Foreword

• Author: Padideh Alai
• Position: Professor of Law
• Pages: 01

Page 1

I am privileged to write the introduction to this edition of the American University, Washington College of Law (WCL) Business Law Brief (the Brief ). Over the past decade it has become increasingly clear that the artificial distinction between economic and non-economic laws has eroded. This distinction was very important to the development of international law regulating cross border economic activity throughout the 20th century. The economic-non-economic distinction has been the basis for the reasoning used by US federal courts in determining whether or not a US law can or should be applied extra-territorially. On one hand, the transnational reach of economic or market related laws, such as securities, anti-trust, or tax law has been repeatedly upheld notwithstanding minimal US contact or conduct. On the other hand, areas of law which were determined to be non-economic, such as labor and the environment, were made subject to the common law presumption against extra- territorial application. The importance of the economic-noneconomic distinction is also evident in the Articles of Agreement of inter-government organizations such as the International Monetary Fund ("IMF") which state that the IMF and the World Bank will limit their activities to "economic" matters. Similarly, from 1947-1994, the General Agreement on Tariffs and Trade (the "GATT") distinguished between trade and nontrade matters by concentrating on market access and non-discrimination mandates of the trading system. The ad hoc dispute settlement panels created under the GATT refused to recognize other competing and interrelated interests in areas such as health, safety or the environment. The GATT panels interpreted such competing "non-economic" concerns very narrowly and refused to allow such concerns to justify violations of the substantive GATT provisions on market access or non-discrimination.

In the mid-1990s, the fall of the Soviet Union and the creation of the World Trade Organization ("WTO") significantly eroded the economic and non-economic distinction and led to the recognition of the impact of trade on other substantive areas of the law. The WTO recognized trade-related matters, starting with Trade Related Aspects of Intellectual Property Rights (TRIPS) and eventually set up a trade and environment committee to deal with the linkage between trade and...