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«EUI Working Papers RSCAS 2012/23 ROBERT SCHUMAN CENTRE FOR ADVANCED STUDIES Global Governance Programme-18 MULTILEVEL GOVERNANCE OF INTERDEPENDENT ...»

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theories for rendering multilevel governance of interdependent ‘aggregate public goods’ more effective. This paper explains why ‘Westphalian agreements among sovereign states’ can protect citizen-driven ‘cosmopolitan public goods’ (like efficient international markets) more effectively by providing for cosmopolitan ‘access rights’ and judicial guarantees of transnational rule of law for the benefit of citizens. Just as ever more UN member states have been transformed into constitutional democracies in response to human rights revolutions of their citizens, the international public goods of efficient markets and ‘sustainable development’ must be protected by a ‘four-stage sequence’ (Rawls) of constitutional, legislative, administrative and judicial institutions and citizen rights to legal and judicial protection of public goods against abuses of power.3 As global public goods affect all (including poor people), human rights and democracy require producing and protecting their benefits in participatory, fair, inclusive, rules-based and rights-based ways for the benefit of citizens. Modern economics and constitutional theories confirm that public goods (like social welfare, rule of law) depend primarily on legal empowerment and collective responsibility of citizens for institutionalizing reasonable rules. By focusing on ‘state sovereignty’ and rights of governments rather than on ‘responsible popular sovereignty’ and human rights, UN and WTO diplomats and politicians prioritize their self-interests (e.g. in redistributing ‘protection rents’ through discriminatory trade restrictions in exchange for political support, avoiding legal accountability vis-à-vis citizens for violations of international law) over the rights of citizens. European human rights, economic and environmental law illustrate that multilevel constitutional protection of cosmopolitan ‘access rights’ to supply and consumption of transnational public goods can effectively limit the welfare-reducing ‘discriminatory traditions’ of ‘constitutional nationalism’ with due respect for ‘constitutional pluralism’. The prevailing ‘intergovernmental Westphalian structures’ of international law and organizations (like the UN, IMF and WTO) fail to protect international public goods effectively and need to be transformed into more legitimate and more flexible ‘multilevel governance structures’ addressing the major ‘collective action problems’ in the supply of international public goods. The intergovernmental rulemaking, rule-application and rule-enforcement processes in worldwide organizations are inadequately supported and ‘constitutionally restrained’ by democratic rights of citizens, domestic parliaments, administrative law principles of ‘good governance’, constitutional and judicial ‘checks and balances’.

For instance:

- Diplomats in distant worldwide organizations – such as WTO diplomats negotiating 10 years intergovernmental disciplines on welfare-reducing trade policy instruments (like tariff bindings at 50which governments should not use anyhow - often continue to act like monarchical rulers without democratic accountability vis-à-vis domestic citizens.

- Trade politicians assert ‘foreign policy discretion’ to redistribute income (e.g. ‘protection rents’) among domestic citizens in violation of WTO obligations ratified by domestic parliaments in blatant disregard of their legal duties to use transparent, non-discriminatory and welfare-enhancing policy instruments.

(Contd.) are made non-exclusive on a global scale (e.g. respect for international law). Certain natural public goods are deliberately left in the global public domain (e.g. global gene pools to promote biodiversity preservation). Even though the legal regulation of the diverse kinds of ‘public goods’ must take into account their differences (e.g. among excludable ‘club goods’ and non-excludable public goods), this paper focuses on regulatory problems of global ‘aggregate public goods’ that are composed of interdependent local, national and regional public goods.

On the ‘four-stage sequence’ of legitimate rulemaking inside constitutional democracies like the USA see Rawls (1971, p.195 ff).

Cosmopolitan ‘Aggregate Public Goods’ Must be Protected by Cosmopolitan Access Rights and Judicial Remedies

- Domestic governments and courts ignore self-imposed international WTO obligations on the ground that WTO diplomacy requires ‘freedom of maneuver’ to ignore international legal obligations ratified by parliaments.

