Shift in Paradigm: From the New International ...

3 downloads 0 Views 439KB Size Report
14 Aristoteles, Nikomachische Ethik, V.5., 1130 lit. b. ...... 245 Knut Ipsen/Ulrich Haltern, Reform des Welthandelssystems?, 1991, 91 et seq.; Jimmie .... 257 Id., 209 et seq.; Reyna (note 245), 2371 et seq.; see also John Croome, Guide to the.
Shift in Paradigm: From the New International Economic Order to the World Trade Organization – Germany’s Contribution to the Development of International Economic Law – By Wolfgang Weiß * A. Introduction After a long period of hesitation1 (due to the unclarified relationship with the German Democratic Republic (GDR) and the position of the Soviet Union as a permanent member of the UN Security Council) the Federal Republic of Germany (FRG) – at the same time as the GDR – acceded to the United Nations Organization (UN) on 18 September 1973.2 Thus, it became an official member of the UN with a seat in the General Assembly (GA). The FRG had then fully arrived in the midst of the international community of states. During the last 30 years of UN memb e r sh ip, the FRG four times (1977/1978; 1987/1988; 1995/1996 and 2003/2004) became a non-permanent member of the UN Security Council 3 and was intensively involved in the work of the UN as well as its special organs and organizations. In the 1950s and 1960s, even before entry to the UN, the FRG had observer status with the UN (since October 1952) and had even become a member of all special organizations and subsidiary organs of the UN,4 Dr. jur., Privatdozent at University of Bayreuth. The members of the parliamentary group of the party “Zentrum” in the first FRG Parliament (Bundestag) requested at first to hold conversations w ith the UN SecretaryGeneral on German membership in UN on 8 November 1949. 2 Federal Law Gazette, 1974, Part II, 1397. 3 See for more detail Christian Freuding, Deutschland in der Weltpolitik, 2000; Gerhard Windscheid, Die Mitgliedschaft der Bundesrepublik Deutschland in den V ereinten Nationen seit 1973, 1982, 337 et seq. 4 Michael Bothe, Völkerrechtliche Praxis der Bundesrepublik Deutschland im Jahre 1963, Zeitschrift für ausländisches öffentliches Recht und Völkerrecht (ZaöRV), vol. 25, 1965, 305 et seq; Beate Lindemann, Die Organisationsstruktur der Vereinten Nationen und die Mitarbeit der BRD, in: Ulrich Scheuner (ed.), Die Vereinten Nationen und die Mitarbeit der *

1

2

Wolfgang Weiß

inter alia,5 of those that dealt with economic issues like the International Monetary Fund (IMF) and the World Bank, the Economic Commission for Europe (ECE), the UN Conferenc e o n Trade and Development (UNCTAD)6 and the UN Development Program (UNDP).7 From 1 October 1951, the FRG took part in the General Agreement on Tariffs and Trade (GATT).8 Following its economic recovery, the FRG soon became one of the big players in the world economy and world economic policy after World War II. Due to its economic position and its integration into the international community, the FRG was in a position to deeply influence the development of international economic law. This article is devoted to an analysis of the development of international economic law between the mid-1980s and the mid-1990s from the debate on a New International Economic Order in the 1970s to the creation of the World Trade Organization (WTO), these being the main and most eminent pillars of the development of international economic law in the past 30 years of Germany’s membership to the UN. The essay investigates the changes in the topics and the discussions and focuses on the FRG’s particular role and contribution 9 to the development of international economic law in the UN system. Although external economic policy has been the exclusive competence of the European (Economic) Community (EC) since the 1970s (initially confined to customs and the trade of goods) and has been subject to the European Political Cooperation since 1970, Bundesrepublik, 1973, 217, 246; Helmut Steinberger, Völkerrechtliche Praxis der BRD im Jahre 1956, ZaöRV, vol. 18, 1957/1958, 749. For a detailed timetable of West Germany’s accession to the different UN special organizations and organs see Ausw ärtiges Amt (ed.), Deutschland in den Vereinten Nationen, 2nd ed., 1995, 11 et seq. 5 E.g., the FRG w as also a member of the World Heath Organization, the International Labour Organization and UNESCO. The cooperation of W est Germany in the UN special organs and organizations before formal accession to the UN w as not only driven by interests in the subjects but w as also motivated by an endeavor to keep the German Democratic Republic out of the UN system in order to be the only representative of Germany on the international level; see Lindemann (note 4), 246 et seq. 6 The FRG had a permanent seat in UNCTAD Conferences, beginning in 1964. The UN CTAD – after its first conference in 1964 – became a special organ of t he UN General Assembly, see GA Res. 1995 (XIX) of 30 December 1964; see also Konrad Buschbeck, Deutsche Völkerrechtspraxis 1964, ZaöRV, vol. 26, 1966, 142. 7 In 1965 the Economic and Social Council (ECOSOC) elected the FRG as a member of the governing council of the UN Development Programme; see Axel Werbke, Völkerrechtliche Praxis der Bundesrepublik im Jahre 1965, ZaöRV, vol. 27, 1967, 193, footnote 257. 8 See Federal Law Gazette, 1951, Part. II, 173 and 200. 9 Regarding t he ex ternal economic policy of the German Democratic Republic see Wolfgang Seiffert, Das Verhältnis der DDR zu den Vereinten Nationen und die Mitgliedschaft der beiden deutschen Staaten in den internationalen Wirtschaftsorganisationen, in: Gottfried Zieger (ed.), Deutschland und die Vereinten Nationen, 1981, 53, 58–63.

Germany’s Contribution to the Development of International Economic Law

3

there remained enough room for the FRG to develop its own, independent attitude towards the development of international economic law especially since the competences of the EC do not embrace all areas of international economic law. This can easily be read from the fact that the FRG like all other EC Member States, is a WTO member besides the EC. Additionally, the FRG played its own role in the decision making process within the EC as regards the EC’s attitude towards issues of international economic law. B. The Discussion on a New International Economic Order I. Starting Point: New Legal Equality yet Continuing Economic Inequalities

In the process of decolonization after World War II, the newly independent states became subjected to public international law and th e c ontemporary international economic order which they discovered to be putting them as developing countries at a disadvantage. The basically liberal, market oriented economic world order which was created by the Bretton Woods System after World War II aimed at a free flow of goods with more and more reduced tariffs, a gradual elimination of non-tariff barriers and an increasingly free flow of production factors and exchange of currencies.10 Thus, the basic principles of international economic law are reciprocity in opening markets, fair competition to all goods irrespective of origin and non-discriminatory free trade.11 In such a system, economies which, due to unfavorable economic conditions like lack of capital and technology, cannot produce competitive products are limited to a very restricted participation in world economy. They more or less can only export raw materials and simply manufactured goods and have to import everything else. As the prices are determ i n ed by supply and demand, and as most developing countries export the same primary commodities, the developing countries’ export receipts were very poor. This led to a negative foreign trade balance and thereby to one-sided dependence. In the end the developing countries soon discovered that the sovereignty and freedom they now enjoyed was very restricted due to the economic realities. Their economic policies had to fit into the e xi sti n g international order to whose formation they had contributed only to a very limited extent as it was established prior to the independence of most of them. Furthermore, the state of international law limited the possibilities to expropriate See Ernst-Ulrich Petersmann, International Economic Order, in: Rudolf Bernhardt (ed.), Encyclopedia of Public International Law (EPIL), vol. II, 1995, 1132 et seq. 11 See Thomas Oppermann, On the Present International Economic Order, in: Thomas Oppermann/Ernst-Ulrich Petersmann (eds.), Reforming the International Economic Order, 1987, 188. 10

4

Wolfgang Weiß

foreign investors12 and to find access to technology, since property rights were protected.13 With the advance of western technological know-how, the situation of the developing countries would, step by step have became even worse. Instead of being developed the developing countries feared to be condemned to a second or third class role in the international community. And partly influenced by a socialist view, they regarded the prevailing economic world order to be an imperialist tool of the leading highly industrialized countries of the world to exploit and oppress the developing countries and to hinder their equal development. Irrespective of the pros and cons of the view of the developing countries, they were right in that the legal equality of new states cannot and does not automatically remove factual inequalities and existing disadvantages of the developing countries’ initial position. Therefore, the demand of the developing countries for compensatory justice (iustitia commutativa)14 in the arrangement and exercise of international relations in principle was – and stil l i s 1 5 – justified. Compensatory justice calls for compensatory inequality of developing countries. They have to be treated in a favorable and preferential manner according to their needs as the situation of developed and developing states differs. II. The Demand of the Developing Countries for a New International Economic Order and the Response of the Western World, in Particular of West Germany

In the 1960s, soon after achieving liberty and due to increased politi c al influence following the beginning of the Cold War and the establishment of international organizations of which the developing countries were members with often even a great majority of the votes,16 the developing states made efforts to make the industrialized states aware of their special needs.17 They called for a change of the existing international economic order to make it more responsive to 12 Regarding the questions brought forw ard by the debate on NIEO concerning the treatment of aliens see Richard Lillich, Duties of States Regarding the Civ il Rights of Aliens, Recueil des Cours (RdC), vol. 161, 1978, 368 et seq. 13 For the main factors contributing to the dominant-dependent relationship see Mahdi El-B agh dadi, The Developing Countries and their Endeavours to Establish the New International Economic Order, World Competition, vol. 21, 1998, 97 et seq. 14 Aristoteles, Nikomachische Ethik, V.5., 1130 lit. b. 15 Petersmann (note 10), 1136 complains about the “deficiencies in the redistributive mechanisms for the benefit of poor people.” 16 In 1966 third w orld nations attained a 2/3 majority of the GA. Thus, they had the percentage necessary for adopting resolutions; see Gabe Shawn Varges, The New International Economic Order Legal Debate, 1983, 114, footnote 6. 17 On the influence of developing states on international law and its causes see Argyres Fatouros, Developing States, in: Rudolf Bernhardt (ed.), EPIL, vol. I, 1992, 1021 et seq.

Germany’s Contribution to the Development of International Economic Law

5

their situ ati o n .18 An institutionalized expression of the endeavors of the developing countries was the formation of UNCTAD in 1964, a subsidiary organ ac c o r ding to Article 22 UN Charter.19 UNCTAD was supposed to be an intellectual center for development issues20 and a counterpart to GATT and the IMF. The developing states hoped to form a new world economic organization. In GATT and its tariff rounds which were crucial for them, the developing states did not play an important role at all because they were simply not important enough as partners in international trade.21 The topic of developing undeveloped countries’ economies was only of minor importance to the GATT. Up to 1965 only Article XVIII GATT on Governmental Assistan c e to Ec o n o m i c Development which was amended in 1955 (to increase its value for development and eliminate its application to post-war reconstruction) addressed some aspects of the complex issue of trade and development. This Article gave additional facilities to developing countries and allowed them to deviate temporarily from GATT obligations for the sake of protection of infant industries and combating payment imbalances.22 Developing countries felt that their trade concerns were not being effectively addressed in GATT.23 The Havana Charter for an International Trade Organization,24 however, which was drafted at the same UN Conference on Trade and Employme nt as the GATT,25 had dealt with such issues in a whole chapter (Chapter III on Economic Development and Reconstruction) which contained in its Articles 8 to 15 provisions favorable to the developing countries on resources, international co-

18 Ghanshyam Purbey, Why a New International Economic Order, in: Raj Sinha (ed.), New International Economic Order, 1985, 40; Christian Tomuschat, New International Economic Order, in: Rudolf Bernhardt (ed.), EPIL, vol. III, 1997, 579. 19 Charter of the United Nations, 26 Ju ne 1 9 4 5 , UNCIO, vol. 15, 335; see also Meinhard Hilf/Daniel-Erasmus Khan, Article 22, in: Bruno Simma et al. (ed.), The Charter of the United Nations – A Commentary, vol. I, 2nd ed., 2002. 20 Karen Hudes, Tow ards A New International Economic Order, in: Yale Studies in World Public Order, vol. 2, 1975, 97. 21 Marthinus Erasmus, The New I nternational Economic Order and International Organizations, 1979, 173. 22 For an analysis see id., 165 et seq.; Mitsuo Matsushita/Thomas Schoenbaum/Pe t ros Mavroidis, The World Trade Organization, 2003, 380 et seq. 23 Constantine Michalopoulos, The Role of Special and Differential Treatment for Developing Countries in GATT and the World Trade Organization, World Bank Policy Research Working Paper No. 2388, 2000, 5 et seq. 24 Extracts are reprinted in: International Law Quarterly, vol. 2, 1948, 283. 25 See Günther Jaenicke, Havana Charter, in: Rudolf Bernhardt (ed.), EPIL, vol. II, 1995, 679; Andreas Lowenfeld, International Economic Law , 2002, 25 et seq.

6

Wolfgang Weiß

operation for deve lopment and preferential agreements for development.26 Additionally, Chapter VI of the Havana Charter on International Commodity Agreements – in contrast to GATT – provided for a system of stabilized prices for primary commodities, i.e., raw materials and foo d stuffs. The international community soon discovered that the existing state of the GATT was completely insufficient to meet the special needs of the developing states. The Haberler Report in 195827 showed that the developing countries could not profit from the prevailing economic order due to restricted market access of developing country products. Because of protectionist measures and barriers of the industrialized countries they could not realize the benefits of free trade.28 This led to intense discussions on improving GATT in the 1960s in order to expand the export earnings of the less developed countries. On the basis of the Haberler Report the GATT Contracting Parties initiated an action program to reduce or remove trade barriers against products of developing countries. This program however never came to anything substantive as the EEC Member States refused to endorse it.29 The result of the debate was the insertion of the new Chapter on Trade and Development in GATT (Articles XXXVI to XXXVIII GATT) which came into effect in 1966.30 One of its m ain contents is the developed countries’ renouncement of reciprocity. According to Article XXXVI para. 8 GATT the industrialized states do not expect reciprocity for reduced or removed tariffs or other barriers to the trade of developing countries. At the level of the U N th e se topics were discussed in meetings of the UNCTAD. UNCTAD intr o d u ced considerations on growth prospects of developing countries into the discussions and negotiations on international trade.31 When establishing UNCTAD, governments wanted to lay foundations for a better world economic order as they recognized that trade is an i n strument for development.32 The establishment of UNCTAD had a major influence on the insertion of the above-mentioned new chapter on Trade and Development into GATT, on the adoption of particular provisions like the Generalized System of For more details see Herbert Gross, Welthandel von Morgen, 1950; Clair Wilcox, A Charter for World Trade, 1949. 27 GATT, Trends in International Trade, A Report by a Panel of Experts, 1958. 28 Raj Bhala/Kevin Kennedy, World Trade Law , 1998, 407. 29 Abdulqawi Yusuf, Legal Aspects of Trade Preferences For Developing States, 1982, 13 et seq. 30 John Howard Jackson, World Trade and the Law of GATT, 1969, 640 et seq. 31 Lutz Hoffmann, UNCTAD and Trade Liberalization, in: Detle v Dicke/Ernst-Ulrich Petersmann (eds.), Foreign Trade in the Present and a New International Economic Order, 1988, 323. 32 Sidney Dell, Origins of UNCTAD, in: Michael Zammit Cutajar (ed.), UNCTAD and the South-North Dialogue, 1985, 10. 26

Germany’s Contribution to the Development of International Economic Law

7

Preferences in 1971 that was proposed by Raul Prebisch in order to protect the export sector of the developing countries33 and on other later GATT measures (e.g. the so-called Enabling Clause of 1979, see infra). The UNCTAD conferences became the main forum for the developing countries to articulate their economic ideas. In contrast to other international fora, the ideas and agreements reached here have mostly been initiated by the developing countries.34 At least in the beginning, it had an interventionist approach. Based on a decision of the UN Economic and Social Council (ECOSOC)35 the first UNCTAD confere n c e (UNCTAD I) took place in 1964 due to the steady urge of th e developing countries who represented (and still represent) the majority of the membership in the UN organs. This conference was dedicated to negotiating a catalogue of general and special principles which are to govern international economic relations and trade policies for development.36 Principles well-known in public international law (like respect of sovereign equality, non-interference in internal affairs of other countries, sovereign right freely to trade with other countries and freely to dispose of their natural resources) as well as novel principles (like the General Principle six stating that international trade should be a fundamental factor of economic development) were applied towards or introduced in international trade and economic relations, yet against resistance of the United States of America (US), United Kingdom (UK) and some other western states including West Germany. The FRG had abstained from voting for some General Principles of UNCTAD I like the third General Principle stressing the sovereign right freely to trade with other countries and to dispose of its natural resources, or the fourteenth General Principle on decolonization, and voted against General Principle two (ban of discrimination based on differences in socio-economic systems), General Principle eleven on increasing the net flow of international institutions and developed countries to support developing countries, Spec i al Principle seven on the stabilization of prices of primary products and Special Principle twelve on helping developing countries build up means of transport.37 UNCTAD I also discussed See UNCTAD Res. 21 (II), reprinted in: Proceedings of the UNCTAD, Second Session, vol. I, Report and Annexes, 1968, 38; Wolfgang Benedek, Preferential Treatment, in Detlev Dicke/Ernst-Ulrich Petersmann (eds .) , F oreign Trade in the Present and a New International Economic Order, 1988, 80; John Howard Jackson, The World Trading System, 2000, 322 et seq.; Ernst-Ulric h Petersmann, International Trade Order and International Trade Law , in: Thomas Oppermann/Ernst-Ulrich Petersmann (eds.), Reforming the International Economic Order, 1987, 224. 34 Gamani Corea, UNCTAD: The Changing Scene, in: Michael Zammit Cutajar (ed.), UNCTAD and the South-North Dialogue, 1985, 295. 35 E/Res. 917 (XXXIV), endorsed in GA Res. 1785 (XVII) of 8 December 1962. 36 See Proceedings of the UNCTAD, Final Act and Report, 1964, 17. 37 Regarding the different standpoints of the Western States see Jerzy Makarczyk, Principles of a New International Economic Order, 1988, 46 et seq. 33

