Mark B. Baker, No Country Left Behind: the Exporting of U.s. Legal Norms Under the Guise of Economic Integration

• Jurisdiction: United States,Federal
• Citation: Vol. 19 No. 3
• Publication year: 2005

ARTICLES

NO COUNTRY LEFT BEHIND:

THE EXPORTING OF U.S. LEGAL NORMS UNDER THE GUISE OF ECONOMIC INTEGRATION

Mark B. Baker

TABLE OF CONTENTS

INTRODUCTION ..............................................................................................1322

I. THE NEEDS OF MODERN COMMERCE .................................................1327

II. THE FTA EXPLOSION .........................................................................1332

A. The Rise of the Multilateral Trade Regime ................................1334

B. The Bipartisan Trade Promotion Authority Act of 2002 ............1337

C. Bilateral/Regional Agreements in a Multilateral World ............1339

D. Facing the Bilateral Challenge ..................................................1342

III. CENTRAL AMERICAN REGIONAL INTEGRATION AND CAFTA ...........1345

A. Early Central American Integration Efforts...............................1345

B. Modern Efforts at Central American Integration .......................1349

C. The CAFTA Agreement...............................................................1350

D. The Administration's Arguments for CAFTA .............................1355

IV. EXAMINING THE JUSTIFICATIONS FOR CAFTA ..................................1356

A. Scrutinizing the Administration's Arguments .............................1356

B. Exporting Law and Increasing Security .....................................1362

C. The Laws That Do Not Get Exported .........................................1368

D. Looking to the Cases: Specific Consequences of Legal

Exportation .................................................................................1370

1. Robert J. Frank c. los Estados Unidos Mexicanos ...............1371

2. Corn Products International c. los Estados Unidos

Mexicanos.............................................................................1373

E. Imperialist or Partner in Development? ....................................1378

CONCLUSION..................................................................................................1380

NO COUNTRY LEFT BEHIND:

THE EXPORTING OF U.S. LEGAL NORMS UNDER THE GUISE OF ECONOMIC INTEGRATION

Mark B. Baker^*

INTRODUCTION

On March 3, 2005, over a thousand protestors surrounded the Honduran legislature, forcing the lawmakers inside to flee the building in order to avoid a confrontation.¹Once the building was empty, protestors smashed out the windows and destroyed furniture inside.²Eleven days later, more extensive riots broke out in neighboring Guatemala. Protestors took to the streets throughout the country, occupying public buildings, blockading highways, and closing airports. In Guatemala City, protestors clashed with riot police and soldiers. Teargas streamed through the major streets of the city, and dozens were injured.³On March 15, government troops opened fire on a crowd of protestors, killing two and injuring many more.⁴Sporadic protests were expected to continue for weeks. There were fears that the violence would spread to Costa Rica and Nicaragua.

Sadly, political violence is not a new phenomenon in Central America. For much of the past three decades, violence and civil war have been a fact of life in the region. Recently, however, Central American states have made remarkable strides towards normalizing their political dialogue. What, then, would cause the citizens of the region to revert to consistent and violent protests?

The answer is the Central American Free Trade Agreement (CAFTA), a

2400 page agreement signed by the United States and the governments of Nicaragua, Honduras, Guatemala, Costa Rica, El Salvador, and the Dominican Republic.⁵Defended by regional governments as a simple trade agreement designed to promote economic development, CAFTA has focused popular political discussion in Central America on the imposition of U.S. economic demands, the destruction of domestic agriculture, the collapse of socially significant industries, and the return of essentially colonial conditions.⁶

In the United States, discussion of CAFTA has failed to garner popular political support. Although Senator John Kerry attempted to make trade an election year issue, only a few special interests and lobbying groups raised any concern over the Agreement.⁷Partially due to the Bush administration's refusal to submit the Agreement for congressional approval for well over a year, the positions of most legislators had ample time to emerge and solidify. After the Agreement was submitted to Congress, supporters argued based on free trade principles and the need to reaffirm the benefits of reducing trade barriers.⁸Opponents, on the other hand, voiced protectionist ideas and argued that Americans would lose jobs to Central America.⁹In the end, the vote on