This contribution argues that the ever-greater importance of international ‘aggregate public goods’ (like efficient world trading, financial and environmental regimes) for the welfare of citizens requires more coherence between multilevel governance based on stronger multilevel judicial protection of individual ‘access rights’ to public goods (like human rights to democratic governance and transnational rule of law for the benefit of citizens) as crucial incentives

- for citizen support and accountability of multilevel economic and environmental governance;

- for reducing transaction and coordination costs of the millions of private and public actors in worldwide economic, environmental and legal cooperation; and

- for limiting other ‘collective action problems’ in multilevel governance of interdependent public goods.





Unfortunately, neither public goods theories nor the prevailing theories of ‘international law among sovereign states’ based on ‘constitutional nationalism’ offer coherent theories for ensuring that ‘multilevel governance’ protects transnational public goods and human rights for the benefit of citizens. The prevailing ‘Westphalian conceptions’ of worldwide economic and environmental treaties as reciprocal contracts among sovereign rulers that governments may freely disregard and violate to the detriment of their citizens, undermine interdependent public goods - such as efficient world trading and transnational rule-of-law systems based on democratic and judicial respect for international treaties ratified by domestic parliaments for the benefit of their citizens. The democratic legitimacy, support by citizens and effectiveness of multilevel governance of interdependent public goods require justification by, and stronger incentives for, ‘participatory democratic governance’, ‘stake-holder participation’ and leadership by ‘coalitions of the willing’ in protecting international public goods and related ‘common concerns’ of citizens.

Worldwide Intergovernmental Cooperation Fails to Protect International Public Goods for the Benefit of Citizens Constitutional democracies and theories of justice (e.g. by Rawls) insist that governance and law need to be institutionalized and justified by a ’four-stage sequence’ of constitutional, legislative, executive and judicial clarification of principles, rules and ‘public reason’ supported by citizens. Constitutional and cosmopolitan approaches to international governance claim that the governance failures of so many worldwide organizations are mainly due to inadequate ‘constitutional restraints’ on the delegation, limitation, regulation and justification of foreign policy powers and institutions.5 In the European Union (EU) as well as in the larger European Economic Area (EEA), the public goods of a 'highly competitive social market economy' (TEU, 2009, Article 3) and protection of the environment (TFEU, 2009, Article 11) are justified not only in terms of ‘output legitimacy’ but also of ‘input legitimacy’ such as constitutional commitments to 'rule of law and respect for human rights' (TEU, Article 2), multilevel democratic legislation and judicial remedies of the more than 500 million This term continues to be used by both the political EU institutions and the EU Court of Justice (e.g. joined cases CP and C-121/06 P, 2008) as the main justification for their disregard of legally binding WTO rules and WTO dispute settlement rulings.

For the ‘functional use’ of the term ‘constitutionalism’ as a political method for limiting abuses of power by using constitutional principles, rules of a higher legal rank and institutional ‘checks and balances’, and the distinction between ‘enabling, constraining and supplemental constitutionalization’, see Petersmann (1991, p.210 ff); Joerges and Petersmann (2006); Dunoff and Trachtman (2009).

Ernst-Ulrich Petersmann

European citizens as codified in the EU Charter of Fundamental Rights and the European Convention of Human Rights (ECHR). In conformity with the ancient European ideal of 'rule of law' as a constitutional restraint on 'rule by men' and their 'rule by law', all 30 EEA member states and 47 ECHR member states have accepted compulsory jurisdiction of international courts for judicial protection of cosmopolitan rights and transnational rule of law for the benefit of citizens. As European economic, environmental and human rights law is directly enforceable by EU citizens in domestic courts, the EU Court of Justice (ECJ) has had to render only 3 judgments in international economic disputes among today’s 27 EU member states since the 1950s. This de-politicization and rights-based enforcement of international economic and environmental regulation has contributed not only to the democratic legitimacy and popular support of economic law throughout Europe. It has also enabled more effective protection of European public goods (like the common market, democratic peace, transnational rule of law) than ever before in European history. Similar to the multilevel cooperation among national and European courts and the decentralized judicial enforcement of EU and EEA law, national, EU and EEA governance institutions and regulatory agencies cooperate ever more closely, as illustrated by the decentralized coordination and enforcement of EU competition, environmental and consumer protection rules and policies through multilevel cooperation among national, EU and EEA competition and other regulatory authorities, courts and non-governmental organizations. The ECJ emphasizes that the EU is ‘a Community based on the rule of law, inasmuch as neither its member states nor its institutions can avoid a review of the question whether the measures adopted by them are in conformity with the basic constitutional charter, the Treaty’ (Case 294/83 Les Verts, 1986, paragraph 23) and with the individual rights protected by EU law.