8

Wolfgang Weiß

establishing general preferences for developing countries’ exports. Whereas the US argued that any departure from the most-favored-nation principle of Article I GATT was not acceptable, some developed states (United Kingdom, Netherlands, West Germany and Denmark) held that there should be a single preferential scheme applied to all developing countries by all developed countries. The conference in the end could not find an agreement on preferences but enunciated in principle the need for their introduction in international trade. General Principle eight challenged developed countries to grant concessions to all developing countries without reciprocity and to make new preferential concessions, both tariff and non-tariff, solely to all developing countries.38 Towards the end of the first UNCTAD conference, the developing countries of Asia, Africa and Latin America aggregated to form the Group of “77” (reflecting their number at that time) as an informal forum of developing states which was supposed to harmonize positions and to coordinate strategies and which soon increased in number.39 This institutional result and the establishment of UNCTAD itself as a permanent institution were the two epochal results of UNCTAD I.40 UNCTAD II (1968) was supposed to pass an action program und to formulate additional principles but failed to achieve any results in strictly economic matters. Only general principles for the preferential treatment of developing countries in trade relations were adopted 41 which resulted in the 1971 decision of the GATT Contracting Parties on a waiver to the most-favored-nation principle of Article I GATT.42 This became the basis of the above mentioned Generalized System of Preferences in favor of the developing countries.43 The beginning of the 1970s showed a certain radicalization of the states of the Non-Aligned Movement (comprising states that wanted to be independent of the two blocs) due to unsatisfying experiences of UNCTAD I and II where the developing states faced continuing resistance of the developed nations in fulfilling their international obligations and due to the fiasco of the first UN Development Decade which had brought no progress.44 The third UNCTAD session (1972) coined by a climate of Yusuf (note 29), 21 et seq. El-Baghdadi (note 13), 92, 95. 40 UNCTAD (ed.), The history of UNCTAD 1964–1984, 1985, 10. 41 UNCTAD Res. 21 (II) (note 33); Makarczyk (note 37), 58. 42 See Basic Instruments and Selected Documents 18S (1972)/24. Another w aiver decision of 1971 (Basic Instruments and Selected Documents 18S (1972)/26), the Protocol Relating to Trade Negotiations among Developing Countries gave w ay to tariff preferential treatment among dev eloping states that led to a Global System of Trade Preferences among developing countries; see Benedek (note 33), 82–86. 4 3 See Wolfgang Benedek, Die Rechtsordnung des GATT aus völkerrechtlicher Sicht, 1990, 71; Jackson (note 33), 323. 44 Makarczyk (note 37), 61. 38 39

Germany’s Contribution to the Development of International Economic Law

9

increasing confrontation brought a proposal of the developing countries to draft a charter of economic rights and duties of states in order to base international economic relations on firm legal grounds. This charter was supposed to be an equivalent of the Universal Declaration of Human Rights and of the International Covenants in Human Rights.45 With this proposal the developing countries admitted that the General Principles of UNCTAD I did not find international legal status. Finally a resolution concerning the drafting of such a charter was adopted by 90 votes with 19 abstentions.46 Whereas Belgium, France and the Netherlands favored the resolution, the FRG abstained. As their more moderate efforts to change the international economic order remained largely unsuccessful, the developing countries – almost at the same time as Germany’s accession to the UN – initiated a course-pointed discussion on an alternative to the existing economic world order, the so -c al l ed New International Economic Order (NIEO) on the UN agenda which advocated for a redistribution of wealth to the advantage of developing countries and was supposed to change the structures, mechanisms and purposes of the international economic system in order to serve their development process fully. With that concept economic development now was high politics; the development issue became politicized.47 The basic concepts of the NIEO were first formulated at the 4th Conference of Heads of State or Government of Non-Aligned Countries (September 1973, socalled Algiers Summit)48 in its Economic Declaration and Action Program for Economic Co-operation which took the most extreme standpoint in struggling against imperialism, complaining ab o u t i n sufficient implementation of UNCTAD III, upholding the full right to nationalization on the state’s own legislation and calling for a nullification of commitments forced upon developing states. It aimed at the “reversal of negative tendencies and the forming of a new international economic order which would be in agreement with the requirements of true democracy.”49 The Non-Aligned Countries now formed something like an international economic pressure group for the reorganization of the international economic system 50 and succeeded in carrying the disc u ssi ons about the international economic system into the international arena.51 The demand for a Id., 66. Id., 67 et seq. 47 Karl Sauvant, The Origins of the NIEO Discussions, in: Karl Sauvant (ed.), Changing Priorities on the International Agenda, 1981, 23. 48 Raul Ferre ro , The NIEO and the Promotion of Human Rights, UN Doc. E/CN.4/Sub.2/1983/24/Rev.1 (1983), 5; Hudes (note 20), 96. 49 Makarczyk (note 37), 73. 50 Odette Jankowitsch/Karl Sauvant, The Initiating Role of the Non-Aligned Countries, in: Karl Sauvant (ed.), Changing Priorities on the International Agenda, 1981, 59 et seq. 51 Id., 68. 45 46

10

Wolfgang Weiß

NIEO found its climax in a series of three resolutions of the General Assembly of the UN in which the concept of a NIEO was embodied. On 1 May 1974 the Declaration on the E st a blishment of a New International Economic Order and the respective Program of Action were adopted in two resolutions of the GA in its 6th Special Session on Raw Materials and Development (the first special session on questions of development) by consensus, i.e., without vote.52 The 6th Special Session convened because of a need for urgent action in issues of trade in primary commodities and raw materials. After the oil crisis, the developing countries wanted to avoid problems of commodities discussed only with regard to oil.53 As the developing countries used their collective strength, the 6th Special Session in the end changed course to form new ground rules for the world economic order.54 The intellectual foundations of the Declaration on the Est a bli sh m ent of a New International Economic Order and the respective Program of Action were largely laid in the above-mentioned Algiers Summit which had drawn upon work of UNCTAD, the Group of 77 and the UNGA.55 The principles and measures adopted by the 6th Special Session were an enriched and qualified version of the program of the Algiers Summit.56 The consensual adoption merely pretended consent because after the adoption of the Declaration and the respective Program of Action, the FRG – as well as the US, France, Japan and the UK – formulated “reservations” concerning certain aspects of the resolutions. The West German ambassador Gehlhoff stated that German policy was to support all measures and actions which lead to an improvement of the international economic order. The Declaration as well as the Program of Action was welcomed, yet certain principles and proposals were criticized because they had to be based more on reality, were found not to offer useful solutions or should be dealt with in the competent international bodies. The FRG Federal Minister of Foreign Affairs, Scheel, speaking also on behalf of the EEC, objected to provisions which would refund revenues obtained in customs duties on goods from developing countr i e s. On commodity agreements it was stated that the needs of consumers should be considered. The demand for indexation of the prices of raw material and commodity exports from developing countries to the prices of their imports from developed countries was seen difficult to realize.57 GA Res. 3201 (S-VI) and 3202 (S-VI) of 1 May 1974, adopted at the Sixth Special Session, reprinted in: ILM, vol. 13, 1974, 715 and 720. 53 See Hudes (note 20), 101 et seq. 54 For more details on the 6th Special Session see id., 103 et seq. 55 Branislav Gosovic/John Gerard Ruggie, On the Creation of a NIEO: Issue Linkage and the 7th Special Session of the UN General Assembly, International Organization (IO), vol. 30, 1976, 313 et seq.; Jankowitsch/Sauvant (note 50), 68. 56 Jankowitsch/Sauvant (note 50), 71. 57 See Hudes (note 20), 115. 52

Germany’s Contribution to the Development of International Economic Law

11

In December 1974, the GA adopted the Charter of Economic Rights and Duties of States58 (which again was influenced by preceding work reflected in it, in particular of UNCTAD III) in order to establish a new system of international economic relations with the approval of 120 states (inter alia, the GDR and Australia, Sweden and New Zeal an d f r o m the Western hemisphere)59 against 6 votes and 10 abstentions. The FRG like the United States, the United Kingdom, Belgium, Luxembourg and Denmark rejected the Charter whereas ten other western states (France, Italy, Netherlands, Ireland, Austria, Canada, Israel, Norway, Spain and Japan) abstained.60 The reason for the FRG’s rejection of the Charter was that several issues remained contentious, in particular nationalization and associations of raw material producers.61 The FRG representative in the second committee of the GA, Mr Dittmann expressed in his reservation 62 that the German government was not able to approve certain articles of the Charter as satisfactory solutions could not be found due to a lack of time. One example is the expropriation of foreign investment on which the developing states insisted in their so-called permanent sovereignty 63 and – therefore – in the applicability solely of national law without any protection by public international law. This was one of the most contentious matters. The FRG also – like other industrialized states – did not want to accept a free formation of associations (i.e. cartels) of raw materials exporting countries (see Article 5 Charta of Economic Rights and Duties of States that on the other hand did not permit cartels of consumer countries) or the indexation of the prices of the export goods of the developing countries to the prices for their import goods.64 It came out against commodity cartels and price indexation because of the great technical difficulties and the hazards for the world economy.65 GA Res. 3281 (XXIX) of 12 December 1974, reprinted in: ILM, vol. 14, 1975, 251. For comments see Richard B. Lillich, American Journal of International L aw (AJIL), vol. 69, 1975, 359; Karl-Matthias Meessen, Law and State, 1979, 106. 59 Markus Kaltenborn, Entw icklungsvölkerrecht und Neugestaltung der internationalen Ordnung, 1998, 47. 60 Ram Prakash Anand, A NIEO for S u s t ainable Development?, in: Najeeb AlNauimi/Richard Meese (eds.), International Legal Issues Arising under the UN Decade of International Law , 1995, 1223; Christian Tomuschat, Die Charta der w irtschaftlichen Rechte und Pflichten der Staaten, ZaöRV, vol. 36, 1976, 444. 61 Hudes (note 20), 118–121. 62 Reprinted in: Karl Sauvant (ed.), Changing Priorities on the Internat ional Agenda, 1981, 214. 63 For the meaning of this term see infra, the text accompanying notes 84 et seq. 64 See the report of the Federal Government on the 29th Session of the GA, reprinted in: Printed Papers of the Federal Parliament, 7/3637, 8. 65 See State Secretary in the Federal Ministry for Economic Cooperation, Udo Kollatz in an interview , Intereconomics, vol. 10, 1975, 236. 58

12

Wolfgang Weiß

The Charter of Economic Rights and Duties of States dealt with a number of relevant topics like the activities of transnational corporations, nationalization, commodity producer associations, effective participation of all states in the decision-making process, transfer of technology, preferential treatment of exports from developing countries and the sharing of ocean resources. Additionally, the absolute permanent sovereignty of the states over their natural resources was stressed. The basic demand of the developing countries aimed for increased international solidarity of the international community particularly in relation to developing states. The principle of solidarity was one of the legal cornerstones of the NIEO.66 These three instruments passed by the GA are the very heart of the NIEO. Other instruments followed but can almost completely be subsumed conceptually under the principles of the aforementioned resolutions.67 At the 7th Special Session of the GA, the resolution on Development and International Economic CoOperation was ad o p te d b y consensus where it was reaffirmed that the aforementioned resolutions lay down the foundations of the new international economic order.68 This resolution, however, brought a new institutional dimension to the NIEO debate, the demand for a re-structuring of the UN system.69 The GA decided in Section VII, para. 1 to initiate […] the process of restructuring the UN system so as to make it more fully capable of dealing w ith problems of international economic co-operation and development […] and to make it more responsive to the requirements of the prov is ions of the Declaration and the Program of Action on the Establishment of a NIEO as w ell as those of the Charter of Economic Rights and Duties.70

In the months preceding the 7th Special Session the attitude of the industrialized countries, in particular of the US,71 had shifted as a preparatory meeting in Paris in F or m ore det ail s ee Kay Hailbronner, Entw icklungstendenzen des Wirtschaftsvölkerrechts, 1983, 10; Wil Verwey, The Principle of S olidarity as a Legal Cornerstone of a New International Economic Order, in: Dimitrios Constantopoulos (ed.), North-South Dialogue: A New International Economic Order, 1982, 483. 67 Gabe Shawn Varges, The New International Economic Order Legal Debate, 1983, 5. 68 GA Res. 3362 (S-VII) of 16 September 1975, reprinted in: Karl Sauvant (ed.), Changing Priorities on the International Agenda, 1981, 226. 69 See Hudes (note 20), 178 et seq. 70 This institutional reform process w as confirmed by UNCTAD Res. 90 (IV), reprinted in: Proceedings of the UNCTAD, Fourth Session, vol. I, Report and Annexes, 1977, 38. There the States, e.g., proposed to provide a major forum w ithin the UN for negotiation in respect of international trade. See also Art. I of UNCTAD Res. 114 (V), reprinted in: Proceedings of the UNCTAD, Fifth Session, vol. I, Report and Annexes, 1981, 42, w here it calls for clear recognition of UNCTAD as a principal instrument of the UN General Assembly for negotiations on international trade and economic co-operation. 71 See Catherine Gwin, The Seventh Special Session – Tow ard a New Phase of Relations 66

Germany’s Contribution to the Development of International Economic Law

13

April 1975 failed. The industrialized countries had to adjust to political reality as the bargaining power of OPEC countries was linked to the demands for a NIEO.72 Thus, they accepted the need for improvements of the structure of international economic relations and tried to avoid confrontation. With the exception of Japan and the FRG, the commitment to improvements varied only in intensity.73 Therefore, the principles of the NIEO were consolidated and refined in the resolution of the 7th Special Session. Nevertheless, some principles were weakened,74 for example, organizations of primary commodity producers were no longer mentioned.75 The developing countries started focusing on an integrated program on commodities and put the idea of producer associations aside due to their sobering results.76 The outcome of the Special Session was the result of an intense struggle for compromise as the US changed its positions during the session.77 In the end no progress was made as regards the substance of economic problems. Disagreements were either masked by ambiguous wording or referred to other fora like UNCTAD IV.78 The result was not the creation of a NIEO. At the 30th Session that started shortly after the end of the 7th Special Session, the GA passed (with 114 votes to 379 with 11 abstentions) a resolution on the

Betw een the Developed and Developing States?, in: Karl Sauvant/Hajo Hasenpflug (eds.), The New International Economic Order, 1977, 103 et seq.; Rolf Langhammer, Industrie- und Entw icklungsländer in der Auseinandersetzung um eine Neue Weltw irtschaftsordnung – Die Internationale Politik 1975/1976, 1981, 41. Henry Kissinger, US Secreatry of State expressed the new approach in his opening address to the 7th S pecial Session: “We embrace your hopes. We w ill join your efforts. We commit ourselves to our common success,” cited from Sauvant (note 47), 79. 72 Hudes (note 20), 126 et seq. 73 Gosovic/Ruggie (note 55), 319 et seq.; Hudes (note 20), 151 et seq. 74 Jankowitsch/Sauvant (note 50), 71 75 The experiences the developing countries made w ith such organizations w ere quite disappointing to them so that the developing countries preferred the idea of negotiating commodity agreements in order to stabilize their export earnings. This solution w as also favored by the developed countries. 76 Langhammer (note 71), 43. For a list of the producer associations and their enlargement and establishment after 1973 see Sauvant (note 47), 34 et seq. 77 Hudes (note 20), 152 et seq. 78 Id., 179. See also Erasmus (note 21), 119; Gosovic/Ruggie (note 55), 327; Windscheid (note 3), 230. 79 The three w ho denied the resolution w ere the FRG, United Kingdom and United States, Anand (note 60), 1224, footnote 34.

