I. Introduction
The obligation to distribute trade policy favors/advantages/privileges/immunities equivalently between foreign states, the “most favored nation” (MFN) principle, is commonly described as a core, if not the central obligation of international trade law.Footnote 1 The World Trade Organization (WTO) Appellate Body described it as the “cornerstone of the [General Agreement on Tariffs and Trade (GATT)].”Footnote 2 The phraseology reflects a deeply sedimented sense in the community of international trade lawyers that there is something fundamental about the MFN obligation; that it has a critical place in the project of international trade law. This sense of fundamental-ness is ultimately owed to the notion that the MFN norm encodes a vital non-discrimination quality, and that this non-discrimination is constitutive of a rules-based international order. Below, I show that this correlation, between MFN, the quality of non-discrimination, and the possibility of a rules-based order, is, in fact, deeply controversial. And on that basis, I further ask if our shared sense about the fundamental-ness of the MFN norm is necessary.
The recent turn in U.S. trade policy toward bilateral tariff deals jettisons the MFN principle (apart from also directly violating the WTO obligation to not raise tariffs above a bound rate).Footnote 3 For a legal regime in which crisis has been a dominant theme for almost a decade now,Footnote 4 this latest turn might be a “coup de grace.”Footnote 5 As one set of commentators has noted: “de facto … the U.S. has exited the multilateral trading system.”Footnote 6 Or, as another put it, “We are now facing for the first time since the inception of the multilateral system a total disregard for its rules.”Footnote 7 In what seems like clutching at straws, ideas have been floated as to how, counterintuitively, countries responding to the bilateral trade deal game, might end up in an ersatz tariff reduction and rebalancing round, bring those negotiations into the WTO MFN fold, and save the multilateral regime.Footnote 8 The idea that a key principle of international economic order, “non-discrimination among trading partners,” has been routed has even led to calls for a new multilateral trade organization without the United States.Footnote 9 This commentary, spurred on by our latest crisis, re-inscribes the idea that the MFN rule has a critical place in the project of international trade law. Should this be the case?
As noted above, MFN is widely viewed (alongside the “national treatment” obligation) as the expression of international trade law’s stress on “non-discrimination”; and non-discrimination is understood as critical for a “rules-based” international order.Footnote 10 Its presumed antithesis, discrimination, is widely seen as the defining feature of a regime in which power, rather than rules, dominate.Footnote 11 But the idea that MFN expresses an ideal of non-discrimination which sustains a rule-based order, is a discursive proposition that has emerged in history. If international trade law is a discipline, which is to say that it is constituted (at least in part) by its scholars and practitioners,Footnote 12 then its foundations were built around claims about MFN’s centrality. In one of the earliest texts consecrating the discipline, GATT Legal System and World Trade Diplomacy, Robert Hudec noted: “if the General Agreement had one dominant purpose, it was to stop the widespread vice of bargaining for discriminatory commercial advantages.”Footnote 13 It is through the embellishment and repetition of this claim about the foundations of the GATT legal system that an MFN mythology has emerged. This Article offers an intellectual genealogy of that emergence and demonstrates that taking this genealogy seriously offers some reasons to question our sanguinity about MFN.
