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EUI Working Papers

RSCAS 2012/23


Global Governance Programme-18



Theories, Rules and Institutions for the

Central Policy Challenge in the 21st Century

Ernst-Ulrich Petersmann (ed)




Multilevel Governance of Interdependent Public Goods Theories, Rules and Institutions for the Central Policy Challenge in the 21st Century


EUI Working Paper RSCAS 2012/23 This text may be downloaded only for personal research purposes. Additional reproduction for other purposes, whether in hard copies or electronically, requires the consent of the author(s), editor(s).

If cited or quoted, reference should be made to the full name of the author(s), editor(s), the title, the working paper, or other series, the year and the publisher.

ISSN 1028-3625 © 2012 Ernst-Ulrich Petersmann (ed) Printed in Italy, June 2012 European University Institute Badia Fiesolana I – 50014 San Domenico di Fiesole (FI) Italy www.eui.eu/RSCAS/Publications/ www.eui.eu cadmus.eui.eu Robert Schuman Centre for Advanced Studies The Robert Schuman Centre for Advanced Studies (RSCAS), created in 1992 and directed by Stefano Bartolini since September 2006, aims to develop inter-disciplinary and comparative research and to promote work on the major issues facing the process of integration and European society.

The Centre is home to a large post-doctoral programme and hosts major research programmes and projects, and a range of working groups and ad hoc initiatives. The research agenda is organised around a set of core themes and is continuously evolving, reflecting the changing agenda of European integration and the expanding membership of the European Union.

Details of the research of the Centre can be found on:

http://www.eui.eu/RSCAS/Research/ Research publications take the form of Working Papers, Policy Papers, Distinguished Lectures and

books. Most of these are also available on the RSCAS website:

http://www.eui.eu/RSCAS/Publications/ The EUI and the RSCAS are not responsible for the opinion expressed by the author(s).

The Global Governance Programme at the EUI The Global Governance Programme (GGP) aims to share knowledge, and develop new ideas on issues of global governance, serve as a bridge between research and policy-making, and contribute the European perspective to the global governance debate.

The GGP comprises three core dimensions: training, research and policy. The Academy of Global Governance is a unique executive training programme which combine EUI’s top-level academic environment with some of the world’s leading experts in the field of global governance and is targeted to young executives and policy-makers, public sector officials, private sector professionals, junior academics, and diplomats. Diverse global governance issues are investigated in research strands and projects coordinated by senior scholars, both from the EUI and from internationally recognized top institutions. The policy dimension is developed throughout the programme, but is highlighted in the GGP High-Level Policy seminars, which bring together policy-makers and academics at the highest level to discuss issues of current global importance.

For more information:

www.globalgovernanceprogramme.eu Abstract This publication includes papers of an interdisciplinary conference in 2011 analysing multilevel governance problems of the international trading, environmental, development and rule-of-law systems as interdependent ‘aggregate public goods’. It begins with policy-oriented analyses from leading practitioners on the ‘gap between theory and practice’ in multilevel governance. The analyses of the ‘collective action problems’ are supplemented by case-studies on the world trading, environmental, development and related rule-of-law systems. Apart from assessing existing multilevel governance arrangements (such as the G20 meetings), the conference papers explore alternative strategies for rendering multilevel governance more effective, for instance by promoting public-private partnerships, empowering private actors through stronger cosmopolitan rights, enhancing legaljudicial accountability of governments and by promoting overall coherence through transnational ruleof-law systems. The papers explore emerging principles for multilevel political governance (like ‘responsible sovereignty’, unilateral protection of ‘common concerns’) as well as new forms of multilevel judicial governance strengthening transnational rule-of-law in international trade, investment and environmental regulation.

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Introduction and Overview: Lack of Adequate Theories, Rules and Institutions for the Central Policy Challenge in the 21st Century?

Ernst-Ulrich Petersmann

I. Multilevel Governance of Interdependent Public Goods: Approaches by Political Practitioners Global Governance: From Theory to Practice Pascal Lamy

The EU and the European Parliament in International Trade and Climate Change Negotiations Josep Borrell

II. Collective Action Problems Impeding Collective Supply of Interdependent Public Goods: Economic, Political and Legal Analyses Global Public Goods: Explaining their Underprovision Inge Kaul

Problems of Policy-Design based on Insufficient Conceptualization: The Case of “Public Goods” Friedrich Kratochwil

III. Case Studies on Multilevel Governance of ‘Interface Problems’ of the International Trading, Environmental and Development Systems The G20 and Global Economic Governance: Lessons from Multilevel European Governance?

Jan Wouters and Thomas Ramopoulos

Multilevel Governance Problems at the Intersection of Trade, Health and the ‘Global Knowledge Economy’’ Frederick M. Abbott

Can the 'Development Dimension' of the WTO Be Secured Without Stronger Synergies Between the WTO and the World Bank?

Anna Pitaraki

Why Climate Change Collective Action has Failed and What Needs to be Done within and without the Trade Regime Daniel Esty and Anthony Moffa

Global Public Goods and Asymmetric Markets: Carbon Emissions Trading and Border Carbon Adjustments Moritz Hartmann

International incentive mechanisms for conservation of biodiversity and ecosystem services Jerneja Penca

IV. Constitutional and Legal Problems of Multilevel Governance of Citizen-driven International Public Goods The Emerging Principle of Common Concern: A Brief Outline Thomas Cottier

Cosmopolitan ‘Aggregate Public Goods’ Must be Protected by Cosmopolitan Access Rights and Judicial Remedies Ernst-Ulrich Petersmann

Introduction and Overview: Lack of Adequate Theories, Rules and Institutions for the Central Policy Challenge in the 21st Century?

