Jean Monnet Center at NYU School of Law


Trade and . . . . Problems, Cost-Benefit Analysis and Subsidiarity

Joel P. Trachtman [1]

This article analyzes the conflict between trade values and other values ("trade and . . . problems"), such as environmental protection, labor rights or free competition, as this conflict is addressed by the principal legal devices available to address conflicts between trade values and other values ("tradeoff devices") in the dispute resolution context in the European Union, the GATT/World Trade Organization system and in the United States federal system. These tradeoff devices include anti-discrimination rules, simple means-ends rationality tests, least trade-restrictive alternative tests, proportionality tests, balancing tests and cost-benefit analysis. This article develops a separate cost-benefit analysis methodology to choose among these devices in particular circumstances. From the simple standpoint of maximization of the sum of benefits of trade and benefits of regulation, cost-benefit analysis would, tautologically, be selected. However, full cost-benefit analysis is nowhere in use as a tradeoff device. This paper begins to explain this apparent paradox by suggesting reasons, including administrative, distributive, moral and theoretical concerns, why this approach is not used. These reasons are explored in order to evaluate retreats from full cost-benefit analysis to the tradeoff devices actually in use. Finally, this article comprehends these tradeoff devices as determinants of the allocation of regulatory jurisdiction between central and component governments: of subsidiarity.

[1] Associate Professor of International Law, The Fletcher School of Law and Diplomacy, Tufts University. I thank Jeffery Atik, Jeffrey Dunoff, Helen Hartnell, Andrew Moravcsik, Kalypso Nicolaïdis, Paul Stephan and Joseph Weiler, and participants in Prof. Weiler's seminar at Harvard Law School on the European Union, NAFTA and the WTO, for their comments on an earlier draft of this article. I am also grateful for research assistance from Leonardo Feinzaig. Errors are mine alone.




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