What Legal Developments Have Lead to Greater Flexibility for International Trade and Investment, and Why?

Yoann

 Sapanel

What legal developments have lead to greater flexibility for international trade and investment, and why?

“If there were an Economist’s Creed, it would surely contain the affirmations “I believe in the Principle of Comparative Advantage” and “I believe in Free Trade”.” Paul Krugman

Since always, we find some reluctant people to this phenomenon of globalization. However for open economies, it is now a fact, international trade and investment can bring dynamic benefits from enhanced competition, innovation, and skill transfer. So we tend to associate globalization with growth and welfare, but how theses societies are coming here, what legal developments have lead to greater flexibility for international trade and investment? The first wave of globalization began around 1870, and quickly the need to contain sudden protectionist, that have a negative impact on global welfare, surges. The conference of Breton Woods held in July 1944 will be the first important stage in setting up the International Bank for Reconstruction and Development and the International Monetary Fund (IMF). Moreover, the conference proposed the creation of the International Trade Organization (ITO) in order to establish rules and regulations for trade between countries. This ITO never exists but one element survived: the General Agreement on Tariffs and Trade (GATT). The GATT is a contributor to economic welfare for all. As the Preamble of the GATT states, the objective is “raising standards of living, ensuring full employment and a large and steadily growing volume of real income and effective demand”.1…in reducing namely barriers to international trade. Since the creation of the GATT, there have been eight rounds of trade negotiations, and it is above all three phases: the first one, from 1947 until the Torquay round concerned freezing and reducing existing tariff levels. The reductions were largely confined to developed countries. For example, during this round in...