Ernst-Ulrich Petersmann *

Globalization has entailed not only more freedoms than citizens have ever enjoyed before; it also continues to make people’s life ever more interconnected and ‘public’ (e.g. through the Internet), thereby contributing to the transformation of ever more local and national goods into international public goods requiring new forms of governance, regulation and justification. The more these new private and public spheres (e.g. of globally integrated financial markets) lack adequate regulation and provoke systemic crises, the more citizens and civil society organizations (like the ‘occupy Wall Street’ movements) criticize their governments for failure to protect public goods like ‘financial stability’ and the human rights obligations of all UN member states. This symposium focuses on the interdependent 'public goods' of efficient world trading, environmental, development and rule-of-law systems. The world financial crisis of 2008, the European debt crises since 2010, the failures of the Doha Round and climate change negotiations, and the unnecessary poverty of more than 1 billion poor people are 'public bads' illustrating systemic failures of the prevailing ‘Westphalian model’ of regulating ‘aggregate public goods’ (e.g. transnational ‘composite goods’ like the world trading system composed of vertically and horizontally interconnected, national, regional and worldwide public goods). Even inside the EU, the increasing ‘euro-scepticism’ reflects distrust by citizens vis-àvis multilevel governance of public goods distorted by persistent violations of rule of law (e.g. of agreed budget and debt disciplines) and injustices caused by interest group politics (e.g. due to underregulation of financial markets). One conclusion of the conference discussions was that better regulation of interrelated public goods requires more adequate theories, rules and institutions for constructing, providing and maintaining interdependent local, national, regional and global public goods. As the undersupply of international public goods affects the welfare of people in all UN member states, the prevailing ‘Westphalian approaches’ of intergovernmental regulation (e.g. in UN institutions and the WTO) are increasingly challenged by civil society and by resort to sub-optimal, regional, plurilateral or bilateral policy alternatives (like regional trade agreements, plurilateral negotiation of the ‘Anti-Counterfeiting Trade Agreement’ outside the WTO, bilateral investment treaties, regional carbon-emission trading systems, humanitarian interventions based on ‘duties to protect’ agreed ‘common concerns’). Constitutional theory and public goods theory challenge the methodological premises of state-centred ‘political realism’, 'interest group politics' and of Westphalian conceptions of ‘international law among sovereign states’ by integrating economic, political, legal, social and moral analyses of society in order to design better multilevel governance institutions for collective supply of international public goods.

The papers collected in this publication were first presented and discussed at an interdisciplinary conference on Multilevel Governance of Interdependent Public Goods at the European University Institute (EUI), Florence, in February 2011; they build on the existing literature and its conclusion ‘that the provision of global public goods occurs largely without the benefit of relevant, up-to-date theory. Public goods theory often lags behind the rapidly evolving political and economic realities – marked by a state-centric and national focus and, consequently, providing poor support for advice on the provision of global public goods in today’s multi-actor world’ (Kaul et al., 2003, p.5). The conference was convened by Prof. Petersmann in the framework of the PEGGED Project on Politics, Economics and Global Governance: The European Dimensions, with the financial support from the European Commission in the context of the Seventh Framework Programme for Research and * European University Institute Florence.

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Technological Development. As the existing research had neglected legal theory 1 and the common principles underlying the hundreds of multilateral agreements accepted by UN member states for protecting international public goods, this conference focused on the following two legal and policy


- Can public goods theory be made more policy-relevant by comparing the legal regulation of diverse, international 'aggregate public goods' so as to draw lessons for more efficient, legitimate and effective governance of interrelated public goods and for institutional alternatives? For instance, which legal tools and institutions have been used vis-à-vis ‘free-riders’ for setting incentives for cooperation in collective supply of international public goods? What are the past experiences with transforming public goods into ‘club goods’ excluding non-members, granting property rights in ‘common pool resources’ so as to prevent the ‘tragedy of the commons’, recognizing ‘common concerns’, ‘duties to protect’, corresponding ‘access rights’, judicial remedies and ‘private-public partnerships’ of citizens and states at national and international levels as incentives for promoting public goods?

- How should the ‘horizontal’ and ‘vertical’ interdependencies between the national and international components of the international trading, environmental, development and related rule-of-law systems be regulated in order to promote the necessary adjustments of multilevel governance to the regulatory needs of globalization in the 21st century? ‘Publicness’ and ‘privateness’ of many goods are no innate properties, but socially and legally constructed, for instance by recognition of human rights to governmental protection of public goods (like rule of law and public health), by ‘privatizing’ the supply of public goods like access to water, or by treaty obligations to cooperate among diverse public goods regimes (like governance of the Internet). How should public goods theory respond to the reality of legitimate ‘legal pluralism’ at national and international levels requiring respect for ‘reasonable disagreement’ (e.g. as reflected in ‘deferential interpretations’ of ‘public interest exceptions’ like Article XX GATT in international agreements coordinating competing public goods) and for legitimately diverse systems of human rights, democratic ‘preference revelation’, fair rule-making, legitimate governance and public goods beyond states?

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