In the external relations, the EU institutions protect similar constitutional and cosmopolitan conceptions of international economic law in free trade, customs union and association agreements with numerous third countries. In worldwide organizations like the WTO, however, the prevailing power-oriented conceptions of WTO rules by the USA and other WTO members have prompted also EU governments and the ECJ to insist that EU compliance with WTO law and other worldwide economic treaties (like the UN Convention on the Law of the Sea) remains a matter of government discretion without effective legal and judicial remedies of EU member states and citizens against, e.g., welfare-reducing trade restrictions by the EU in blatant violation of the EU’s rule-of-law obligations under WTO law and EU law (e.g. TEU, 2009, Articles. 2 and 3; cf. Petersmann, 2011). 6 The lack of effective constitutional, parliamentary and judicial restraints on foreign policy discretion to redistribute domestic income for the benefit of protectionist interest groups entails that, in most states, discretionary trade and foreign policy powers have become ‘captured’ by ‘rent-seeking’ interest groups (e.g. antidumping, agricultural and cotton lobbies in the US Congress) to the detriment of general consumer welfare and other general citizen interests. Transnational rule of law and respect for international treaties ratified by national parliaments for the benefit of citizens are not effectively secured. The WTO Agreement remains the only worldwide treaty system providing for compulsory jurisdiction and ‘access to justice’ at the international level among WTO members (as regulated in the WTO Dispute Settlement Understanding) as well as in domestic legal systems. 7 Yet, WTO rules only exceptionally require governments to enable private economic actors to ‘challenge alleged breaches of Arguably, the claim by the political EU institutions to ‘freedom to violate WTO law’ and to ignore WTO dispute settlement rulings, like the ECJ’s judicial self-restraint and refusal to review the WTO consistency of EU trade restrictions - without effective judicial remedies of EU member states and EU citizens against adverse effects of illegal trade protectionism, are inconsistent with the EU’s constitutional commitments to ‘strict observance of international law’ (TEU, 2009, Article 3), ‘rule of law’ (TEU, 2009, Article 2), protection of ‘freedom to conduct a business in accordance with Union law’ (EU Charter of Fundamental Rights, 2009, Article 16) and ‘access to justice’ (EU Charter of Fundamental Rights, 2009, Article 47).

Cf. the comprehensive WTO legal guarantees of private access to domestic courts, for instance in the GATT (Article X), the WTO Anti-dumping Agreement (Article 13), the WTO Agreement on Subsidies (Article 23), GATS (1994, Article VI), and the TRIPS Agreement (Article 42 ff).

Cosmopolitan ‘Aggregate Public Goods’ Must be Protected by Cosmopolitan Access Rights and Judicial Remedies the Agreement’ (Article XX Agreement on Government Procurement) in domestic courts and, thereby, to act as private advocates for government compliance with WTO law. Even though most national legal systems require courts to interpret domestic laws in conformity with the international legal obligations of the country concerned (based on the presumption that governments act in conformity with international law), this ‘consistent interpretation principle’ and the WTO dispute settlement jurisprudence are often neglected by domestic courts whenever citizens request protecting transnational rule of law in conformity with WTO law and WTO dispute settlement rulings. Multilevel governance of global public goods remains ineffective because governments all too often avoid legal and judicial accountability vis-à-vis citizens for compliance with international treaties protecting interdependent public goods.



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