What I demonstrate here is that international trade law academics and practitioners have constructed, over time, a sense about MFN’s fundamental-ness. Looked at one way, MFN is an ordinary international obligation entailed by a treaty. In the WTO legal system, it is a benefit that a state receives for acceding to a multilateral system for reciprocal reduction in trade barriers.Footnote 14 The obvious usefulness of MFN for creating a line along which discrimination operates is also known as a historical matter.Footnote 15 But in the community of international trade lawyers, MFN also operates as a mythology,Footnote 16 about which a higher order signification is habitually articulated. The use of words like “fundamental” and “cornerstone” in pedagogical materials about the discipline (and dispute settlement reports) testify to this mythologizing. As texts through which a legal discipline is reproduced and new participants interpellated into an epistemic community, these pedagogical materials stand as excellent evidence for a discipline’s mythologies.Footnote 17 As noted above, the claim about MFN’s fundamental-ness was at the heart of the discipline’s emergence, when international trade was constituted as an object of legal study.Footnote 18 This has been reproduced and amplified through the invocation of “political and economic rationales” underlying it.Footnote 19
To be clear however, my view about this disciplinary sensibility does not suggest that international trade lawyers are exclusively concerned about MFN. To the contrary, I accept that a number of normative views about law, economics, and politics shape our sense of what is core to international trade legal regime, and therefore, different legal obligations are often viewed as critical. If abstract restraint on states exercising power is key to the legal regime, perhaps the dispute settlement procedures are central;Footnote 20 if protection is anathema, then perhaps the national treatment obligation;Footnote 21 or if distortion of some efficient pattern of trade is the main concern, then obligations restraining the use of subsidies (and trade remedies) are key.Footnote 22 Nevertheless, it is worth repeating that it is the MFN-as-non-discrimination norm (and not even national treatment) that invites multiple invocations of fundamental-ness, and habitual references to its numerous consequentialist justifications. This then offers sufficient reasons to investigate the emergence of a mythology. Additionally, the fact that state practice around MFN has been inconsistentFootnote 23 is especially good reason to investigate the persistence of a disciplinary myth.
The claim about MFN’s fundamental-ness is a composite claim: first, there is an internal claim about normative quality—MFN is non-discrimination;Footnote 24 second, there are consequentialist claims about how MFN-as-non-discrimination creates a good order. My strategy below is to first query how the consequentialist claims, which have to do with international peace and economic efficiency, gained salience. Historicizing the consequentialist justifications, in turn, offers us grounds to question the broader claim about MFN’s quality as a non-discrimination norm.
It is often noted that MFN, as a non-discrimination norm, assures peace.Footnote 25 Discrimination, being the vector of conflict, the argument goes that MFN (through widespread use, or codified in a multilateral treaty) serves to protect peace by preventing discrimination between equal sovereign states.Footnote 26 Below, I show that this claim about non-discrimination and peace, itself rooted in a claim about the correlation between discrimination and conflict in the inter-war period,Footnote 27 is an abstraction from the concrete experience of inter-imperial conflict about the management of colonial markets and raw materials. MFN assumed salience as a solution to the political problems that trade discrimination engendered between European states over managing colonial territories. Non-discrimination, in essence, became valuable as an obligation between one set of states in how they organized the exploitation of colonies.Footnote 28
Another commonly made consequentialist claim is about economic efficiency. MFN-as-non-discrimination, it is argued, allows comparative advantage, and the market principle, to work, allowing people to buy cheapest (and sell dearest).Footnote 29 Yet, what the historical record shows is that this specific argument, about the economic virtues of MFN, gained salience precisely at a moment when the reach of the norm was constrained. Rather than universalizing MFN—as one might expect is the fate of a “non-discrimination” norm spreading economic efficiency on a global scale—the efficiency justification served to sharpen the divide between the East and the West in the early Cold War era. The debate over the applicability of the MFN norm to the East-West trade in fact served to limit the progressive development of international law on economic non-discrimination.
The two historical arguments together show that through much of the twentieth century, MFN had as much to do with the eminently discriminatory act of drawing lines—between metropoles and colonies, or between the East and the West—as it did with the idea of non-discrimination. In other words, by historicizing the consequentialist justifications for MFN, I am able to show that the internal claim about normative quality—MFN is non-discrimination—is difficult to sustain. In terms familiar to critical scholars of international law, it may be reformulated to say that the non-discrimination function has been historically unintelligible except in relation to the outside that the MFN obligation constructed.Footnote 30
If MFN is so historically tangled with discrimination and boundary-drawing, how is it that international trade lawyers have come to share such a deep-seated sense about its value as rule-promoting, universalist, non-discrimination norm? This sensibility, I argue, is the product of a relatively recent, sharp, intellectual turn, associated with the influence of ordoliberal ideology in GATT circles.Footnote 31 As ordoliberals came to conceive international trade law to be the legal form of organizing a worldwide system of price signals, MFN became re-articulated as fundamental to that project. But even if radical, this ordoliberal project was at least remarkably coherent. The more important point, however, is that today, while we are unlikely to easily find international trade lawyers steeped in ordoliberal ideology—willing to speak the language of worldwide price signals—the sense of MFN’s fundamental-ness, remains.