14

Wolfgang Weiß

Implementation of the Charter of Economic Rights and Duties of States80 where it solemnly reiterates the determination to develop the NIEO. The basic idea of a NIEO was to place transnational economic activity into the frame of common goals and natural law principles81 like peace, security, justice, solidarity and democracy and to derive quite concrete and detailed demands from them. The Declaration on the Establishment of a NIEO as well as the Charter of Economic Rights and Duties of States aimed to promote the establishment of a new order that was – according to their respective preambles – “based on equity, sovereign equality, interdependence, common interest and cooperation among all States.” The Charter in its Chapter I was referring to principles well-acknowledged by public international law like sovereignty, equality of states, non-interference in internal affairs, territorial integrity and self-dete r mination. From those they postulated for example the right to nationalization in accordance (solely) with the domestic law or international solidarity. The developing countries used classic concepts of public international law in order to reason their demands and to legitimize them by generally accepted rules and principles. The concepts, however, were filled with new ideas and approaches. Two examples highlight this observation: the formulations in the Charter of Economic Rights and Duties of the States are not helpful in indicating the precise corollaries of the concept of permanent sovereignty used in its Article 2. But it seems to have functioned as a counterpart to the concept of acquired rights that protects the interests of aliens.82 The term permanent sovereignty was at first used in the Declaration o n Permanent Sovereignty over Natural Resources,83 where the sovereign right of every state to dispose o f i ts n atural resources was acknowledged. This resolution was said to represent the first call for a new international economic order as far as natural resources are concerned.84 The concept of permanent sovereignty used in the Declaration of 1962, however, is different from that of the Charter and the NIEO debate as the Declar ation explicitly acknowledges that in case of nationalization the former owner has to be “paid appropriate compensation […] in accordance with international law.” Thus, the phrase “permanent” did not have a connotation solely based on national law. GA Res. 3486 (XXX) of 12 December 1975. Further resolutions on the implementation w ere GA Res. 31/178 of 21 December 1976 and GA Res. 32/174 of 19 December 1977. 81 On the natural law roots of the NIEO postulates see José Puente Egido, Natural Law , in: Rudolf Bernhardt (ed.), EPIL, vol. III, 1997, 518; Kaltenborn (note 59), 131 et seq., 141. 82 See Ian Brownlie, Legal Status of Natural Resources in International Law , RdC, vol. 162, 1979, 270. 83 GA Res. 1962 (XVII) of 14 December 1962. 84 Hasan Zakariya, Permanent Sovereignty over Natural Resources, in: Kamal Hossain (ed.), Legal Aspects of the New International Economic Order, 1980, 216. 80

Germany’s Contribution to the Development of International Economic Law

15

A further example of the new conceptualization of traditional terms can be found by a comparison of the Charter with the UN Cove n an t on Human Rights. Whereas the latter in their Article 1 para. 2 acknowledges the rights to “freely dispose of their natural wealth and resources without prejudice to any obligations arising out of international economic co-operation, based upon the principle of mutual benefit, and the international law,” Article 2 of the Charter no longer figures the latter restrictions.85 Because of the steady reference to classic terms of international law, the reform concept of the NIEO still was statocratic. The primacy and sovereignty of the state and its role was reaffirmed very often at international conferences on the NIEO.86 This is astonishing as the developing countries knew that there is an asymmetry between states of unequal power even when they try to negotiate formally on equal footing. There is actually a contradiction between the constant affirmation of the primacy of the state and the inability of the international system based on that very primacy to bring benefits to the developing countries. Thus, the reaffirmation of the importance of the state and its sovereignty can only be explained by the assumption that those who represent the developing countries have an interest in it because it protects them when their behavior with respect to their populations is questioned.87 The developing countries determined their attitude according to their final aim to improve their situation, irrespective of contradictions in their argumentation.88 The quoted, aforementioned principles, on which the developing countries relied, seem only to have served the purpose of covering up their demands and to pretend legitimacy for them. The demand for a NIEO engendered a discussion on several very concrete issues that were practical expressions of compensating inequalities.89 Apart from the already mentioned preferential treatment and formation of produ c e r associations, one of these issues was the improvement of the terms of trade in parti c u l ar for primary commodities exported by the developing states. An Ignaz Seidl-Hohenveldern, The International Economic Order, in: Christian Tomuschat (ed.), The United Nations at Age Fifty, 1995, 220. 86 Hailbronner (note 66), 9. 87 Roy Preis we rk, Hidden Dimensions of the So-Called NIEO, in: Addo Herb (ed.), Transforming the World-Economy?, 1984, 37 et seq. 88 Ignaz Seidl-Hohenveldern, International Economic “Soft Law ,” RdC, vol. 163, 1979, 176 et seq. See also Juergen Donges, Außenw irtschafts- und Entw icklungspolitik, 1980, 191; Wolfgang Graf Vitzthum, A New International Economic Order and a New Global Maritime Regime, Law and State, vol. 19, 1979, 8, 10 et seq. 89 A summary list put together by the UN Institute for Training and Research specified 32 principal issues covered by the demand for a NIEO; see Andre Gunder Frank, Rhetoric and Reality of the NIEO, in: Addo Herb (ed.), Transforming the World-Economy?, 1984, 173 et seq. 85

16

Wolfgang Weiß

internationally agreed market order for commodities established by an agreement between suppliers and consumers was believed to stabilize prices for primary commodities. This was one of the most important single objectives of the NIEO agenda90 as on the basis of the prevailing international division of labor only a redistribution of financial means could function and bring results in this area; at least the issue of raw materials was integrated in development politics as early as 1964 at UNCTAD I.91 Another issue was the industrialization of the developing countries.92 They wanted to become able to produce processed and manufactured products and to have widened access to the markets of the developed countries. The proportion of the developing countries in world trade was to increase and the international division of work to involve the developing countries to a bigger extent. One demand in that line was that the developed countries should prefer natural resources of the developing countries to synthetic resources93 and give preferences to the goods of developing countries. Several proposals were made at the Second General Conference of the United Nations’ Industrial Development Organization (UNIDO) in Lima in March 1975, in particular the aim of a 25% share for the developing countries of the world’s industrial production by the year 2000.94 The Lima Declaration and Plan of Action on Industrial Development Cooperation was adopted against the sole negative vote of the US with West Germany and six more developed countries abstaining95 and was endorsed at the 7th Special Session o f U NGA.96 Other topics of the NIEO debate were development aid and the debt problem,97 in particular an orientation of the monetary system toward developing states’ interests and a link between special drawing rights and development aid,98 the control of transnational corporations,99 Robert Gregg, UN-Decision Making Structures and the Implementation of the NIEO, in: Ervin Laszlo/Joel Kurtzman (eds.), Political and Institutional Issues of the NIEO, 1981, 108 et seq. 91 Cf. Horst-Michael Pelikahn, Internationale Rohstoffabkommen, 1990, 129 et seq. 92 See Sauvant (note 71), 120–124. 93 See e.g., the Integrated Programme for Commodities, UNCTAD Res. 93 (IV), I.5., reprinted in: Proceedings of the UNCTAD, Fourth Session, vol. I, Report and Annexes, 1977, 7. 94 See the resolution reprinted in: ILM, vol. 14, 1975, 826, para. 28. 95 Hudes (note 20), 173. 96 See GA Res. 3362 (S-VII) (note 68), IV.1. 97 See Charles Siegman, Developing Countries and the Financial System, in Edwin Reubens (ed.), The Challenge of the New International Economic Order, 1981, 196 et seq. 98 For more detail see Erasmus (note 21), 197 et seq.; Sauvant (note 71), 97–112. 99 Cf. Erasmus (note 21), 174 et seq.; Sauvant (note 71), 124–128; id., Controlling Transnational Enterprises: A Review and Some Further Thoughts, in: Karl Sauvant/Hajo Hasenpflug (eds.), The New International Economic Order, 1977, 356; Milan Vojnovic, The NIEO, in: 90

Germany’s Contribution to the Development of International Economic Law

17

the acceleration of the transfer of technology 100 and the participation of the developing countries in international decision making. After the 7th Special Session of the UN GA had brought a commitment at least to negotiate on fundamental issues,101 the discussion on certain topics of the requested change of the economic world order into a NIEO (like the role of transnational corporations, monetary issues and an integrated program on commodities) was continued in Kenya 1976 at the UNCTAD IV conference. The main topic there was – apart form the debt problem and technology transfer102 – a market order for commodities as proposed in advance by the Manila Declaration and Programme of Action adopted by the Group of 77 in its third Ministerial Meeting.103 One of its main demands was the indexation of the prices for raw materials.104 Since this topic had been discussed already at the 7th Special Session of the UN GA,105 the UNCTAD IV conference produced consensus to initiate negotiations on the so-called Integrated Program for Commodities and the creation of a Common Fund that was aimed to bring more stable conditions in commodity trade to the benefit of producers and consumers by introducing a kind of market order and a system financing buffer stocks to adjust demand and supply.106 This consensus was reached in the last minute as the western states gave

Dimitrios Constantopoulos (ed.), North-South Dialogue: A New International Economic Order, 1982, 257. 100 See Dieter Ernst, A Code of Condu ct for the Transfer of Technology, in: Karl Sauvant/Hajo Hasenpflug (eds.), The New Int ernational Economic Order, 1977, 297; Sauvant (note 71), 113–120; Oscar Schac h t e r, Transfer of Technology and Developing Countries, in: Kamal Hossain (ed.), Legal A spects of the New International Economic O rder, 1980, 156; Otto Wulff, Entw icklungshilfe zw ischen Völkerrechtsordnu ng u nd Weltw irtschaftssystem, 1986, 88 et seq. 101 See Gosovic/Ruggie (note 55), 327. 102 See UNCTAD Res. 94 (IV), Debt Problems of D ev eloping Countries and UNCTAD Res. 87 (IV) Strengthening the Technological Capacity of Developing Countries, both reprinted in: Proceedings of the UNCTAD, Fourth Session, vol. I, Report and Annexes, 1977, 16 et seq. 103 Reprinted in: Proceedings of the UNCTAD, Fourth Session, vol. I, Report and Annexes, 1977, 109; see also Europa-Archiv, vol. 31, 1976, D 404 et seq. 104 See e.g., the Integrated Programme for Commodities (note 93), III lit. c. 105 See GA Res. 3362 (S-VII) (note 68), I.3.; Hudes (note 20), 155–159. 106 See UNCTAD Res. 93 (IV), reprinted in: Proceedings of the UNCTAD, Fourth Session, vol. I, Report and Annexes, 1977, 6. For more details in regard to the Program for Commodities see Harry Johnson, Commodities: Less Developed Countries’ Demands and Developed Countries’ Responses, in: Jagdish Bhagwati (ed.), The NIEO: The NorthSouth Debate, 1977, 242 et seq.; Robert Rothstein, Global Bargaining – UNCTAD and the Quest for a NIEO, 1979, 58 et seq.

18

Wolfgang Weiß

in.107 They had discovered that negotiations on an Integrated Program and a Common Fund can also help the developed countries in safeguarding supply security. The first oil crisis in 1972–1974 brought a new awareness of that.108 The resolution adopted, however, cannot be read as an agreement to the demands of the Manila Declaration. It was only a consensus as regards the su b se qu e nt negotiating process but not in substance.109 The difference in opinion among the western states again was quite high. The US, the FRG, Japan and the UK were opposed to the idea of an Integrated Commodity Program and particularly to the Common Fund.110 The FRG’s interest was for the maintenance of the market mechanisms. It rejected governmental interventions in world markets and a dirigiste mechanism as leading to greater distortions.111 In a declaration made after the adoption of the resolution on the Integrated Program for Commodities the FRG representative pointed out that their agreement should not be understood to be an agreement to the New International Economic Orde r an d i ts basic documents but that it had rather agreed to a number of practical steps designed to improve the structure of the world economy. The outcome of the negotiations would determine which commodity agreements could be reached and whether a common fund would be the best means for financing buffer stocks. The FRG explicitly rejected indexation and price intervention and intervention in production structures and trade patterns.112 Sweden, Norway, Finland and the Netherlands welcomed the Commodity Program and the Common Fund and wanted to accept the proposals of the developing countries more or less intact. The rest of the western states was scattered.113 In the view of the developing countries presented in the subsequent negotiating conference, the main tasks of the Common Fund See Bhaskar Menon, Global Dialogue – The New International Economic Order, 1977, 27; Rothstein (note 106), 132 et seq. 108 For the connection betw een the oil crisis and the shift in position of the industrialized countries see Gosovic/Ruggie (note 55), 310 et seq.; Ervin Laszlo et al., The Obstacles to the New International Economic Order, 1980, 81. 109 See Hans Friderichs (then the FRG Minister for Economy), Nairobi und die Folgen, in: Europa-Archiv, vol. 31, 1976, 518 et seq. 110 See e.g., the declaration of the representatives of the UK and the US and the Position Paper on Commodities submitted by Group B, both reprinted in: Proceedings of the UNCTAD, Fourth Session, vol. I, Report and Annexes, 1977, 51 et seq., 71 et seq., 139; Menon (note 107), 26. 111 Harald Malmgren, Trade Policies of the Developed Countries for the Next Decade, in: Jagdish Bhagwati (ed.), The NIEO: The North-South Debate, 1977, 221 et seq. 112 The declaration is reprinted in: Proceedings of the UNCTAD, Fourt h S es sion, vol. I, Report and Annexes, 1977, 49, para. 21 and in Europa-Archiv, vol. 31, D 417. 113 Rothstein (note 106), 123 et seq., 129. For an overview on the different positions taken by OECD delegations at the 6th and 7th Special Session and UNCTAD IV see Jeffrey Hart, The New International Economic Order, 1983, 104 et seq. 107

Germany’s Contribution to the Development of International Economic Law

19

were to finance buffer stocks and other measures aimed at the diversification of developing countries industries and the opening of new markets for raw materials. Additionally the Fund was to financ e direct interventions in the market of commodities not covered by an agreement.114 The Western industrialized states intensely resisted intervention and other measures incompatible with market forces and did not want the Fund to be used as a means to raise prices.115 Besides, they denied indexation as it might mean the end of free prices for industrial goods as well. But as the EC countries at their Rome summit endorsed the creation of a Common Fund in principle116 the negotiations were expected to be successful. The Integrated Program was at first to extend to the 18 commodities of the so-called Nairobi list.117 Detailed negotiations on this took place at the Conference on International Economic Co-operation in Paris (1976–1977). This Conference (outside the UN system,118 organized and hosted by the French government following the first oil crisis in early 70’s) however, failed.119 No solution of the raw material problem could be found. An agreement on the principles of the Common Fund for financing commodity stocks could not be found although the industrial countries participating in the conference accepted that a Common Fund should be established under the Integrated Programme for Commodities.120 No progress was made either on the other topics of the conference, the debt problem of the developing countries and the protectionist measures of the industrialized states.121 Thus, progress was very slow. The implementation of the Commodity Program has been extremely tardy.122 Only in 1979 was the Integrated Commodity Program implemented partly by an agreement on natural rubber. Additionally, in 1979, basic consent could be reached on core elements of a common fund to be established. And in June 1980 an agreement was finally reached to establish a 114 See Klaus Glaubitt/Wilfried Lütkenhorst, Elemente einer Neu en W eltw irtschaftsordnung, Verhandlungsstand zu UNCTAD V, 1979, 2 et seq. 115 Konrad Seitz, The Negotiations on a Common Fund, Intereconomics, vol. 13, 1978, 62. 116 Id., 60. 117 Lothar Hübl/Klaus-Peter Müller, The Federal Republic in the North-South Dialogue, Intereconomics, vol. 13, 1978, 294; Sauvant (note 71), 90. For the list see id., 258. 118 The GA in vain challenged the participants of the conference to establish a relationship to the UN system, see GA Res. 3515 (XXX) of 15 December 1975. 119 See Menon (note 107), 30 et seq. 120 Gamani Corea, Issues for the International Community 1978, Intereconomics, vol. 13, 1978, 55. 121 Erasmus (note 21), 120. 122 Kabir-ur-Rahman Khan, The Law and Organisation of International Commodity Agreements, 1982, 331 et seq.; Manmohan Singh, Tow ards a New International Economic Order, in: Raj Sinha (ed.), New International Economic Order, 1985, 17.

