International economic law is in the middle of rapid sea changes, arising from converging demands for deep reform on all fronts. These reforms range from current initiatives to recast the orthodox substantive guarantees of foreign market access, investment protection, prudential regulation and financial stability to states’ choices between paths of unilateralism, bilateralism, regionalism, multilateralism, or some hybrid multi-speed variation between gradualism and compliance with economic commitments. They also include the formulation of different proposals to revise the dispute settlement mechanisms in world trade law, to rewrite the terms of investor-state dispute settlement, and to harden a definitive dispute settlement process for states’ international financial obligations. Beyond these main threads of reform, however, international economic law is also increasingly challenged to meet frontier regulatory challenges, such as those arising from new disruptive technologies in the “sharing economy” and their implications for ensuring fair competition through cross-border anti-trust laws.

Reforming the terms of international economic law (writ large) creates heightened opportunities for arbitrage. In this context, firms, third states, and other non-state market actors can more easily take advantage of disparities between international economic rules throughout different jurisdictions under-going their respective reform processes in treaty programs, regulatory design, and participation in international economic institutions. I argue that, beyond the escalating influence of international human rights in rewriting the terms of international economic law, international human rights—especially states’ duties in economic, social, and cultural rights—exist as a foundational normative imperative for states, which can help address the underlying arbitrage problem in a more anticipatory (and not merely reactive) way. While the acts of arbitrage of firms, third states, and other non-state market actors (who take advantage of lingering loopholes in the process of reforming international eco-nomic law) may well be technically “legal” acts in relative non liquet situations, arbitrage may also result in a push to the “regulatory bottom” that can jeopardize the progressive realization of international economic, social, and cultural rights within states. States will thus have to embed international human rights assessments in every step and phase of the design of international economic law reforms to confront and mitigate the underlying arbitrage problem in the ongoing reform of international economic law.

Continue reading Shifting Sands in the International Economic System: “Arbitrage” in International Economic Law and International Human Rights