By demonstrating the intellectual contexts through which an MFN mythology—that it is a non-discrimination norm which is critical to the project of a rules-based order—emerged in history, this Article underscores the contingent character of what otherwise appears as a transcendental proposition. In that broad sense, this Article is situated in a broader critical-historical literature in international law. For international trade law in particular, both Anne Orford’s argument about the shifting politics of “free trade” as a liberal slogan over the longue durée, and Quinn Slobodian’s claim about the WTO legal system’s intellectual inheritances lying much less in the laissez faire liberalism of the nineteenth century than in the German language ordoliberalism of the post-war era, are important earlier contributions in this vein.Footnote 32 To this tradition, this Article brings a greater degree of granularity. It allows us to see the influence of ordoliberal ideology, not as a general matter, but in the construction of a very particular MFN-centric idea of international trade law; and it shows that focusing on the period between the inter-war years and the 1980s reveals something specific about the relationship between liberal ideology and trade law doctrine.
The fact that MFN has historically structured discrimination is not, by itself, a surprising claim. Given the considerable length of time over which the MFN clause has been a feature of treaties, its usefulness in shaping alliances, and securing imperial commercial networks should be expected, and, this has been written about.Footnote 33 International lawyers also acknowledge that in one form—as a unilateral clause, long discarded—MFN was useful in organizing extraction by the West from the non-West.Footnote 34 But my claims here are not simply about the use of MFN for discrimination or its entanglement with empire. Rather, what the twentieth-century-focused intellectual history here contributes is something more specific: it shows that the liberal political and economic justifications for MFN, that raise it to centrality in the post-war project of a rules-based economic order, emerged in decidedly discriminatory contexts. This makes the claim about its non-discriminatory quality all the more puzzling and requiring an explanation. By synthesizing the first two historical claims about the imperial and Cold War context, with the third, about ordoliberalism, this Article provides precisely this explanation.
To what end? My intellectual-historical account of the strange emergence of one core idea that has shaped international trade law is a prompt to consider the role that alternative normative principles have played in shaping international trade regimes, but which are marginalized in the disciplinary imagination. If the historical record points to a relative weakness of the MFN-as-non-discrimination norm by showing MFN’s entanglement with discrimination, and, if it shows that a radical defense of MFN’s fundamental-ness belongs to a very particular ideological formulation, then should international trade lawyers continue to hold the norm dear? To be clear, it does not follow from my historical reconstruction that MFN cannot be a valuable rule for organizing international economic relations. There are pragmatic justifications for MFN for example, such as allowing more across-the-board liberalization, and creating a multilateral set of rules to govern countries in their simultaneous relations with each other.Footnote 35 But these pragmatic justifications hardly raise MFN to the hallowed normative status that it is associated with. That sensibility instead, is the outcome of the more powerful claims about international peace and economic efficiency that eventually come together in a unique, ideologically charged, matrix. This Article reconstructs the emergence of that sensibility, and through that reconstruction, lays the foundation for investigating alternatives. Ultimately, what the argument here shows is that the prevailing academic sense of MFN’s fundamental-ness—the idea that it is critical for a project of a rules-based order—is exaggerated. Thinking of MFN in terms of fundamental-ness is ultimately, a habit of mind which we should prepared to discard. In that vein, as a final argument, this Article explores how historically, international legal orders have rested around a different principle with deep roots in state practice: planning.