20

Wolfgang Weiß

Common Fund with resources of US-$ 750 Mil.123 The fif th U NCT AD conference in Manila in 1979, to the disappointment of the developing countries, did not contribute new ideas although the GATT Tokyo Round of Multilateral Trade Negotiations that ended shortly before had improved the preferential treatment of developing countries.124 UNCTAD V urged the states in resolution 124 (V) on the Integrated Program for Commodities125 to implement this Program. Additionally the consent on a Common Fund was confirmed. The FRG like many other Western States made declarations after this resolution had been adopted by consensus. The FRG representative again pointed out that indexation was a mistake from the economic standpoint. The price ranges of commodity agreement should be fixed exclusively according to the state of the respective market. Government interference with commodity processing structure was not acceptable. Instead, in the FRG’s view, expanding the processing of commodities in the developing countries, supporting investment and lowering trade barriers were appropriate means to assist the developing countries.126 The FRG, however, together with Sweden and Finland agreed to a resolution on a complementary facility for commodity–related shortfalls in export earnings127 which requested the Secretary-General to prepare a study on compensation for shortfalls in earnings of each commodity. Stabilizing export earnings of the developing countries (which was preferred to stabilizing prices) was an aim of German development and economic policy. The German representative in his declaration 128 on that resolution made clear that Germany agreed to this proposal of the developing countries because it favored a system designed to stabilize the export earnings of commodities. But he pointed out that the study should explore several possible solutions (not only that of the developing countries). Germany was against compensation in real terms and on a commodity by commodity basis. The other western states denied the resolution because of the already existing mechanism in the IMF and because of the combination of stabilization and resource transfers.129 After the drastic decrease of commo d i ty prices in the early 1980s the compensatory financing of export earnings shortfalls again became the topic of a resolution adopted at UNCTAD VI which requested for an expert group on this Singh (note 122), 17. See in more detail infra, note 125. 125 Reprinted in: Proceedings of the UN CTA D , Fifth Session, vol. I, Report and Annexes, 1981, 9. 126 See the declaration reprinted in: id., 64. 127 UNCTAD Res. 125 (V), reprinted in: id., 11. This resolution w as not adopted by consensus but by 73 votes to 12 w ith 14 abstentions. All other w estern states either voted against it or abstained. 128 Reprinted in: id., 66, para. 64. 129 See the declaration made by the US, reprinted in: id., 66, para. 69. 123 124

Germany’s Contribution to the Development of International Economic Law

21

issue.130 UNCTAD VI did not bring new results but endorsed former resolutions. The alread y m e n ti o ned Agreement Establishing a Common Fund for Commodities131 which was adopted in June 1980 came into force not earlier than June 1989. The commodity agreements entered into usually did not provide for price stabilization but mainly focused on creating market transp ar e n c y by collection and dissemination of information, promoting the demand and coordinating the production policy.132 The third UN Conference on the Law of the Sea,133 which started in December 1973, also gave the developing states the opportunity to seek to realize their interests and to express their expectation of a NIEO.134 Their efforts resulted in rules on technology transfer (Articles 144, 266 et seq. UN Convention on the Law of the Sea)135 and in the establishment of the International Seabed Authority (Part XI of the UN Convention on the Law of the Sea); yet it was exactly the latter success of the developing countries that blocked the entry into force of the UN Convention on the Law of the Sea until 1994. The Secretary-General of the UN therefore worked toward the negotiation of a supplementary agreement for the implementation of Part XI. The Resolution and the Agreement relating to the Implementation of Part XI of the UNCLOS136 considers the demands of the developed states to a gr e at e xtent.137 The preamble of the Implementation Agreement refers to “the political and economic changes including market130 UNCTAD Res. 157 (VI), reprinted in: Proceedings of the UNCTAD, Sixth Session, vol. I, Report and Annexes, 1984, 12. 131 UN Doc. TD/IPC/CF/CONF/25. 132 See Kaltenborn (note 59), 55. 133 See Günther Jaenicke, Die Dritte Seerechtskonferenz der Vereinten N at ionen – Grundprobleme im Überblick, ZaöRV, vol. 38, 1978, 438 et seq.; regarding the German contribution see Renate Platzöder, Die Mitarbeit der Bundesrepublik Deutschland und der DDR auf der Dritten Seerechtskonferenz der Vereinten Nationen, in: Gottfried Zieger (ed.), Deutschland und die Vereinten Nationen, 1981, 123 et seq. 134 El-Baghdadi (note 13), 101 et seq.; Vitzthum (note 88), 13; Michael Morris, The NIEO and the New Law of the Sea, in: Karl Sauvant/Hajo Hasenpflug (eds.), The New International Economic Order, 1977, 175. See also the contributions on the interrelatedness of the Law of the Sea and the NIEO debate in Kamal Hossain (ed.), Legal Aspects of the New International Economic Order, 1980. 135 Reprinted in: ILM, vol. 21, 1982, 1261. 136 Reprinted in: ILM vol. 33, 1994, 1309. 137 See David H. Anderson, Resolution and Agreement Relating to the Implementation of Part XI of the UNCLOS: A General Assessment, ZaöRV, vol. 55, 1995, 277 et seq; Günther Jaenicke, The UNCLOS and the Agreement Relating to the Implementation of Part XI of the Convention, in: Festschrift für Rudolf Bernhardt, 1995, 212 et seq.; Bernard H. Oxman et. al., Law of the Sea Forum – The 1994 Agreement on Implementation of Seabed Provisions of the UNCLOS, AJIL, vol. 88, 1994, 687 et seq.

22

Wolfgang Weiß

oriented approaches.” This was und e r stood as the requiem for the new international economic order.138 This Agreement, however, was not the first to overwhelm the NIEO. The discussion of the history of the NIEO debate presented here proves that the developing countries soon concentrated on demands that basically were in line with a market oriented world order (preferential treatment, stabilization of export earnings, removing trade barriers for developing countries’ goods) and more or less gave up postulates incompatible with it like indexation of commodity prices, control of transnational corporations, change of decision making procedures in international economics.139 This process of weakening the main demands seems to have started at the 7th Special Session of the UN GA140 irrespective of the solemn confirmation of the NIEO project later at the 30th Session. In contrast to the structural changes the NIEO concept pursued in the beginning, the succeeding concrete action proposals had more limited objectives. Therefore, it can be doubted whether the NIEO was a new system of international economic relations or a mere replastering of the existing order.141 The hope expressed by some observers that the debate would go back to place more emphasis on structural transformation,142 failed. The debate on a NIEO faded away in the 1980s (see infra, Section B.II.4). One tangible positive result of the NIEO debate was the Lomé Convention of 1975 which was entered into by the EEC and 46 African, Caribbean and Pacific states and which pioneered a number of progressive mechanisms (export earning stabilization fund, free access without reciprocity to the EEC market). The spirit of the NIEO revitalized the negotiations and provided for the insertion of these elements.143 On the other hand, the Lomé Convention co n tr i b u ted to the acceptance of the ideas of the developed countries on the stabilization of export earnings by the developing countries. The stabilization fund of the EEC (STABEX),144 which the FRG warmly welcomed as it particularly was a proponent See Matthias Herdegen, Internationales Wirtschaftsrecht, 3rd ed., 2002, 70. Urs Müller-Plantenberg, Die Bundesrepublik Deut schland und die Neue Weltw irtschaftsordnung, in: Urs Müller-Plantenberg, Vorschläge, Ausgew ählte politischsoziologische Arbeiten 1961–1996, 1997, 388 et seq., 390. 140 Cf. Windscheid (note 3), 212. 141 Brigitte Bollecker-Stern, The Legal Character of Emerging Norms Relating to the New International Economic Order: Some Comments, in: Kamal Hossain (ed.), Legal Aspects of the New International Economic Order, 1980, 68. 142 Sauvant (note 71), 137. 143 Id. 144 For a discussion of STABEX see Bishnodat Persaud, Export Earnings from Commodities: Export Stabilisation in the Lomé Convention, in: Frans Alting von Geusau (ed.), The Lomé Convention and a NIEO, 1977, 81. 138 139

Germany’s Contribution to the Development of International Economic Law

23

of the idea of stabilizing export earnings of the developing countries, was a first step in the right direction , b u t th e f und was far too small to make a big difference.145 Although the Lomé Convention incorporated some innovations, it was only a partial response to the problems raised in the NIEO debate as the resource transfer still was small and many goods of the developing countries did not get increased access to the Common Market.146 Further more, as already indicated, the NIEO-process in 1979 led to various provisions for special and differential treatment of developing countries’ goods in the codes adopted as a result of the Tokyo Round of Multilateral Trade Negotiations in the framework of the GATT147 and to three decisions of the GATT CONTRACTING PARTIES, in particular of th e so -c alled Enabling Clau se , a declaration entitled “Differential and More Favorable Treatment, Reciprocity and Fuller Participation of Developing Countries,”148 allowing for preferential treatment of developing countries.149 The Enabling Clause made differential and more favorable treatment an integral part of the GATT system no longer requiring waivers from the GATT rules.150 Thus, it provided a permanent basis for a Generalized System of Preferences and tariff preferences among developing states.1 5 1 T he Group of 77 had already postulated an improved preferential scheme as a permanent feature of the international trading system in the debates during the 7th Special Session of UN GA in 1975.152 The Tokyo Round, however, in sum did not meet the expectations of the developing countries as, for example, the largest tariff reductions were made in 145 Rolf Hasse, A New Model w ith Old Problems, in: Intereconomics, vol. 14, 1979, 238; Rainer Tetzlaff, Die Diskussion der Neuen Weltw irtschaftsordnung in der Bundesrepublik, in: Universität Bremen (ed.), Bundesrepublik und die Neue Weltw irtschaftsordnung, Bremer Beiträge zu Wissenschaft und Gesellschaft, 1980, 21. 146 Hudes (note 20), 124. 147 See Erasmus (note 21), 186 et seq. 148 GATT Basic Ins t ru m ents and Selected Documents 26S (1980)/203. See also Bhala/Kennedy (note 28), 424 et seq.; Jackson (note 33), 323; Matsushita/Schoenbaum/Mavroidis (note 22), 376 et seq.; Abdulqawi Yu s u f, Differential and More Favourable Treatment, Journal of World Trade Law (JWTL), vol. 14, 1980, 488. 149 Benedek (note 33), 80. 150 GATT (ed.), The Tokyo Round of Multilateral Trade Negotiations – Report by the Director-General of GATT, vol. I, 1979, 99. 151 Benedek (note 43), 71; id. (note 149), 83 et seq.; Matsushita/Schoenbaum/Mavroidis (note 22), 383. 152 For the result of this debate see GA Res. 3362 (S-VII) (note 68), I.8.; cf. also UNCTAD Res. 91 (IV), 15 lit. b, reprinted in: Proceedings of UNCTAD, Fourth Session, vol. I, Reports and Annexes, 1977, 14; Gosovic/Ruggie (note 55), 326; Hudes (note 20), 162–166.

24

Wolfgang Weiß

trade among industrialized state s 153 and could not hinder the negative developments for the world economy and the international monetary system stemming from the energy crisis which also brought stagflation problems to developing countries.154 Although the developed countri e s knew the needs and demands of the developing countries to get improved access to the markets of the former, protectionism found new strongholds among developed states in the 1970s. Following the economic backdrop caused by the oil crisis the states resorted to minimum prices, administrative barriers or even quantitative import restrictions. The average industrial subsidy rates in most of the OECD countries increased in the 1970s and stabilized or declined in the 1980s.155 In the FRG for example, subsidies in 1980 w e re more than twice the share of GDP than in 1952.156 Significantly, the sectors covered by the new protectionism were those like textiles and clothing or light engineering i n which there had been major shifts in comparative advantage towards producers who in previous times had not been significant exporters.157 Thus, new restrictions to international trade concerned in particular goods from developing countries.158 Despite acknowledgment, especially from the FRG, of free trade, the industrialized countries and the EEC took up a sad leadership role and put the new partners in world trade at a disadvantage. Even the FRG favored some trade controls although previously it w as a proponent of free market capitalism.159 New instruments that were an expression of the new protectionism were the so-called grey area measures of voluntary export restraints or voluntary restraint agreements. By these non-transparent, discriminatory and harmful measures which were kept outside the framework of GATT and which actually have to be seen as illegal under GATT, exporters, usually on a bilateral basis, more or less voluntarily restricted their trade to

153 Erasmus (note 21), 187; GATT (note 150), 155; Sauvant (note 71), 95 et seq.; Richard Senti, WTO, 2000, 63. 154 Prakash Agarwala, The New International Economic Order – An Overview , 1983, 15 et seq. 155 Patrick McDonough, Subsidies and Countervailing Measures, in: Terence Stewart (ed.), The GATT Uruguay Round – A Negotiating History, vol. I, 1993, 811. 156 Id., 815, footnote 26. 157 Marc Beise/Thomas Oppermann/Gerald Sander, Grauzonen im Welthandel, 1998, 51 et seq; Oliver Long, The Protectionist Threat to World Trade Relations, Intereconomics, vol. 12, 1977, 283 et seq. 158 The new protectionism became the object of UNCTAD Res. 159 (VI), reprinted in: Proceedings of UNCTAD; Sixth Session, vol. I, Report and Annexes, 1984, 14, w hich reminded the developed countries to their commitments under international trade law . 159 Cf. Frank (note 89), 192.

Germany’s Contribution to the Development of International Economic Law

25

Western Europe or No rth America.160 The French President Valerie Giscard d’Estaing in May 1977 called for an organized liberalism and to internationally organize free trade.161 This protectionism seems to have been the result of the world economic crisis that hindered the expansion of world trade which was needed for implementation of the NIEO. The realization of its demands would lead to a rearrangement from north to south and for this reason requires certain growth rates of the world economy, otherwise the developed countries’ readiness to redistribute wealth from a perspective of practical politics will not be high. Implementing the NIEO program has an impact on the domestic production of the developed countries. Thus, on the one hand, the oil crisis made the developing states aware of their powers as it seemed to prove the weaknesses of the industrialized states, but on the other hand the subsequent economic crisis hindered the growth of world trade and caused bad economic conditions for a change of the present economic order and, in fact, provoked new protectionism. The economic malaise among the Western market economy countries made concessions of the magnitude envisaged by the NIEO politically impossible.162 III. Germany’s Role in the Failure of a New International Economic Order Due to hard and sometimes very open objections by most but not all Western States the demand for a NIEO could not become accepted. There are many reasons for the failure of the NIEO project some of which have already been indicated. Not only substantial divergences in opinion (in particular as regards nationalization o f f o r e ign investment and a market order for primary commodities), but also an inflexibility in strategy and a lack of willingness of the very am b itious developing countries to negotiate their demands and hasty preparations of their proposals contributed to it. The NIEO was not a consistent concept but a mixture of market-oriented instruments (such as the demand for better integration of the developing countries markets into the world market and free trade of the goods of developing countries) and of interventionist ideas and planned-economy conceptions that challenge the basic values of free trade as in the field of primary commodities (e.g. price indexation) which made the NIEO For more details see Beise/Oppermann/Sander (note 157), 61 et seq.; Hasan Moinuddin, Grey Area Trade Policies, in: Detlev Dicke (ed.), Foreign Trade in the Present and A New International Economic Order, 1988, 197; Ernst-Ulrich Petersmann, Grey Area Trade Policy and the Rule of Law , JWTL, vol. 22, 1988, 23. By the end of the 1980s there w ere more than 270 agreements of this kind. 161 Cf. Frank (note 89), 192. 162 Agarwala (note 154), 78, 223. 160

26

Wolfgang Weiß

concept unworkable.163 As was seen from the above analysis of the NIEO debate, the developing countries shifted to a more realistic and market-oriented approach in the course of the NIEO discussion. Some ideas of the NIEO concept were even counterproductive as they could have conserved prevailing economic and social structures in the developing countries and hinder the necessary structural adjustments. The progressive demand for a NIEO could stabilize the ruling regimes in the developing countries as it compensated internal problems and directed the attention away from them. The spokesmen of the Third World could blame the prevailing conditions of the international order.164 Further more, the developing countries insisted in an unrealistically wide agenda and trusted in the legal force of the resolutions165 adopted by vote of a l ar ge majority or by consensus pretending rather than guaranteeing agreement or even consent166 and got a false sense of power by the oil crisis. The core resolutions of the NIEO debate never have functioned as reference documents in the further development of the international development of economic law in the 1980s and 1990s so that they could not obtain any legal value. The developing countries´ hope to create new methods of codification of international economic law and to formulate a new theory of obligation in international law 167 did not come true. Later the developing states overrated the importance of negotiations for the Common Fund to stabilize commodity prices. The developed countries showed resistance to change, increasingly since the shock of the oil crisis faded away, and refused to use the UN as a forum for negotiation. The NIEO debate challenged the attitude of the developed states that regar d ed the UN system mainly as a forum of cooperation, communication and compensating different interests. The consensus expressed in the GA when adopting the Declaration on the Establishment of a NIEO and the respective Program of Action was only a formal one. The positions See Thomas Oppermann, Die Seoul-Erklärung der International Law Association, in: Liber Amicorum Ignaz Seidl-Hohenveldern, 1988, 470; Thomas Waelde, A Requiem for the “New International Economic Order,” in: Liber Amicorum Ignaz Seidl-Hohenveldern, 1988, 778 et seq. 164 See Frank (note 89), 171. 165 Gabe Shawn Verges, The NIEO Legal Debate, 1983, 39. 166 It is w ell established that in order to determine the legal value and character of a General Assembly resolution even in case of a majority vote t he necessary degree of agreement does not depend on numerical majority alone but instead on the fact that those states w hose interests are particularly affected need to have agreed to the rule in question. As the demands of a NIEO mainly affected the Western industrialized states their rejection of or formal reservations t o res olutions on the NIEO counted. See Kay Hailbronner/Eckart Klein, Article 10, in: Bruno Simma et al. (ed.), The Charter of the United Nations – A Commentary, vol. I, 2nd ed., 2002, MN 57. 167 Milan Bulajic, Legal Aspects of the NIEO, in: Kamal Hossain (ed.), Legal Aspects of the New International Economic Order, 1980, 60 et seq.; Khan (note 122), 247 et seq.; see also Hailbronner (note 66), 19 et seq. 163

Germany’s Contribution to the Development of International Economic Law

27

of the developed and the developing countries still were totally different. The developed countries had mental reservations and accepted the two resolutions of the GA only in order to bring the 6th Special Session to a good end.168 They were aware that a resolution of the GA had no legal value in itself and that the developing countries did not have the power to implement the resolutions. The dispute and the continuing lack of agreement were hidden in the reservations to the two resolutions made by western states. Additionally, the NIEO might have failed due to the lack of a really suitable institutional forum in whose framework the demands could have been negotiated between developing and industrialized states.169 There are, however, demands raised in the course of the debate which at least partly have been accepted by the industrialized states: the need for an increased South-South cooperation, increased development aid, preferential treatment and overcoming protectionism.170 The NIEO debate for a short time made the development issue one of the main purposes of the international economic system. What remained is a greater sensitivity for the particular needs of the developing countries and of the interdependence between developing and developed states and between globally interrelated growth, trade, finance and development.171 Furthermore, the failure of the NIEO debate has shown that true changes of the existing order of international trade and economy need to be negotiated and must result in legal instruments within the framwork of the existing order. One must not invest trust and hope in emerging new customary law or principles of international law but has to negotiate agreements altering existing treaties. The developing countries seem to have learnt this lesson as their level of involvement in the negotiations of the GATT Uruguay Round was high after overcoming some hesitation in the beginning. The developing countries had to recognize that the industrialized states would not give up their fundamental preference for a trading system driven by market mechanisms rather than by state intervention.172

