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Bayreuth Summer 2023

Law & Economics of Trade

Professor: Douglas Nelson

Office: Tilton 108 (Murphy Institute), Phone: 865-5317

Office Hours: Tuesday and Thursday, 3:30-5:30

Phone: 865-5317

email: dnelson@tulane.edu

Webpage: nelson.wp.tulane.edu

In 2016, for the first time since before the Second World War, national international trade policies and the international arrangements providing a (relatively weak) regulatory framework have become significant public political issues in virtually all of the core countries of the liberal international trading system. The readings and lectures in this course seek to develop an understanding of the domestic and international foundations of international trade law. Positive law and economics is a branch of political economy, not a branch of welfare economics. We begin the course with some background in the economics and politics of a liberal international economy. Then we examine the role of law in a democratic, capitalist political economy. Having laid this foundation, we turn to detailed analysis of the way that system seeks to balance the gains from integration with losses of sovereignty. Then we consider a number of new issues facing the liberal international trading system: restructuring of the world economy to take advantage of global value chains; and the emergence of China as a significant economic and political actor. Finally, we examine some sources of crisis and potential alternatives. Our main international focus will be the World Trade Organization (WTO), though we will consider other multilateral and plurilateral organizations in passing; and our analysis of national policy with focus on the United states, though we will consider other countries in passing.

Evaluation: Your performance in this course will be evaluated on the basis of active participation and an approximately 5000 word essay that will be described more fully in class.

Readings for the course will be drawn from:

  • Bernard Hoekman and Michel Kostecki (2010). The Political Economy of the World Trading System: The WTO & Beyond. Oxford University Press.

[Hoekman/Kostecki]

  • Henrik Horn & Petros Mavroidis (2013). Legal and Economic Principles of World Trade Law. Cambridge: Cambridge University Press. [Horn/Mavroidis]

Many readings, most available online and linked from the online version of this syllabus.

If you are interested in more detail, Petros Mavroidis has produced a series of more advanced and longer texts that are very good, indeed:

  • Petros Mavroidis (2016). The Regulation of International Trade: GATT. MIT Press.
  • Petros Mavroidis (2016) The Regulation of International Trade: The WTO Agreements on Trade in Goods. MIT Press.
  • Petros Mavroidis (2020). The Regulation of International Trade: The General Agreement on Trade in Services. MIT Press.

Although our approach is quite different, Kyle Bagwell and Robert Staiger have developed an extensive and sophisticated analysis of WTO law rooted fundamentally in modern trade theory:

  • Kyle Bagwell and Robert W. Staiger (2002). The Economics of the World Trading System. Cambridge, MA: MIT Press.
  • Robert W. Staiger (2022). A World Trading System for the Twenty-First Century. Cambridge, MA: MIT Press.

An interesting attempt to explain key economic concepts to lawyers in the context of a philosophically informed framework is.

  • Robin Malloy (2004). Law in a Market Context: An Introduction to Market Concepts in Legal Reasoning. Cambridge University Press.

For more detailed topics and readings see the syllabus for my Tulane course:

Econ 3970: Law & Economics of International Trade (tulane.edu)

Uni Bayreuth    SYLLABUS    Summer 2023

Topic: Some Background

● A Political Economy Foundation: Nation States, Democracy and the Legitimation of Markets

  • Polanyi (1944). “Man, Nature, and Productive Organization”. Chapter 11 of The Great Transformation. Boston: Beacon Press, pp. 130-134.
  • Iversen (2006). “Capitalism and Democracy”. Chapter 33 in B. Weingast and D. Wittman, eds. Oxford Handbook of Political Economy. New York: Oxford University Press, pp. 601-623.
  • Chambers and Kopstein (2006). “Civil Society and the State,” in Dryzek, Honig and Phillips eds, The Oxford Handbook of Political Theory. Oxford: Oxford University Press, 363-81.

● What is the Role of Law (Domestic & International)

  • Collins (1980). “Weber’s Last Theory of Capitalism: A Systematization”. American Sociological Review; V.45-#6, pp. 925-942.
  • Raustiala & Slaughter (2002). “International law, international relations and compliance”. in Carlsnaes, Risse & Simmons, eds. Handbook of International Relations. Thousand Oaks: Sage, 538-558.
  • Steinberg (2013). “Wanted–Dead or Alive: Realism in International Law,” in J. L. Dunoff and M. A. Pollack eds, Interdisciplinary Perspectives on International Law and International Relations: The State of the Art. Cambridge: Cambridge University Press, 146-72.

● Theory of Economic Policy for Law, Economics, and Policy

  • Johnson (1963). “Optimal Trade Intervention in the Presence of Domestic Distortions,” inBaldwin and others eds, Trade, Growth and the Balance of Payments. Chicago: Rand McNally & Company, 3-34.
  • Hoekman & Nelson “Rethinking International Subsidy Rules“. 2020. The World Economy; V.43-#12, pp. 3104-3111.
  • Francois, Hoekman & Nelson (forthcoming). “Trade and Sustainable Development: Non-Economic Objectives in the Theory of Economic Policy,” forthcoming. World Trade Review,

● Optional Topic: Historical/Institutional Background for the WTO

Topic: Basic Law and Economics of the WTO

● Liberalization

● Nondiscrimination

  • Horn and Mavroidis (2001). “Economic and Legal Aspects of the Most-Favored-Nation Clause.” European Journal of Political Economy, V.17-#2, 233-79.
  • Grossman, Horn, Mavroidis (2012). “Legal and Economic Principles of World Trade Law: National Treatment”. Chapter 4, Horn/Mavroidis, pp. 205-353 (just 226-241).

● Transparency & Epistemic Community

● Safeguards: General

● Safeguards: Antidumping and Anti-Subsidy

  • Hoekman/Kostecki, Chapters 9 (pp. 431-455).
  • Hoekman & Nelson (2021) “Rethinking International Subsidy Rules”. The World Economy, V.43-#12, pp. 3111-3116.

● Safeguards: National Security

● Disputes

  • Hoekman/Kostecki, Chapter 4.
  • Horn and Mavroidis (2007). “International Trade: Dispute Settlement,” in A. T. Guzman and A. O. Sykes eds, Research Handbook in International Economic Law. Cheltenham: Edward Elgar Publishing, Lt., 177-210.

Topic: Where is the WTO Going?

● WTO: Sources of Crisis

● WTO: Directions of Reform