July 27, 2005, made it apparent that political support for the Agreement was scarce. Even after a great deal of political maneuvering and presidential pressure, the Agreement only passed by two votes in the House of Representatives.¹⁰

This article cuts through the political and economic justifications traditionally used to support agreements such as NAFTA, CAFTA, and numerous other bilateral/regional free trade acts which are currently being developed by the Office of the United States Trade Representative. The article will show that the political and economic consequences-both in the United States and in the other signatory countries-simply do not justify the enormous outpouring of time, effort, and political capital being expended by national governments. If neither economics nor domestic politics justify the formation of these new trade agreements, what reasons remain?

In the opinion of this author, underneath each of the recent bilateral/regional trade agreements, including NAFTA and CAFTA, is a fundamental commitment on the part of U.S. negotiators to export domestic legal rules and norms into the international arena. Thus, these free trade agreements can be better understood as business contracts, building a common body of law to be used by the partners to the contract. This body of law is typically the product of U.S. export for two reasons. First, as the overwhelmingly dominant economic player at the negotiating table, the United States has little difficulty instilling its legal standards and interpretations into the agreements. Second, because U.S. law is generally extremely protective of property and investment, powerful domestic commercial interests within each signatory state are likely to favor U.S. law over less protective domestic law. For the latter reason, even when it might be in the overall economic interest of the partner country to remain outside a trade agreement, powerful concentrated interests are likely to compel the state to join.

The process of exporting law from economically powerful to economically disadvantaged states, and thereby forming extended trading blocs linked by shared legal norms, is not a phenomenon unique to the United States. The European Union has long engaged in a similar practice with the peripheral states, first in Spain and Greece, then more recently with the post-communist countries of Eastern Europe.¹¹On the other side of the globe, Japan is apparently abandoning its traditional preference for broad, multilateral trade arrangements such as the WTO, and instead the country is beginning to form regional trading alliances to counter the rising power of China.¹²

A number of threshold issues must be discussed in order to properly understand the process of exporting legal norms. One of the most important issues is an understanding of the rise of bilateral/regional trade agreements within the context of the World Trade Organization's multilateral trading regime. The European Union is perhaps the most advanced, sophisticated example of how trade agreements can develop through the process of legal export and harmonization into an entity which increasingly resembles a single political state. At the same time, however, the efforts of the Central American states to form their own regional trading partnerships have repeatedly floundered.

In order to achieve the goals discussed above, this article is divided into four major sections. The first brief section discusses the basic economic factors which compel international commercial entities to seek expanded levels of legal norms and create ever higher levels of governmental protection. After laying this foundation, Part II examines the rise of regionalization within the context of modern trading relationships. Three subsections address regionalism within the WTO context, the rise of the European Union as a regional trading and economic bloc par excellence, and the way in which modern U.S. trade policy has rapidly adopted the bilateral trade agreement model as its standard operating procedure. The policy appears to represent a peculiar mix of faith in the simple idea that "trade is good" and a realpolitik understanding that bilateral negotiations maximize U.S. bargaining power.

Part III examines the history of regionalization within Central America. This history extends back over six decades and has been marked by brief periods of economic success. Overall, though, the region has lagged behind the rest of the world in terms of average economic growth.¹³At the same time, civil wars and other conflicts have prevented all but the most basic economic integration.

Part IV addresses the specific issues surrounding the CAFTA itself. First, the agreement is put in its proper historical context, and then the most outstanding features of the agreement are discussed. The defenses and criticisms of CAFTA are each examined. Argument is made that the economically-based defenses presented by the USTR and heard within the halls of Congress quickly show themselves to be little more than smokescreens, obscuring much more powerful, but politically sensitive, non- economic explanations for the move to bilateralism. The final section posits that the best explanation for the current rapid push to...