See Walter Gehlhoff, Der Weg der BRD in die Vereinten Nationen, in: Deutsche Gesellschaft für die Vereinten Nationen (ed.), Die Vereinten Nationen und deutsche UNPolitik – Aus Persönlicher Sicht, 1991, 36. 169 On the need for a multilateral institutional framew ork see Agarwala (note 154), 79 et seq. 170 Kaltenborn (note 59), 50. 171 See Hans Friderichs, Basic Problems of the World Economy, in: Karl Sauvant/Hajo Hasenpflug (ed.), The New International Economic Order, 1977, 96. This linkage could be found again in the preamble of the Punta del Este Ministerial Declaration launching the Uruguay Round negotiations. 172 See John Croome, Reshaping the World Trading System – A History of the Uruguay Round, 2nd ed., 1999, 4. 168

28

Wolfgang Weiß

From the very beginning of the debate, the FRG’s attitude towards the NIEO was more reserved and reluctant than that of other western states. Actually the FRG can be seen as one of the most persistent opponents to the NIEO and its preceding ideas. For this reason it was one of the main areas of activity of West Germany’s delegates to the UN to represent German interests in the development of international economic law and in the NIEO debate and to contribute to that part of the UN work.173 As already mentioned, the FRG had abstained from voting for some General Principles of UNCTAD I or even had voted against them. At UNCTAD III, the FRG abstained when the resolution on the charter was adopted. After the adoption of the Declaration on the Establishment of a NIEO and the respective Program of Action by the GA at the 6th Special Session, the FRG made the “reservations” mentioned above. West Germany then, at the 29th UN GA Session, tried to adjourn the vote on the Charter of Economic Rights and Duties of the States. When this was unsuccessful,174 the FRG also rejected the Charter as did the United States, the United Kingdom, Belgium, Luxembourg and Denmark. The remaining EEC Member States (France, Italy, Netherlands) together with seven other western states abstained. This was not the only incident where the European Political Cooperation175 had failed and where the EEC members could not find a common position on matters of external economic policy 176 despite the so l e m n declarations on the priority of the Community´ s common development policy.177 The EC for example was also divided regarding the Integrated Programme for Commodities. Although all Membe r States in principle had agreed to start negotiations on commodity agreements (see supra, footnote 117), it became rather difficult to establish a common position in this regard. In particular Germany showed great reserve.178 Another example of relevance here is the GA resolution of 14 December 1981 on human rights and the right to development as an inalienable human right.179 Whereas the FRG, Italy , Lu xemburg and the UK abstained, the other EEC members expressed their consent. As already pointed out, the reason for the rejection of the Charter of Economic Rights and Duties of the States by West Germany was that several issues remained See Windscheid (note 3), 231. Id., 203. 175 For its history see Beate Lindemann, EG-Staaten und Vereinte Nationen, 1978, 62 et seq.; Rudolf Streinz, Europarecht, 6th ed. 2003, 12 et seq. 176 For more detail see Lindemann (note 175), 179 et seq. 177 Cf. in this regard Tw enty-Five Theses of the Federal Government on Cooperation Policies w ith Developing Countries, Intereconomics, vol. 10, 1975, 225, in particular Thesis 4. 178 Udo Steffens, Interessenausgleich und w esteuropäische Integration, 1984, 221 et seq. 179 GA Res. 36/133 of 14 December 1981. 173 174

Germany’s Contribution to the Development of International Economic Law

29

contentious, in particular the expropriation of foreign investment. The Federal government in its 3rd report on development policy in 1977180 confirmed that prompt, adequate and freely transferable compensations for expropriation are prerequisites for foreign investments.181 The free formation of cartels of raw materials exporting countries and the price indexation as well seemed not to be acceptable. The background for this negative attitude was that West Germany was the third biggest consumer of raw materials and depended on the imports from developing countries. Therefore, the shift in power to the suppliers that these instruments would have provoked had to be looked at skeptically. The Integrated Program fo r Co mmodities and particularly the indexation seemed to be unworkable as it would run into almost insurmountable difficulties and would lead to a misallocation of resources.182 In consequence the FRG also expressed reservations to the resolution on Development and International Economic Co-Operation adopted at the 7th Special Session 183 and at the 30th Session denied – in line with the United States and the United Kingdom – the GA Resolution on the Implementation of the Charter.184 The FRG position expressed a conservatism contrary to progressive views shared by some Western States like the Scandinavian states185 or even some EEC members like the Netherlands that seriously su p p o r te d a new order with fundamental change.186 The very divergent views within EEC Member States, particularly of the Netherlands and West Germany, made it difficult to establish a common position.187 The debate on the NIEO on several occasions revealed that the EEC was unable to speak with one voice.188 Some developed countries had a more moderate view, in particular those that were raw material exporters like Australia and Canada. West Germany however, like the US and Japan, appeared to feel threatened by the demands of the NIEO. These three countries formed a very conservative group. Concessions were made if they could be shown to be in the interest of the developed states as well. Sometimes, these three countries shared Printed Papers of the Federal Parliament, 8/1185, 18 et seq. See Tetzlaff (note 145), 16. Cf. also Tw enty-Five Theses of the Federal government on Cooperation Policies w ith Developing Countries (note 177), Thesis 19. 182 See the then West German Minister of Economic Affairs Friderichs (note 171), 90 et seq. 183 Windscheid (note 3), 213. 184 GA Res. 3486 (XXX) of 12 December 1975. 185 Their attitude is described by Agarwala (note 154), 224 et seq. 186 Helge Hveem, Scandinavia – The Like-Minded Countries and the NIEO, in: Ervin Laszlo/Joel Kurtzman (eds.), Western Europe and the New International Economic Order, 1980, 84. 187 See Gosovic/Ruggie (note 55), 343; Rothstein (note 106), 127 et seq. 188 See also Friderichs (note 109), 521. 180 181

30

Wolfgang Weiß

moderate views, especially when the effects of a concession could be controlled.189 Basically West Germany held on to the status quo of the international economic order. The FRG’s position was only to a limited extent determined by consideration for the EEC and mainly depended on its own interests and its own material estimates. Only market-oriented instruments were to be used for the development of the world economy. The FRG was the strongest defender of the virtue of the free market economy although the then Chancellor Helmut Schmidt was a social democrat.190 The maintenance of a market-oriented free world trade system was a vital interest of West Germany 191 because as one of the leading export countries192 the FRG depended on open markets and free world trade. Economic growth mainly was based on export successes – in 1975 one out of five jobs depended on exports.193 In West Ge r m an so c iety and politics since the 1960s there was common consent that foreign economic politics in principle must favor free trade.194 There was no tradition to control the allocation of resources or to place confidence in well meaning economic programs.195 Thus, West Germany could have accepted those ideas of the NIEO that conformed with market orientation such as the demand of the developing countries for open access to the markets of the developed countries (e.g. by improvements i n the general system of preferences), or helped the market function like commodity export earnings stabilization.196 Besides, this orthodox liberalism led the FRG to become one of

Rothstein (note 106), 23 et seq. Joachim Betz, Kooperation statt Konflikt? Die Position der Bundesrepublik auf den Nord-Süd-Konferenzen, in: Hilfe+Handel=Frieden? Die Bundesrepublik in der Dritten Welt, 1982, 178; Hart (note 113), 114 et seq.; Otto Kreye, Western Europe’s Economic and Social Dev elopment and the Rationality and Reality of a NIEO, in: Herb Addo (ed.), Transforming the World-Economy?, 1984, 130 et seq; Rothstein (note 106), 125. 191 See the then West German Minister of Economic Affairs Friderichs (note 109), 521. 192 In 1970 to 1973 West Germany´s share in w orld exports w as climbing to the extent that it became the w orld´s second largest trading nation behind the US, Michael Kreile, West Germany: The Dynamics of Expansion, in: Peter Katzenstein (ed.), Betw een Pow er and Plenty, Foreign Economic Policies of Advances Industrial States, 1978, 192. 193 Id. 194 See Jürgen Belle rs, Außenw irtschaftspolitik und politisches System der Weimarer Republik und der Bu ndes repu blik, 1988, 491 et seq.; id., Außenw irtschaftspolitik der Bundesrepublik Deutschland 1949–1989, 1990, 305, 358 et seq. 195 See Hart (note 113), 147. 196 See the then West German Minister of Economic Affairs Friderichs (note 171), 92 et seq.; see also Betz (note 190), 179 et seq. 189 190

Germany’s Contribution to the Development of International Economic Law

31

the leading opponents of NIEO budgetary considerations, as might have the loyalty to the US,197 and contributed to FRG’s vigorous opposition 198 Market orientation also caused problems within the EEC as the EEC was involved in grey area measures mentioned above that restricted market access of developing countries and was not in line with free international trade. The FRG encountered resistance within the EEC if it placed itself on the side of free trade.199 That the FRG was not totally in line with EEC politics but preserved its own national interests can be seen even in more contemporary issues. During the Asian monetary crisis, Germany on the one hand stressed the importance of conducting German external economic policy in the framework of and in close coordination with the E(E)C, on the other hand assigned itself a guiding role in international competition with presentation of its own initiatives.200 The alternative to the NIEO Germany tried to foster was the concept of a social market economy. The wealth of Germany was seen to be the result of a successful market economy policy within the frame of a basically free world market.201 In this view, the development and increasing wealth of developing countries could only be the result of a free world market order and not subject to internati o n al economic planning.202 At the 7th Special Session, the German delegates presented the view that the objectives of the developing countries would best be achieved through the operation of a free market system.203 Federal Minister of Foreign Affairs Hans-Dietrich Genscher favored a reform of the present world economic system in the frame of a worldwide social market economy.204 This statement implicitly again denies the demand for a NIEO. The Federal government professed itself to international solidarity and to the protection of the In this regard see Kreile (note 192), 196. Id., 199. 199 See the then Federal Minister for Economic Cooperation Jürgen Warnke, Deutsche Entw icklungspolitik am Vorabend v on UNCTAD VI, in: Bundesministerium für w irtschaftliche Zusammenarbeit (ed.), 6. V N-Konferenz für Handel und Entw icklung, 1985, 77; Windscheid (note 3), 231. 200 Miriam Ismail, Die Ausw irkungen der Globalisierung auf die deutsche Außenw irtschaftspolitik vor und nach der südostasiatischen Währungskrise, 2000, 317 et seq. 201 See Müller-Plantenberg (note 139), 386. 202 See Betz (note 190), 178 et seq. 203 Windscheid (note 3), 212, footnote 2. 204 See Hans-Dietrich Genscher, Speech before the 30th United Nations General Assembly, 24 September 1975, reprinted in: Europa-Archiv, vol. 3 1 , 1 976, D 26; id., Eine Reform der Weltw irtschaftsordnung im Geiste sozialer Marktw irtschaft, in: Hans-Dietrich Genscher, Deutsche Außenpolitik, 1977, 83. 197 198

32

Wolfgang Weiß

weaker partners in the world economy 205 but at the same time stressed market principles. West Germany’s development policy aimed at a reconciliation of the diverging interests of the FRG and the developing countries.206 Reconciliation, however, only is necessary where interests are in conflict. Thus, the Federal government conceded that its interests were opposed to the concept of the NIEO. Spectators complained that Germany only wanted to use its development policy as a means of economic policy in order to safeguard its own economic wealth and development. In contrast to official government statements which expressed a division of politics and commerce, stressed world-wide interdependence and underlined the willingness of German UN policy to contribute to an improvement of international economic relations in the spirit of partnership and solidarity 207 and to play an increasingly active role in clearing away the differences between developing and developed states, the true intention of Germany’s development policy was perceived as only supporting its export industries.208 The negotiating tactics of Germany, the US and Japan were judged to delay, be ambiguious in verbal concessions and give minimal concessions that might split some of the developing countries away from others.209 That, of course, was only possible due to the inherent contradictions of the NIEO demands pointed out above. A closer look at accessible data of import and export relations and development aid proves that the procurement of development aid was not only motivated by advantages for supply with primary commodities. After the oil crisis in the 1970s, however, the sensitivity for dependence of the FRG on commodity supply from developing countries increased so that deliberations of economic policy and economic motivations influenced the spending of development aid210 and the aims of development and foreign policy. Despite its invocation of market principles, the FRG as well as the other western states counteracted by government action protecting their domestic agricultural programs or in state trading or invoked See Müller-Plantenberg (note 139), 387; Tetzlaff (note 145), 17. See the then State Secretary in the Federal Ministry for Economic Cooperation Udo Kollatz in an interview , Intereconomics, vol. 10, 1975, 234. 207 See the FRG Federal Minister of Foreign Affairs Hans-Dietrich Genscher in his speech before the 29th United Nations General Assembly, 23 September 1974, reprinted in: Bulletin der Bundesregierung 1974, 1135 et seq.; id., Deutsche Außenpolitik, 1977, 111; cf. also the report of the Federal government on the 29th Session of the GA, in: Printed Papers of the Federal Parliament, 7/3637, 8. 208 See Tetzlaff (note 145), 17 et seq.; id., Die Dritte-Welt-Politik der Bundesrepublik Deutschland zw ischen Friedensrhetorik und Realpolitik, in: Hilfe+Handel=Frieden?, Die Bundesrepublik in der Dritten Welt, 1982, 99. 209 Rothstein (note 106), 24. 210 See Jürgen Bellers, Bestimmungsfaktoren der Entw icklungspolitik der Bundesrepublik Deutschland 1960–1980, Diskussionspapier des Faches Politikw issenschaft Nr. 64/2002, 5. 205 206

Germany’s Contribution to the Development of International Economic Law

33

safeguard clauses to protect particular sectors from international competition.211 Thus, the complaint that Germany’s attitude was contradictory had its merits. The acknowledgment of the need for international solidarity led to concrete proposals by the FRG, e.g., as regards a world wide export earnings stabilization fund which imitates STABEX.212 The Federal government also strived to ensure that the EEC grants further trade privileges (preferences, abolition of non-tariff barriers) to developing countries.213 Additionally it wanted to foster industrial and technological cooperation between north and south and ease the technology and capital transfer to developing countries.214 These initiatives were in line with the market-oriented approach of the FRG and fostered freedom of trade. Regarding the Integrated Program f o r Commodities, the Federal Republic was more reluctant,215 sometimes even more than the US, and, beginning in 1977, changed its negative attitude due to international pressure.216 The standpoints within the Federal government sometimes were divided. Whereas the skeptical attitude of the government was led and expressed mainly by the Ministry of Economic Affairs and the Ministry of Finance, the Ministry of Development and Economic Cooperation f avored enlarged preferences of developing countries’ goods. B u t th e l atter also was far from accepting interventionist ideas.217 IV. The Disappearance of the Debate in the 1980s

In the 1980s and 1990s the concept of NIEO d i d n ot play a role at the international political level.218 The Final Act of UNCTAD VII (1987) made no reference to the new international economic order at all and considered market forces to a greater extent than ever before. Some GA resolutions still dealt with

Bellers (note 194), 491; id., (note 194), 305, 360 et seq.; Malmgren (note 111), 222. Glaubitt/Lütkenhorst (note 114), 28 et seq. 213 Tw ent y-F iv e Theses of the Federal government on Cooperation Policies w ith Developing Countries (note 177), Thesis 12. 214 See Betz (note 190), 183 et seq.; Windscheid (note 3), 215. 215 Steffens (note 178), 221 et seq. 216 Betz (note 190), 188–193; Volker Matthies, Neue Weltw irtschaftsordnung, 1980, 35. 217 See Tetzlaff (note 145), 19 et seq.; cf. also Matthies (note 216), 387 et seq. 218 The NIEO became a topic of international law scholars in the International Law Association w hich adopted at its 62nd Conference in Seoul 1986 a Declaration on the Progressive Development of the Principles of Public Internat ional Law relating to a NIEO. The text is reprinted in: Thomas Oppermann/Ernst-Ulrich Petersmann (eds.), Reforming the International Economic Order, 1987, 47 et seq. 211 212