At first blush, this pivot to planning might appear as a sharp turn away from the historical thread that this Article weaves about the history of non-discrimination claims as intimately tied to the creation of discriminatory boundaries. But contrary to what appears first, there is a deeper continuity that inheres in this final claim. As Part V of the Article shows, planning is MFN’s true antithesis, understood both conceptually, and historically. Planning expresses a view of exchange that is alive to the thing that is being traded, while MFN relies on agnosticism about the thing: only the price matters. This conceptual opposition plays out in history, as planning was suppressed as a principle of international order, precisely in the moment that the radical ordoliberal justification for MFN gained salience. Therefore, my final pivot to planning is in essence the revelation of the historical dialectic. But let me also be clear at the outset about what this final pivot is not about. I am not offering a set of justifications for why planning should become central to international trade order. Instead, I argue that planning has been an important norm for international trade law, but this history has not been properly considered. This epistemic failure has created the conditions for the emergence of MFN mythology. An account of international trade law that properly cognizes planning as a normative principle is therefore necessary.
The remainder of this Article is structured as follows. In Part II below, I demonstrate how the claim about the peace-enhancing quality of the MFN norm is inextricably linked to the question of management of colonial territories. The idea that non-discrimination in questions of trade helps dampen conflict was articulated in the context of claims over access to raw materials and markets of colonies. Linguistically, and conceptually, the MFN obligation in the GATT derived from that universe. In Part III, I show that claims about MFN’s economic virtues gained salience in the early Cold War era, paradoxically, to limit the development of the non-discrimination norm in international law. Economic efficiency, I demonstrate, was employed as a rhetorical device to argue that the MFN obligation ought not to structure the trading relations between the West and the Communist bloc. The linkage between MFN and efficiency, served to sharpen the Cold War divide, contrary to the universalism that we commonly associate with non-discrimination. Part IV records the emergence of a fundamental intellectual breakthrough, showing how a radical, and truly universalist, defense of the MFN norm was mounted by ordoliberal intellectuals associated with the GATT. It shows how our contemporary sense of MFN’s fundamental-ness is genealogically linked to this ideological universe. Finally, Part V shows how planning has historically been central to international trade law, and as a principle, was dialectically bound to MFN. The construction of the MFN mythology thus relies not just on the abstractions described in the prior parts, but also on writing a story of normative conflict out of the record.
II. Peace, Non-discrimination, and Empire
In the chapter discussing the MFN obligation, a leading textbook by Peter Van den Bossche and Werner Zdouc on GATT/WTO law begins with the following statement: “discrimination in matters relating to trade breeds resentment and poisons the economic and political relations between countries. Moreover, discrimination makes scant economic sense ….”Footnote 36 As that opening statement suggests, it is a widely held notion among international trade lawyers that non-discrimination obligations codified in international trade law, especially the MFN obligation, solve—or at least can solve—some very pernicious problems of international trade relations.
This part examines the discourse around the political problems arising from trade discrimination, and value of the MFN norm in solving it. Standing behind the argument about discrimination and strife is a crucial historical claim. As any work on post-war international trade order would likely stress, during the inter-war years international trade broke down as nations adopted high trade barriers, which were, importantly, discriminatory barriers.Footnote 37 This discrimination is widely correlated with the rising conflict of the inter-war period.Footnote 38 Emblematic of this inter-war context was the British system of imperial trade preferences, through which Britain drew a wall around its empire.Footnote 39 It is commonly understood that in designing the post-war international trade order, the Americans were particularly keen to dismantle this system of imperial preferences.Footnote 40
If the inter-war period was marked by the rise of trade discrimination and correlated conflict, the post-war international trade order, centered around the GATT is seen as a radical departure from this universe of discrimination. Given the lessons of the inter-war era, the narrative goes, post-war planners emphasized non-discriminatory trade, codified through Article I of the GATT.Footnote 41 This settlement on non-discrimination appears as the unfolding of historical rationality. Commentaries on the GATT MFN provision often allude to the rich historical vintage of MFN clauses in general, which have appeared in treaties for centuries.Footnote 42 The GATT MFN clause is connected to the nineteenth-century European system of commercial treaties that supposedly made up the nineteenth-century liberal order.Footnote 43 The fact that the “unconditional” form of the MFN clauseFootnote 44 was adopted in the GATT, and that states had rejected the conditional form of the clause by the end of World War II is seen as the domination of liberal rationality.Footnote 45 The adoption of the unconditional MFN form in U.S. treaty practice in 1923,Footnote 46 the efforts of the League of Nations to encourage states to adopt unconditional MFN obligations amidst strife,Footnote 47 and the rejection by architects of post-war international order of discrimination in favor of an unconditional MFN,Footnote 48 all seem to appear as steps in the emergence of a more rational international law that supports peace over conflict.
