem to have fully acknowledged the implications of the decentering of the world. In fact, both the preceding implosion of the Eurocentric world and the ongoing end of the West has not yet been sufficiently understood. 2 The rethinking of TIL needs a rethink. Scholars based in China, Europe, the United States and elsewhere should engage in meaningful exercises of rethinking, but that will not lead to the emergence of a new singular paradigm for the world. TIL in the singular was largely an American product, developed on the backdrop of American politics, economy, and cultural affinities and subsequently exported through a mixture of persuasion and imposition to the rest of the world. Paradigms and models developed for Nebraska arrived in Sicily and Hunan. In the wake of the progressive decentering of the world, the persuasiveness of the American academic worldview is diminishing, along with the status of the American societal model at large. From a non-American perspective, a rethinking of TIL should be an exercise of reconnection, developing models that match the cultural universes, economic structures and political worldviews of the world’s different regions. TIL needs to become part of the cultural political economy and understood as a broader societally embedded exercise that takes the 2 Hauke Brunkhorst, “Constitutionalism and Democracy in the World Society,” in The Twilight of Constitutionalism? eds. Petra Dobner and Martin Loughlin (Oxford: Oxford University Press, 2010), 179–98 (185). 6 idiosyncratic structures of the societies where they are developed, deployed and exercised seriously. 3 Breaking the Hegemony of Economics For both institutional and social praxis reasons, academia tends to transform more slowly than the world that surrounds it. The economic rise of the United States in the late nineteenth century was not matched by a comparable status of US academia before 1945, and just like the Sorbonne is still the Sorbonne more than 100 years after its peak, Harvard will in all likelihood still be Harvard 100 years from now. The discursive universe that TIL scholarship operates within will largely remain dominated by American-based scholarship for decades to come. The change will be very slow. The core element needed for a rethinking of TIL and its transformation into TILs is, however, beyond the control of lawyers. When the current world order, which is now dying away, was created in the wake of WWII through the establishment of Bretton Woods, GATT, the International Monetary Fund and the like, the legal discipline was in charge as the diplomatic world at the time was overwhelmingly dominated by lawyers. Despite influential economists like John Maynard Keynes, lawyers and their worldview re-created the world while economists acted as the technicians tasked with implementing the plan. Also in this respect the tables have turned. Today the economists, on the basis of their worldview, develop the policies, and the lawyers are the technicians engaged in implementation. Unless this changes, any rethinking of TIL will be futile and a potentially pitiable exercise with little or no effects. 3 Ngai-Ling Sum and Bob Jessop, Towards a Cultural Political Economy: Putting Culture in Its Place in Political Economy (Cheltenham: Edward Elgar, 2013). 7 The lost world of the hegemony of the legal discipline is unlikely to come back. The biggest impetus of change will have to come from within the economic discipline itself. This change will occur only to the extent that the discipline is pluralized through a breakdown of the hegemonic status of a handful of economics departments, which currently control the definition of what is good and sound economics scholarship. The discipline will have to be opened up to insights from disciplines such as anthropology, history, sociology and—of course—law. Rather than integrating economics into legal tools and insights, legal tools and insights might be integrated into economics instead. Achieving that would probably be the biggest possible contribution one could make to the rethinking of TIL and its transformation into TILs. 8