34

Wolfgang Weiß

the NIEO and its implementation.219 They could, however, not bring substantial progress as the vast majority of the developed countries lacked readiness to negotiate any further or to continue work as they could point to the continuing development of the law in this area.220 The resolutions only resulted in an order to the United Nations Institute for Training and Research to prepare a study.221 Thus, the debate on the NIEO was replaced by a set of resolutions that dealt with the study and its results instead of the NIEO itself. Even the 11th Special Session of the UN GA in 1980, that was fully dedicated to the NIEO according to a decision of the UN GA in 1977 in order to assess the progress made in forums of the UN in its establishment,222 did not bring progress. At the UNCTAD VI conference in 1983 the problem of the development of the NIEO principles was not even raised.223 Only in some expert groups were the demands of the developing countries in the NIEO debate picked up and presented as a solution to world problems.224 The economic crisis of the early 1980s following the second oil crisis in 1979 r esulted in a severe and widespread economic recession that affecte d th e developing countries even more than the industrialized states. The former suffered a severe debt crisis. For this reason, the recovery process became important and the need for development was seen from this angle.225 The way the UN treated the economic crisis in Africa in the midst of the 1980s testifies to the more realistic approach of the developing countries. The 13th Special Session of the GA was dedicated to Africa’s problems. For the first time, the GA addressed a regional problem and did not treat the economic and development issues in the context of a global north-south dialogue. The African states chaired by the Senegal Minister of Foreign Affairs spoke with a moderate voice. The result of the session was different in style and approach when compared to former UN resolutions in this See e.g., GA Res. 34/150 of 17 December 1979; GA Res. 39/75 of 13 December 1984; GA Res. 40/67 of 11 December 1985. 220 Cf. Makarczyk (note 37), 116–121. 221 See GA Res. 35/166 of 15 December 1980; Makarczyk (note 37), 122 et seq. 222 Erasmus (note 21), 121. 223 Makarczyk (note 37), 121. 224 See – apart from the Club of Rome (Jan Tinbergen et al. (ed.), Reshaping the International Order, 1976) – the reports of the North-South Commission chaired by Willy Brandt ( 1980) and the report of the World Commission on Environment and Development chaired by Gro Harlem Brundtland, 1987. 225 See e.g., the preamble of UNCTAD Res. 159 (VI), reprinted in: Proceedings of UNCTAD, Sixth Session, vol. I, Report and Annexes, 1984, 14 and the statement made by the Federal Minister for Economic Affairs, Otto Graf Lambsdorff, in: Proceedings of UNCTAD, Sixth Session, vol. II, St at em ents and Summary Records, 1986, 82, also speaking on behalf of the EEC. 219

Germany’s Contribution to the Development of International Economic Law

35

area. The states tried to address the substantive problems in an objective way and the developing countries did so at least to a great extent without confrontation and mostly unrealistic catalogs of demands to the industrialized states.226 In the GA resolutions on the crisis in Africa one can find the principle of self responsibility of the African developing countries. The African countries recognized that they have the primary responsibility for their development and for addressing the present crisis.227 The imp o r tance of market-oriented elements for their development was expressed.228 The GA Declaration on International Economic Cooperation, in Particular the Revitalization of Growth and Development of Developing Countries229 adopted at its 18th Special Session in 1990 and the Declaration and Final Document of the UNCTAD VIII Conference advocated market-oriented policies that did not refer to nor even mention the NIEO. Both differ notably from the requests of the 1970s.230 The GA Declaration on International Economic Cooperation became a turning point in the relationship between the industrialized countries and the developing coun tr i es. Whereas the North-South Dialogue was previously characterized by confrontation and reproaches to the industrialized countries, the self-help efforts of the developing countries was now stressed. The developing states became partners of global common responsibility und solidarity. The developing countries were held responsible for their economic development and the industrialized countries had to support their efforts by economic co-operation and the creation of suitable basic conditions in world economy. Free market principles are the way to economic success. These statements have been confirmed afterwards on several occasions. Germany was deeply involved in the discussions that led to the adaptation of that declaration. Once more it could bring in its experiences with a social market economy.231 Germany was actively engaged in dealing with economic and development issues in the UN system. It had an important role in and with the EEC. The fall of the iron curtain and the dissolution of the socialist regimes in 1989/1990 as well contributed to the total disappearance of the debate on the NIEO. The developing countries lost the assistance of the communist states See Hans-Werner Lautenschlager, Deutsche UN-Politik von 1984–1987, in: Deutsche Gesellschaft für die Vereinten Nationen (ed.), Die Vereinten Nationen und deutsche UNPolitik – Aus Persönlicher Sicht, 1991, 60. 2 2 7 GA Res. 39/29 of 3 December 1984 – Declaration on the Critical Econom ic Situation in Africa, para. 6. 228 Resolution on the Special Session of the United Nations General Assembly on the Critical Situation in Africa. 229 GA Res. S-18/3 of 1 May 1990. 230 Tomuschat (note 18), 579. 231 Ausw ärtiges Amt (ed.), Deutschland in den Vereinten Nationen, 2nd ed., 1995, 120. 226

36

Wolfgang Weiß

which supported the NIEO demands, although they did so not out of conviction but as a tactic in political competition with the western states.232 With the end of the Cold War, the developing states could no longer play East against West. With that they lost a big part of their political power because the industrialized states’ opposition to Third World demands was no longer accompanied by the fear of loss of the developing countries to the opposite bloc.233 Finally, the attention the developing states attracted became lowered by the development aid required by the new economies in transition. The western states had greater political interest in the East.234 In the course of the events in the end-1980s the sovereignty of new states and, beyond that, fundamental human rights and the freedom of entrepreneurship and of trade and the liberalization of markets by privatization received new attention. There no longer was an alternative real-life model to capitalism.235 Against this background dirigiste, planning or controlling concepts of a world economic order seemed to be of an old-fashioned socialist style and to be disproved by history. The open and decentraliz e d system prevailing in international economics corresponded to the freedom-oriented attitude of that time. Thus, the geopolitical change of 1989/1990 contributed to the disappearance of the NIEO demands at least in so far as it hindered the resurrection of the debate. By the end of the 1980s and in the 1990s a new key word emerged on the UNlevel. It was sustainable development.236 The debate on a NIEO was replaced by the increasing awareness of the interrelatedness of economic development with environmental issues. That the states had a responsibility towards the international community as regards the protection, preservation and enhancement of the environment was already enshrined in Article 30 of the Charter on Economic Rights and Duties of States. Germany had pointed out to the importance of environmental issues for the development process quite early.237 The initial resistance of other states, especially of those from the 3rd World, decreased the more this topic was discussed. The so-called Earth Summit of the Rio Conference in 1992 brought meaningful progress. It seems as if the topic put forward by the developing countries (NIEO) was replaced by a topic that seems to be of more i n terest to the industrialized countries which can afford to develo p a consciousness for environmental problems. Waelde (note 163), 781. Id., 782. 234 Id. 235 Id., 781. 236 See Our Common Future – The World Commission on Environment and Development, the so-called Brundtland report, 1987. 237 Lautenschlager (note 226), 62. 232 233

Germany’s Contribution to the Development of International Economic Law

37

C. The Creation of the WTO by the Uruguay Round I. Developing Countries and the Uruguay Round Negotiations

The GATT Uruguay Round of Multilateral Trade Ne go ti ations (1986 to 1994)238 was initiated in order to address a crisis of the GATT caused by increased protectionism that particularly used non-tariff barriers to trade. The Round ended with a formidable reinforcement of its institutional structures and rules.239 The World Trade Organization was established and new rules were added regarding intellectual property, investments and services thus covering trade-related issues and a new trade sector. The development issue, however, was not in the center of the Uruguay Round and the problems of the developing states were not a core issue.240 The initiatives for new multilateral trade negotiations were not motivated by particular problems of the developing countries (apart from the debt problem of the threshold states that called for their intensified integration into the world economy)241 nor by an effort to meet their needs after the Tokyo Round of GATT negotiations which had been a great disappointment to them. Instead free trade was supposed to be improved to the benefit mainly of the market economy countries because the new areas to which free trade was to be extended (e.g. services, intellectual property) were in their interest. The US initiative to include negotiations on agriculture was not due to the interest of the developing states in this area but due to protectionism particularly of the EC that heavily affected agricultural exports from the US. On the eve of the Uruguay Round, there was a high level of protection as government policies distorted competition in this area by export subsidies, domestic support or hi gh tar i ffs.242 The Ministerial Declaration of the Contracting Parties at Punta Del Este of 20 September 1986243 that launched the Uruguay Round negotiations pointed to different subjects for negotiation among which the areas of special interest for developing countries Detailed negotiating history can be found in Terence Stewart (ed.), The GATT Uruguay Round – A Negotiating History, vol. I–III, 1993. 239 Peter-Tobias Stoll, World Trade Organization, in Rudolf Bernhardt (ed.), EPIL, vol IV, 2000, 1530. 240 Maurice Flory, New GATT and NIEO, in: Thomas Oppermann/Josef Molsberger (eds.), A New GATT for the Nineties and Europe ‘92, 1991, 389. 241 See Bernhard May, Die Uruguay-Runde, 1994, 17. 242 By 1986, the w orld trade in agricultural products w as changing rapidly. Supplies w ere increasing faster than demand. For this reason, export subsidies w ere reintroduced. Competition betw een subsidized exports from the US and the EEC led to a sharp decline of market prices. Importing countries w ere adopting self-sufficiency policies. 243 Reprinted in: BISD (1987) 33S/19 or EC Bulletin 9/1986. 238

38

Wolfgang Weiß

(tropical and natural resource based products, textiles and clothing) were only of minor importance. The interests of the developing states were taken up by the Declaration at several points since the developing countries were involved in its drafting so that the Declaration could not too obviously be tailored to the specific interests of the industrialized states. The Declaration made further liberalization of the world trade an objective of the negotiations and particularly referred to the less-develo ped contracting parties in this context. The General Principles Governing the Negotiations provided in the Declaration several times also took account of the interests of the developing states. But in general, it seems that they were mainly referred to as a strengthened and more strictly enforced idea of free trade to benefit all countries including the developing ones. The key concepts of the intended negotiations were further liberalization of all sectors of trade, mutuality of benefits and transparency all of which work as well to the benefit of the developing states.244 Thus, the Declaration implicitly expresses the view that trade and open markets contribute more and better to the development of developing states than transfer payments, not to speak of concepts presented in th e NIEO debate. The Declaration also endorsed the existing preferential treatment of the developing states. It reaffirmed that the principle of differential and more favorable treatment embodied in Part IV and other relevant GATT provisions and in the Decision of the CONTRACTING PARTIES of 1979, the so-called Enabling Clause, applies to the negotiations. When the idea of a new GATT round was presented, the developing countries first denied it as they opposed the idea of liberalized trade in services, protection of intellectual property and improved protection of foreign investment. They feared that the industrialized states would tend to make concessions on market access or even on observance of their already existing commitments only if progress was reached in negotiations on these topics. Regarding services, the developing states complained that the industrialized states after having prepared their service industries for worldwide competition now wanted to also conquer the services markets of the developing states whose services sectors were not yet competitive.245 Concerns were raised regarding the economic sovereignty of the Third World.246 Developing countries opposed over-protection of intellectual See Rudolf Dolzer, The Philosophy of the Declaration of Punta del Este, in: Thomas Oppermann/Josef Molsberger (eds.), A New GATT for the Nineties and Europe ‘92, 1991 36 et seq. 245 Knut Ipsen/Ulrich Haltern, Reform des Welthandelssystems?, 1991, 91 et seq.; Jimmie Reyna, Services, in: Terence Stuart (ed.) , The GATT Uruguay Round – A Negotiating History, vol. II, 1993, 2379; Sie gfried Schultz, Developing Countries and Services, Intereconomics, vol. 24, 1989, 227; Michael Trebilcock/Robert Howse, The Regulation of International Trade, 2nd ed., 2000, 278. 246 See Khor Kok Peng, Third World Economic Sovereignty at Stake in the Uruguay Round, 1990. 244

Germany’s Contribution to the Development of International Economic Law

39

property as this might prevent them from access to modern technology. They claimed that their own social and developmental needs were more or at least equally important as the interests of the owners of intellectual property rights.247 As a response to Western demands the developing states instead asked in their proposals relating to UNCTAD VII which took place in 1987 at Geneva as well and was dedicated to “Revitalizing Development, Growth, and International Trade in a more predictable and supportive Environment” for a universal, nondiscriminatory, comprehensive, stable and predictable trading system which would respect fundamental principles underlying the international legal order. UNCTAD should initiate work on a new system that facilitates the increase of developing countries’ participation in world exports, was oriented towards development and growth, incorporated differential and favorable treatment for developing countries as an integral part of its rules and redressed restrictive business practices of transnational corporations.248 The developing states felt discriminated against, criticized the industrialized states for not living up to their GATT and other commitments and asked for liberalization of trade in agricultural goods, textiles and clothing. Some of these demands were reflected in the Punta del Este Declaration and were taken up in the Uruguay Round, as the agriculture, textile and clothing sectors finally, as a result of the Uruguay Round negotiations, and for the first time, effectively came into the ambit of the GATT. Despite these doubts, the developing states played a very active role in the Uruguay Round due to a change in their economic policy. They had become more and more export-oriented and tried to liberalize their markets and to attract foreign investors.249 During the Uruguay Round negotiations, however, only little attention was paid to the developing countries’ problems. This is not a surprise as their interests were not a core motive for launching the Round. Particularly as regards the negotiations on the issues which were most importan t f or the developing countries like tropical products, natural-resource based products, textiles, clothing and agriculture there was considerable delay.250 Agriculture was the very topic in which a result could be found only at the very end of the Julie Chasen Ross/Jessica Wasserman, Trade-Related Aspects of Intellectual Property Rights, in: Terence Stewart (ed.), The GATT Uruguay Round – A N egotiating History, vol. II, 1993, 2267 et seq. 248 See the proposals by the Group of 77 relating to UNCTAD VII, TD 330, reprinted in: Bundesministerium für w irtschaftliche Zusammenarbeit (ed.), UNCTAD V I I – Chancen für einen neuen Stil?, Materialien Entw icklungspolitik Nr. 78, 1987, 31, 41. 249 Matsushita/Schoenbaum/Mavroidis (note 22), 390; Constantine Michalopoulos, Developing Countries in the WTO, 2001, 152 et seq.; id. (note 23), 10 et seq.; Trebilcock/Howse (note 245), 385 et seq. 250 Flory (note 240), 394; Chakravarthi Raghavan, Recolonization – GATT, the Uruguay Round and the Third World, 1990, 257 et seq., 273, 282. 247

40

Wolfgang Weiß

Uruguay Round due to lack of agreement between US and EC. The interests of the developing states did not play an important role in it. The negotiations on agriculture were dominated by the conflict between the US, the Cairns-Group (a group of countries that are major agricultural exporters) and the EEC (see infra).251 Other topics like stable and predictable prices for commodities were not an issue at the Uruguay Round negotiations.252 The attitude of the developing states towards special and differential treatment evolved during the Uruguay Round. Without formally relinquishing the principle of non-reciprocity the developing state s adhere to, they agreed actively to participate in reciprocal trade liberalization and accepted a considerably increased binding of their tariffs.253 In the course of the negotiations the developing states’ initial rejection of services and in te l l e ctual property negotiations faded away. They started to contribute to the search for solutions and to play an active role in order to participate fully in whatever gains the negotiations might bring in particular as regards agriculture and textiles and clothing, i.e., hoping for a trade off between the old and the new issues.254 As for services, the battle lines of the negotiations ceased to be drawn on exclusively North-South lines as there were increasing differences among the developed countries.255 The d e veloping countries discovered that they could win from the liberalized movement of labor.256 The adoption of the positive list approach of the GATS which leads to substantial obligations only in case a Member has entered into specific commitments was one of their final successes allowing them not to commit themselves to services liberalization.257 Regarding TRIPS, the developing states only wanted to offer rules incorporated into GATT on counterfeit and pirated goods258 but finally did not

Ipsen/Haltern (note 245), 79. Federico Canuto/Todd Fineberg, Natural Resource Based Products, in: Terence Stewart (ed.), The GATT Uruguay Round – A Negotiating History, vol. I, 1993, 509. 253 Michalopoulos (note 249), 34 et seq. The developing countries increased their share of bound industrial tariffs from 14% to 59%. 254 Raghavan (note 250), 77 et seq. For the position of the developing countries see Hugo Paemen/Alexandra Bensch, From the GATT to the WTO, 1995, 100 et seq. 255 See Croome (note 172), 207. 256 Cf. id., 328. 257 Id., 209 et seq.; Reyna (note 245), 2371 et seq.; see also John Croome, Guide to the Uruguay Round Agreements, 1999, 197 et seq., w ho reports that the majorit y of the developing countries did not commit themselves to services liberalization. 258 See Croome (note 172), 218. 251 252

Germany’s Contribution to the Development of International Economic Law

41

hinder the present more comprehensive agreement because special treatment and flexibility were granted to them.259 2. Development Needs and the Results of the Uruguay-Round260 The WTO when compared to GATT 1947 for the first time mentioned the development needs of the developing countries as an objective of the WTO, yet in a limited form: the Member States recognized in the preamble of the WTO Agreement, that there is need for efforts to ensure that developing countries and especially the least developed among them secure a share in the growth in international trade commensurate with the needs of their development. This aim was new, but was far from setting the developing countries needs on the top of the agenda. First, it was not a share of the developing countries exports in international trade that should be ensured, but only a share in the growth of international trade. Second, this objective was far from addressing all needs of the developing countries. Third, it was listed at the end of the indicative list of WTO o b j ectives, even after protection and preservation of the environment and sustainable development. Additionally, the Uruguay Round agreements contain a lot of new differential and more favorable treatment provisions. There are 155 individual references to special and differential treatment of the developing c ountries in the WTO agreements.261 Regarding the poorest of the developin g countries, the least developed countries, the Marrakesh Agreement incorporates a Ministerial Decision on Measures in Favor of Least-Developed Co u n tries which recognizes the difficult circumstances of these countries and gives them special treatment with regard to all aspects of all the agreements.262 The differential and more favorable treatment increases trade opportunities by preferential market access, calls upon WTO members to safeguard the interests of developing state s i n th e implementation of the WTO agreements, grants flexibility of commitments and provides transitional periods and technical assistance. Thus, special treatment was not only maintained by the Uruguay Round but strengthened. Two new elements of special treatment (technical assistance, transitional periods) were introduced. 259 For the contributions of the developing countries to the TRIPS negotiations see Ross/Wasserman (note 247), 2305–2309. 260 A detailed analysis of the Uruguay Round results for developing countries is given in Will Martin/Alan Winters (eds.), The Uruguay Round and the Developing Economies, World Bank Discussion Papers, 1995. 261 WTO, Committee on Trade and Development, Implem ent ation of Special and Different ial Treat m ent P rov is ions in W TO A greem ent s and Decisions, WT/COMTD/W/77/Rev.1, 14. 262 Croome (note 257), 224.

42

Wolfgang Weiß

This, however, was not voluntarily done to favor the developing states but was a consequence of the extension of the GATT on new areas and of the single undertaking rule. The developing countr i e s d id not have the capacities to implement the commitments in some of the new areas so that they would not have signed the Marrakesh agreement unless these new features were conceded to them.263 Nevertheless, it seems as if the demands of the developing countries for preferential treatment and compensatory inequality raised in the NIEO debate and already enshrined in GATT 1947 to a certain degree found a continued echo: the peculiar circumstances of the developing countries were recognized and their special and differential treatment was given more room. Th e needs of the developing states were stressed by the Uruguay Round agreements and at the same time combined with a strengthened liberal approach. On the other hand it was observed that the Uruguay Round addressed the development needs and the particular problems of developing countries by simply writing a new set of rules on increased liberalization the way the industrialized Northern countries wanted them. And then they extended transitional periods to developing countries by way of “special and differential treatment”264 because the increased liberalization was incompatible with the economic situation of the developing countries so that necessarily the liberalization had to go along with technical provisions specific to developing countries.265 The results of the Uruguay Round reflected the tendency not to grant developing countries broad exceptions to compliance with GATT rules. In a large measure they reflect a rejection of the view that developing countries should not be required to make reciprocal commitments to trade liberalization.266 This approach has nothing to do with an attitude of considering the needs of the developing countries and then accordingly trying to find rules and norms specifically tailored to those needs. Instead the industrialized countries looked to their own needs, drafted the new rules accordingly and then conceded derogations to the weaker economies. Special and differential treatment was not integrated systematically but rather added on as an afterthought. Therefore, it was not at all surprising that the developing countries had and still have difficulties in implementing the Uruguay Round Agreements. Implementation is one of the issues of the Doha Development Agenda.267 The Uruguay Round requirements do not satisfyingly identify the particular problems that exist in developing countries. Michalopoulos (note 249), 35. Cf. Pascal Lamy in a speech in Berlin on 28 January 2002, available at: http://europa. eu.int/comm/commissioners/lamy/speeches_articles/spla93_en.htm. 265 Flory (note 240), 390. 266 Trebilcock/Howse (note 245), 388. 267 See the Doha Ministerial Declaration, WT/MI N(01)/DEC/1, para. 12 and the Decision of the D oha Ministerial Conference on Implementation-Related Issues and Concerns, WT/MIN(01)/17. 263 264

Germany’s Contribution to the Development of International Economic Law

43

Therefore, as a consequence, they demand establishment of institutions and regulations that will impose higher costs than benefits on the countries that implement them.268 Of special interest to developing countries was and still is the improved market access for agricultural goods. In this regard, the Uruguay r o u nd was a step forward.269 A new Agreement on Agriculture was concluded, whereby all countries accepted quantitative limits for their agricultural policies, committing them to reduce tariffs, export subsidies and domestic support. The Agreement was a watershed in global agricultural trade as it created completely new rules for agricultural trade worldwide. It brought agriculture back on the main track of trade liberalization, creating the conditions under which market forces could work better in world agriculture.270 But in the end, trade in agriculture (as well as textiles and clothing and services) was liberalized only to a limited extent. Besides, long implementation periods (ten years for textiles, six years for agriculture; the peace clause for agriculture in Art. 13 Agreement on Agriculture expires not before the end of 2003271) have been provided. Hence, the years immediately following the Uruguay Round have not yet seen a fundamental change in actual policies and trade flows. The current Doha negotiations show that trade in agricultural goods still is a matter of great content. Although no country questions the need for fu r th e r liberalization in this area, the reform concepts differ substantially. Furthermore, the industrialized states in the Uruguay Round agreements entered into commitments to abolish practices that violated the letter, at least the spirit of GATT (like the Multi-Fibre Arrangement272 or voluntary export restraints), but in turn received a substantial expansion of the coverage and reach of multilateral disciplines by the new themes.273 This illustrates the negotiating power asymmetries. Against this background it is not surprising that at the end of the Michael Finger, Implementing the Uruguay Round Agreements: Problems for Developing Countries, The World Economy, vol. 24, 2001, 1097. 269 The Tokyo Round of GATT (completed in 1979) made some minor progress on liberalizing agricultural trade for meat and dairy products. These commodity agreements w ere, how ever, of little long-term value. 270 Stefan Tangermann, Global Agricultural Trade in the New Century – Moving Forw ard or Retreating?, available at: http://w w w 0 .u n.org/P u bs /chronicle/2001/issue3/ 0103p56.html. 271 Didier Chambovey, How the Expiry of the Peace Clause Might Alter Disciplines on Agricultural Subsidies in the WTO Framew ork, JWTL, vol. 36, 2002, 305 272 See Trebilcock/Howse (note 245), 376. 273 Rajesh Chadha et al., Developing Countries and the Next Round of WTO Negotiations, in: Bernard Hoekman/Will Martin (eds.), Developing Countries and the WTO, 2001, 1 et seq.; Thomas Hertel/Bernard Hoekman/Will Martin, Developing Countries and a New Round of WTO Negotiations, World Bank Research Observer, 2002, 128; Raghavan (note 250), 283 et seq. 268

44

Wolfgang Weiß

Uruguay Round the developing states expressed their disappointment of the results.274 Despite its weaknesses, the Uruguay Round results were of importance to developing countries in two ways: First, several WTO agreements o f f e red improved market access in areas of interest to developing states that were not subject to GATT disciplines before (textiles and clothing; agriculture). The safeguard agreement in principle put an end to voluntary export restraints. Also tariffs on industrial imports from developing states were reduced, although tariff peaks are still there. Second, the strengthening of the dispute settlement system introduced greater certainty and thereby offered the chance to developing states to get judicial protection against powerful industrialized states.275 Still unsolved although requested in the 1970s is stronger representation and participation of developing countries in decision making. In WTO, developing countries do not play a key role 276 or even a role that corresponds to their meaning in the international community. Only some 15 developing country members are institutionally integrated in the WTO system.277 The Doha Ministerial Declaration refers to that issue and promises assistance in the effective participation of leastdeveloped countries (not all developing countries) in the ongoing negotiations. However, this is only regarding market access for non-agricultural products.278 The NIEO debate was an attempt to create a sectoral world order regarding international economic relations in an all encompassing perspective.279 A tendency to continue this approach can be seen in the establishment and subsequent work of the WTO as this organization is not limited to trade in goods as was the old GATT, but covers economic issues like services; intellectual property protection; investment; debt and finances; and competition. Regarding technology transfer, a working group has been established within the WTO in 2002. The WTO tries to enter into close cooperation with other specialized international organizations establishing a network of inter-sectoral cooperation and increased coherence in international economic policy. Thus, the WTO more and more embraces almost all of the issues raised in the NIEO debate, although solutions for the relevant problems are far from being reached. The scope of the WTO is expanding due to the increasing interdependence between trade in goods, services and flow of production factors like capital and labor. For these reasons, the WTO could be 274 275 276 277 278 279

Senti (note 153), 267. Michalopoulos (note 249), 33 et seq.; see also Flory (note 240), 393. Matsushita/Schoenbaum/Mavroidis (note 22), 389. Michalopoulos (note 249), 171 et seq. Doha Declaration, WT/MIN(01)/DEC/1, para. 16. See Vitzthum (note 88), 7, 20.

Germany’s Contribution to the Development of International Economic Law

45

described as a (at least emerging) new world economic order.280 In contrast to the NIEO debate, the WTO rules, however, are based on market principles and founded in a basically liberal market oriented approach. The failure of the Cancun Ministerial Meeting in September 2003 did not prove the opposite but confirms the liberalized market access to be the foundation of the WTO. The Cancun Meeting did not fail due to resistance to market principles as such but it failed because of divergences regarding the details of further liberalized agricultural markets (with the U.S. and the EU not willing to make any significant cuts in their high levels of agricultural subsidies thus betraying their own principles of market orientation) and the resistance to expanding the scope of the WTO (in particular to include investments issues being one of the very contentious so -c al led Singapore issues). III. Germany’s Role in the Uruguay Round The negotiations in the Uruguay Round were conducted by the EC Commission because it was and still is the case that the EC has the exclusive competence in common external trade policy. The competences of the EC, however, do not cover all fields of negotiation. The EC Member States still have residual competences as regards GATS and TRIPS and some multilateral trade agreements like the TRIMS Agreement.281 Therefore, the WTO Agreement with its Annexes was concluded as a so-called mixed agreement.282 Nevertheless, the EC Council decided at a meeting convened in Punta del Este on 20 September 1986 after approving the Punta del Este Declaration, that in the Uruguay Round negotiations the EC and its Member States should be represented solely by the EC Commission in order to enable homogenous behavior and uniform positions. A maximum of consistency in the negotiations should be ensured.283 Thus, the difficult issue of divided competences could be avoided. The EC Member States, however, still could and did influence the negotiating positions of the EC Commission by way of the so-called 113-Committee and by the fact that the proposals of the Commission needed approval by the Council of Ministers. According to Article 113 (now Article 133) EC-Treaty the Commission shall conduct the negotiations in consultation with a special committee appointed by the Co u n c il to assist the Commission in this task. Member States were Jan Michalek, WTO: A New World Economic Order?, in: International Geneva Yearbook, vol. 11, 1997, 37. 281 For more details see Wolfgang Weiß/Christoph Herrmann, Welthandelsrecht, 2003, MN 120 et seq. 282 Cf. David O’Keeffe/Henry Schermers, Mixed Agreements, 1983. 283 Peter Van den Bosche, The EC and the Uruguay Round Agreements, in: John Jackson/Alan Sykes (eds.), Implementing the Uruguay Round, 1997, 56 et seq. 280

46

Wolfgang Weiß

represented in this committee. Thus, Germany like the other EC Member States could participate in the Uruguay negotiations only indirectly by the influence the Committee had on the Commission’s position. Germany was represented in the Committee by staff of the German Ministry of Economic Affairs and the Foreign Office.284 EC Commission’s participation in the GATT negotiations implied a double negotiati on for the Community: an “intra-European” one to find a common position and an “extra-European” one with the other participants in GATT negotiations. This turned out to be a severe handicap upon the EC’s ability to conduct negotiations.285 Generally, the WTO Agreement and its Annexes were fully supported by Germany.286 Germany’s contributions helped the EC Commission to fend off particular interests of other EC Member States which might have endangered the successful conclusion of the Uruguay Round.287 The interest of the Member States were frequently in conflict and difficult to reconcile. Very often there was a split between the free trading bloc led by Germany and the UK and some protectionists led by France.288 The different external economic policies that could be observed during the 1970s were again present. West Germany and the United Kingdom stood on the side of the free trade as they had done in the NIEO debate. The FRG was interested to improve the marke t access of developing countries products and succeeded in giving UNCTAD a supportive role for the developing states in the Uruguay Round as the Secretary-General of UNCTAD was asked to provide technical assistance to them in order to f ac ilitate their effective participation.289 In contrast, France that had some sympathy for the dirigiste, steering ideas of the develop i n g c o u n tr i es in the NIEO discussion again favored state interventionism in the market processes.290 On the other hand France acted in favor of an integration of social standards into WTO law at the end of the Uruguay-Round and at th e Singapore Ministerial Conference but met with resistance not only of developing states but also of Germany.291 Meinhard Hilf, Negotiating and Implementing the Uruguay Round: The Role of EC Member States – The Case of Germany, in: John Jackson/Alan Sykes (eds.), Implementing the Uruguay Round, 1997, 124. 285 See Paemen/Bensch (note 254), 93 et seq. 286 Hilf (note 284), 121. 287 Id., 124. 288 Van den Bosche (note 283), 69. 289 See Final Act of UNCTAD VII (1987), No. 105 (9). 290 Peter Hall, Governing the Economy, The Politics of State Intervention in Britain and France, 1986. 291 Rain e r F alk, Handels politik an der UNO vorbei? D eu t s cher 284

Germany’s Contribution to the Development of International Economic Law

47

The negotiations on agriculture are an example of Germany’s own role in the Uruguay Round. The Uruguay Rounds’ negotiations on agriculture were very crucial for the EC as the Common Agricultural Policy (CAP) was a very protectionist one. The EC position regarding the opening up of its agricultural sector was defined over two distinct periods. The first, from 1986 to 1988, was characterized by the European alignment with the French position, which sought to reach a consensus regarding an export cartel position. By 1988, in an effort to avoid being isolated, France changed its position. A second period began in 1989, when two distinct positions were brought forward: one which favored liberalization of EC’s CAP while the other advocated supply control. The more liberal position had the support of the Northern countries, in particular UK and the Netherlands, including a German and a French faction. This position hoped that the excessive costs could be lowered by replacing the CAP. The second position called for better regulation of agricultural supply, seeking to limit the volume produced to maintain price levels. This position was defended in Germany, Spain, Greece, Italy, Portugal and Ireland by the sectors seeking to protect small farmers. In these countries, agricultural modernization had taken place at a later date, and was characterized by the co-existence of small landholdings and large estates. None of these countries wanted to risk their agricultural interests in favor of a GATT agreement. In 1990, the EC proposed global negotiations to decrease support and protection by 30 percent over 5 years.292 By this offer, the EC wanted to reconcile various objectives: to attain a balance between agricultural supply and demand, to revamp the international market, to reduce government intervention in agriculture, and to uphold the right of all member countries of GATT to keep agricultural policies. This appeared unacceptable to other countries which perceived the European position as an attempt to close their market. After the failure of the Brussels Ministerial Meeting in December 1990, the issue of agriculture seemed to bring the whole Uruguay Round to an unfortunate end. In 1992, the EC reformed the CAP for the first time in thirty years. In the cereal sector, the most sensitive in trade talks between the US and Europe, the reforms were to significantly reduce government intervention to maintain market prices. The loss of revenue was counterbalanced by direct support per hectare that would maintain income to producers, while bringing the prices of agricultural commodities to international levels. This brought new momentum to the negotiations.293 “Weltmarkfundamentalismus” und Vereinte Nationen, in: UN-w illiges Deutschland, Der WEED-Report zur deutschen UNO-Politik, 1997, 82, 84–87; Weiß/Hermann (note 281), MN 1101 et seq. 292 Paemen/Bensch (note 254), 178. 293 Id., 210 et seq.

48

Wolfgang Weiß

The negotiations on agriculture were potentially divisive for the EC, whose members had extremely divergent preferences with respect to agriculture. Whereas some like the UK and the Netherlands hoped that the multilateral negotiations would provide an ‘‘external push’’ enabling the EC to sl o w th e increasing agricultural costs, other Member States, above all France, but also to some extent Belgium, Ireland, Italy and Germany, were determined to keep a high degree of agricultural protection. As Europe’s first and the world’s second agricultural exporter, France was particularly adamant about maintaining the current system of export subsidies and protected market access. As a major services provider, however, France had generally agreed in March 1985 to go ahead with multilateral agricultural negotiations in exchange for inclusion in GATT talks of its most important concerns, notably the liberalization of investment and other services. The institutional inability of the EC to offer concessions going beyond its lowest common denominator position almo st te rminated the Uruguay Round altogether.294 In 1992/1993 at the climax of the crisis about agriculture,295 which initially seemed to be settled by the so-called US-EC Blair House compromise on agriculture, negotiated after six years of almost deadlock, France and Ireland wanted to renegotiate the deal.296 The Commission and the other Member States were opposed to renegotiation of the deal that had been legitimately agreed to by the EC representatives. ‘‘Opening up Pandora’s Box,’’ in the words of the then EC Agricultural Commissioner Steichen, could also prove risky becau se many American agricultural groups felt that the US had granted too many concessions to the EC. Nevertheless, France succeeded in finding some allies to reopen the Blair House deal. Germany, which initially expressed firm opposition to reopening the deal, played a crucial role in mediating the renegotiation crisis. In late August 1993 German Chancellor Helmut Kohl announced that Germany shared some French concerns about the Blair House compromise although a great part of the German government as well as almost all of the German Parliament did not want to compromise liberalism.297 Chancellor Kohl’s concessions to France were interpreted as either a trade-off for the monetary crisis of the summer which forced devaluations upon Italy, Spain and the UK making German exports more expensive or as an extraordinary gesture of Franco–German solidarity that had already earlier caused Kohl’s restraint in breaking the agricultural deadlock.298 At 294 Sophie Meunier, What Single Voice? European Institutions and US-EU Trade Negotiations, IO, vol. 54, 2000, 122 et seq. 295 See William Clark/Erick Duchesne/Sophie Meunier, Domestic and International Asymmetries in US-EU Trade Negotiations, in: International Negotiation, vol. 5, 2000, 86 et seq.; Meunier (note 294), 123 et seq. 296 Cf. Paemen/Bensch (note 254), 236 et seq. 297 See id., 239 et seq. 298 Id., 212.

Germany’s Contribution to the Development of International Economic Law

49

the request of the French government, an exceptional joint Council meeting of the Foreign Affairs and Agriculture Ministers took place on 20 September 1993 to finally enable the EC to present a common front in the multilateral negotiations. After an intense session, thirty-five ministers of trade, agriculture, and foreign affairs compromised on the need for ‘clarification’’ of the Blair House agreement. This decision appeased France while not overtly jeopardizing the results of the Uruguay Round. The threat of a major crisis if the EC demands for ‘‘clarification’’ of the Blair House agreement were not met eventually contributed to a reversal of the US position. The US administration ultimately agreed to renegotiate specific elements of the agreement, rather than confront a possible breakdown of the talks before the crucial ultimatum enforced by the expiration of the US Congressional Fast Track Authority on 15 December 1993. The EC gained more than mere clarification in the final agreement on agriculture.299 Worth noting in our context, the renegotiations were not driven by concerns as regards the needs of the developing countries. Thus, France had endangered the whole Round in the name of preserving its “rural way of life.” Later it followed an equally firm French position on the socalled “cultural exception” according to which cultural goods should be exempted from the rule of free trade.300 Another area of “cultural concerns” was the issue of whether the audiovisual sector should be included in the new set of rules regarding services. France and to a lesser extent Germany regarded films and TV programs as an essential part of national identity. Driven by this pressure the EC insisted that cultural matters must be recognized in the GATS as requiring special treatment.301 As a result, the EC did not enter into specific GATS commitments regarding cultural services. This led others to withdraw their commitments offered.302 As was observed, France’s external trade policy shifted from a national, special protectionism to global protectionism by the end of the 1990s.303 D. Development, Terrorism and a New Global Deal Cu r rent developments of the debate on the reform of the international economic order shall briefly be mentioned here. In the last years since the commencement of the new millennium, leaders not only of developing countries Meunier (note 294), 125 et seq. Sophie Meunier, France, Globalization and Global P rotectionism (CES Working Papers, No. 71), 6, available at: http://w w w .ces.fas .harvard.edu/w orking_papers/ CES_papers.html or http://w w w .princeton.edu/~smeunier/articles.htm. 301 Croome (note 172), 311, 324 et seq.; Beise/Oppermann/Sander (note 157), 55 et seq. 302 Croome (note 172), 311, 328; see also Paemen/Bensch (note 254), 245 et seq. 303 Sophie Meunier, France, Globalization and Global Protectionism, 4 et seq., 10–12. 299 300

50

Wolfgang Weiß

and of NGOs that work in the area of development and environment protection, but also of the UN such as Secretary General Kofi Annan and other staff proposed a “new global deal” on development which, in the spirit of international solidarity, should obligate the industrialized nations to respond to the development needs of the less developed countries in a new and sincere way. The idea is that developing countries that fight corruption, strengthen their institutions, adopt market-oriented policies, respect human rights and the rule of law, and spend more on the needs of the poor should be supported by rich countries with trade, aid, investment and debt relief.304 A ‘big bar gain’ is demanded by which sustained political and economic reform by developing countries would be matched by direct support from the industrialized, rich countries. This new deal was supposed to focus on clear, time-bound targets for achieving rapid, measurable improvements in the lives of the world’s poorest citizens305 and got particular attention at the 2002 UN World Conference on Financing for Development in Monterrey, Mexico and at the Johannesburg World Summit on Sustainable Development in September 2002.306 After the terrorist attacks of 11 September 2001 this proposal was reintroduced with new impetus307 and strongly confirmed for example by the German Federal Minister for Economic Cooperation and Development, Mrs Wieczorek-Zeul who stressed its importance for world peace and security.308 Also President George W. Bush when raising the issue of US development aid in 2002 spoke about a “new compact” for global development. With increasing terrorism in the world, the issues of the NIEO debate on development issues obtained a new meaning. The 304 UN Secretary-General Kofi Annan in his address to UNCTAD X in Bangkok at 12 February 2000, available at: http://w w w .dgap.org/IP/ip0006/annan12022000.html, in articles in the New York Times of 19 March 2002 and in The Guardian of 21 March 2002, available at: http://w w w .campaignforedu cat ion.org/_html/2002-new s/03kofiannan/content-txt.shtml. 305 See e.g., the statement by the UN Development Programme (UNDP) Administrator Mark Malloch Brown, available at: http://w w w .undp.org/dpa/pressrelease/releases/2002/ march/12mar02.html. 306 See e.g., the World Bank President James Wolfensohn in his remarks to the Plenary Meeting of the Financing For Development Conference, available at: http://w eb. w orldbank.org/WBSITE/EXTERNAL/NEWS/0,,contentMDK:20046707~menuPK: 34457~pagePK:34370~piPK:34424~theSitePK:4607,00.html. The Monterrey Consensus (A/CONF.198/11) is available at: http://w w w .un.org/esa/ffd/Monterrey-Consensusexcepts-aconf198_11.pdf. For the results of the World Summit see http://w w w . w orldsummit2002.org. 307 See the speech by Kofi Annan to the UN General Assembly, 10 November 2001. 308 H e ide marie Wieczorek-Zeul, Entw icklungspolitik nach dem 11. September – Ein umfassender friedens- und sicherheitspolitischer Ansatz, E+Z 2002, 8; Tow ards a Comprehensive Peace and Security Policy Approach, available at: http://w w w .bmz.de/en/ topics/statment.html.

Germany’s Contribution to the Development of International Economic Law

51

low development in many countries is no longer a mere issue of economic policy and justice in the global distribution of wealth with side effects for environmental protection and sustainable development but affects the peace and security of the whole world and in particular of the industrialized nations. International terrorism has made the industrialized states more aware of the interdependence of peace, security and development. Most terrorists come from poor countries. Poverty, lack of education and hopelessness makes men seduce-able and receptive to calls for terrorist attacks on institutions seen to symbolize western values. Thus, the international community might become more mindful of the need to combat the poverty which is often a breeding ground for terrorism. The demand for a new global deal, however, has lost attention in 2003. Nevertheless, one can state that not only has the debate on the problems and challenges (but not the solutions) raised by the developing states in the NIEO agenda not yet come to a final end, but also may have even risen in importance. E. Conclusion An analysis of the development of the international economic law from the NIEO debate to the establishment of the WTO is witnes to several changes in its development. The topics discussed have changed to some extent. Those topics of the NIEO debate which were not only in the interest of the developing states but also in the interest of Western developed countries’ economies (as they improve the international trade structure)309 like the diversification of Third World exports, improved or even free access of the developing countries’ products to the markets of the industrialized states by removing tariff and non-tariff barriers in particular as regards those products that are of special interest for the developing states (e.g. agricultural products, textiles and clothing) or worldwide responsibility for the environment are still relevant and on the top of the international agenda today. But other topics like participation of developing countries in the decision making processes, the change of standards for the expropriation of foreign investments or the issue of commodity price stabilization have disappeared.310 The latter issues are solely in the interest of developing states. They did not survive the resistance of the Western States. A thir d group of topics (like transfer of technology) is currently again attracting increasing attention, sometimes in a varied manner. The issue of international solidarity, for example, reentered the international stage See Kreye (note 190), 130 et seq. Stable prices for natural resources w ere not an issue at the Uruguay Round. But see now the promise of the Doha Ministerial Declaration regarding more effective negotiation participation of least developed countries. The WTO concedes that improving the internal w orking methods does not form part of the Doha Agenda, see World Trade Report 2003, 154. The negotiations on investment envisaged in the Doha Declaration cannot be expected to reenter the debate on standards for compensation. 309 310

52

Wolfgang Weiß

again in the mantle of social standards. Mutual solidarity of the states, however, still is only “soft law,” if at all.311 The concrete topics discussed in the NIEO debate expressed more or less a political conflict between governing classes in the Third World an d the representatives of international capital 312 and did not care about ameliorating the economic conditions of the poor in the developing countries.313 As the governing classes have changed, the impetus for NIEO has decreased and disappeared.314 In international politics the term NIEO no longer is in use. It is old-fashioned and the developing countries fear use it as it might cause memories and connotations to Cold War times and to the solutions proposed in the 1970s. Scholars however do not shy away from alluding to the NIEO again,315 particularly since the new WTO (seen as being the main expression of globalization) has attracted increasing criticism. The substantive issues of the 1970s, however, remained unsolved. The economic problems of the developing countries which led to the NIEO debate still exist and do increasingly effect international peace and security and lead to subsequent problems. Nevertheless, even from today’s perspective the particular demands in the NIEO debate seem not to offer real solutions to these problems316 and rightly are no longer in the discussion. That the postulates of the developing countries in the NIEO debate were and still are not acceptable and helpful, however, it does not mean that their analyses did not have their merits or that the present international economic order and its institutions do not need some reform. Other solutions to the problems raised in the 1970s have to be found by the international community which are more in line with individual freedoms and market mechanisms.317 At least the NIEO debate could highlight that the See Pieter VerLoren van Themaat, The Changing Structure of International Economic Law , 1981, 233. 312 Frank (note 89), 184. 313 Müller-Plantenberg (note 139), 394. 314 See Waelde (note 163), 779 adds that a younger generation of economists took over w ho w ere trained on capitalist approaches and understood that inw ard-orientation w as a key factor of underdevelopment.. 315 See Sungjoon Cho, Free Markets and Social Regulation: A Reform Agenda of the Global Trading System – Tow ard a New International Economic Law , 2002. 316 Thomas Oppermann, Über die Grundlagen der heutigen Weltw irtschaftsordnung, in: Brun-Otto Bryde/Philip Kunig/Thomas Oppermann (eds.), Neuordnung der Weltw irtschaft, 1986, 27 et seq.; id., On the Present International Econom ic Order, in: Thomas Oppermann/Ernst-Ulrich Petersmann (eds.), Reforming the International Economic Order, 1987, 199. 317 See Gutachten des w issenschaftlichen Beirats beim Bundesminister für Wirtschaft zu Fragen einer neuen Weltw irtschaftsordnung, reprinted in: Archiv des Völkerrechts, 1982, 82; this opinion indicates at 92 et seq. three basic principles of a successful reform of the economic order: respect for the interests of all involved; effectivity; division of tasks. 311

Germany’s Contribution to the Development of International Economic Law

53

international economic order has to serve development needs as well. Nowadays the emphasis of the development issue and its special meaning to the economic order is not as important as in the 1970s because the developing states recognized that market mechanisms also work in their interest, but the topic still is on the agenda, as the Development Agenda of the Doha Ministerial Declaration proves. Besides, the development of international economic law since the 1960s and 1970s up to the present saw several very fundamental changes which actually are shifts in paradigm as they show that development takes place under different auspices: First, instead of a total change or a revolution, a reform and renewal of the existing order that is compatible with market forces is looked for now. Planning and managing the world economy 318 meets skepticism. International economic law and any attempt to its reform is not successful if it opposes economic trends that flow from private decisions and the use of economic freedoms. To the contrary, it has to assist and facilitate them.319 Ideological patterns have disappeared. The developing countries learnt that the industrialized states would not give up their preference of a market oriented trading system to state intervention. Second, in an institu ti o nal perspective, instead of new fora, the further development of international economic law is and has to be done within the existing system, i.e., within World Bank, IMF and WTO. Tendencies to withdraw from GATT and to utilize UNCTAD as a forum for evolving an alternative trade order 320 were halted. Since the NIEO debate disappeared, the le adership in negotiating on international economic issues moved from the UN, in particular UNCTAD, back to IMF, World Bank and GATT (and now WTO) where it used to be before. Due to this shift the numerical superiority of the developing countries in the plenary organs of the UN, like in the GA and in UN Conferences like UNCTAD and certain specialized organizations, could be evaporated of political influence. Financial and monetary organizations and institutions like the IMF and World Bank in which the industrialized nations legally and factually dominated again gained power. Finally the WTO was founded, an organization dedicated to the prevailing international economic order. The foundation of WTO proves that the attempt of the developing countries to have an organization that is a counterweight to GATT has finally failed. UNCTAD’s role could not meet the Cf. as w ell Thomas Oppermann, Die Charta der w irtschaftlichen Rechte und Pflichten der Staaten, ZaöRV, vol. 36, 1976, 458. 318 As proposed by Kamal Hossain, Introduction, in: Detlev Dicke/Ernst-Ulrich Petersmann (eds.), Foreign Trade in the Present and a New International Economic Order, 1988, 16 et seq. 319 See Waelde (note 163), 802. 320 Trebilcock/Howse (note 245), 377 et seq.

54

Wolfgang Weiß

expectations of the developing states to become a principal instrument of the UN GA for negotiations on international trade and economic co-operation.321 The debate on the reform of the UN did not bring any change of the meaninglessness of the UN as regards economic and trade issues.322 There is, however, an increased awareness of the interlink of trade, growth and economic policy leading to closer cooperation between WTO on the one side and World Bank, IMF, but also UNCTAD, UNEP or ILO on the other side. Greater coherence of international trade policy receives more attention. Still unresolved is the problem that the existing international economic organizations mainly are concerned with the interests and ideas of developed countries while neglecting the interests of developing states.323 Third, whereas the NIEO reform pol i cies – though contradictory – have focused on an absolute notion of so vereignty of the state – the current development of international law in general and economic law in particular is coined by the idea that state sovereignty has to be limited by pressing global demands like environmental protection, sustainable development, human rights, social and labor stan dards, consumer health and safety. This has to be implemented by a deeper and wider network of treaty obligations.324 Fourth, – and closely related to the latter – the attitude towards international law and the existing international economic order in particular has changed: instead of rejecting the existing public international law, the developing countries acknowledge the one legal order of international law 325 and increasingly participate in GATT and in the WTO. The developing states understo o d that their development is their own primary responsibility and that the industrialized states can only support their efforts. The new attitude of the developing states is proven by their preparedness to enter into significant tariff concessions in the Uruguay Round and by the speedy increase of developing countries’ WTO membership. The Western industrialized countries, in particular US, Canada, Japan and EC can no longer expect to design and steer the negotiations. The WTO Ministerial Conference at Seattle demonstrated this quite clearly. In terms of law, this means that developing states no longer try to enrich international economic law with new methods of codification of international economic law or new principles like solidarity, right to development or new concepts of sovereignty like so-called 321 See e.g., Art. I of UNCTAD Res. 114 (V), reprinted in: Proceedings of the UNCTAD, Fifth Session, vol. I, Report and Annexes, 1981, 42. 322 Falk (note 291), 73; Jens Martens, Aussitzen oder Mitgestalten? Deutschland in der Debatte um die Reform der UNO, in: UN-w illiges Deutschland – Der WEED-Report zur deutschen UNO-Politik, 1997, 239. 323 See van Themaat (note 311), 231. 324 See Waelde (note 163), 798. 325 Flory (note 240), 391.

Germany’s Contribution to the Development of International Economic Law

55

permanent sovereignty. What still is lacking is their effective participation in decision-making on trade-related matters. This is an old demand of the NIEO debate and might require institutional reforms and an enlargement of the mandate of the WTO.326 German foreign trade policy steadfastly has to follow the approach of combining market economy and protecting the weak, resulting in a type of world wide social market economy that has been taken up since the 1970s. It has, however, to fight for this approach even within the EC in order to counteract EC protectionism. This calls for the fifth shift in paradigm that still has to be seen: the developed countries have to be sincere as regards free access to their markets. The persistent departures from the GATT principles of multilateralism, non-discrimination and most-favored nation treatment have to come to an end. The ? of power-oriented system of the WTO has already contributed to it. The sixth shift in paradigm refers to new instruments that have to be developed in order to assist an d protect the weaker economies. The current form of preferential an d differential treatment of developing countries seems insufficient, but has to be reformed as it does not pay attention to the very diff erent situation of the developing states and does not always work to the benefit of the developing states. New ideas regardi n g capacity building, assistance in the implementation of commitments, transfer of technology, investment, exp o rt promotion and a worldwide antitrust law 327 are required.328 This analysis of the development of international economic law also proved that the FRG contributed considerably to its development since its accession to the UN. Germany more than other EC Member States advocated a liberal market orientation in the 1970s making it a rigid opponent to the NIEO. Germany, however, was also tempted by protectionism. Since the 1980s, Germany seems to have succumbed even more to this temptation. Germany’s particular influence on the development of international economic law seems to have become less. The increasing competences of the EC in this field, the need for the EC Member States to speak with one voice and the necessity to respect the interests of other EC Member States have contributed to that. See Hossain (note 318), 15 et seq. The Doha Ministerial Declarat ion, WT/MIN (01)/DEC/1, para. 23 calls for a framew ork to enhance the contribution of competition policy to international trade and development. Core principles of a future multilateral competition law agreem ent have been analyzed by a w orking group, see Werner Berg/Holger Bielesz, The WTO and Competition – Options and Perspectives, in: International Trade Law and Regulation, 2003, 94. The Ministerial Conference in Cancun in September 2003 is expected to initiate negotiations on this issue. 328 For more detail on WTO’s development relevance see Wolfgang Weiß, The Role of the WTO in Global Development Policy, in: Bernd von Hoffmann (ed.), Global Governance, forthcoming. 326 327

56

Wolfgang Weiß