All of the above helps connect the GATT MFN obligation with a powerful genealogy. It appears as a solution to the general problem of international strife that discrimination had caused, and as the product of a liberal evolution toward a more pacific international order.Footnote 49 Now to be sure, the historical claim that the post-war GATT was centered around the MFN principle, “the most important single rule of conduct in international trade,”Footnote 50 gets something right about the post-war moment. Yet, that is also a claim that obscures the history of inter-war discrimination, and the post-war settlement on non-discrimination in two ways. First, the claim rests on an abstraction from the specific conditions of inter-imperial conflict of the early twentieth century to arrive at the general conclusion that discrimination, in matters of international trade, breeds conflict.Footnote 51 As I show below, what is naturalized as a connection between discrimination and strife, is an abstraction from the real conflict between Euro-American powers over access to the trade of the colonized regions of the world. Second, the idea that the elevated importance of the MFN principle in post-war international order reflects an evolution toward a more rational international law, obscures the specific importance of non-discrimination as a tool of imperial and counter-imperial diplomacy.
The fact that the MFN principle in the post-war GATT bears some connection to the imperial era that precedes it, is by itself, a relatively modest claim, even though the connection between imperialism and the GATT is still an under-explored area of research.Footnote 52 What the argument in this part however demonstrates is something more specific. It shows that a powerful political rationale—peace through equality—which is routinely cited by international lawyers for why MFN originally became a core GATT obligation and should still be understood as critical for a rules-based order, emerged in the context of empire. As I will demonstrate below, both elements of the rationale, peace, and equality, have imperial referents: peace was theorized as peace between imperial entities that were in conflict, and equality referred to a principle of equal access to colonial raw materials and markets. Of course, it cannot follow from this demonstration that there is no theoretically plausible connection between MFN and peace, nor that every such assertion necessarily requires an imperial context to be intelligible.Footnote 53 Nevertheless, it is key to note that claims about the relationship between the non-discriminatory system of liberal trade that the GATT is said to have inaugurated and peace is often made by reference to, and underscoring the trade discrimination of the inter-war era.Footnote 54 Thus, what the argument in this part demonstrates, at the very least, is that the contemporary repetition of the claim about MFN and peace, is a fraught exercise in abstraction.
Below, the argument unfolds in two steps. First, I show how inter-war imperial conflict between European powers became refracted through the lens of trade discrimination, and how the solution, liberal trading arrangements (with a stress on MFN), itself was made possible owing to an imperial imagination of world space. Second, I show how the GATT, whose birth is commonly attributed to American leadership, and its policy of non-discrimination, in reality, reflects the codification of an empire-centric solution to the problem of conflict. Through a study of American foreign policy, I show that the insistence on MFN through the GATT instrument should be read in light of the empire that preceded it and the Pax Americana that succeeded.
A. European Inter-war Conflict and Imperialism
The widely cited economist of international trade, Jacob Viner, argued in 1947 that “[t]ariff discriminations are invariably resented by the countries which are discriminated against, and three centuries of experience demonstrates that under all circumstances they operate to poison international relations and to make more difficult the task of maintaining international harmony.”Footnote 55 As the extract from Van den Bossche and Zdouc’s textbook at the start of this part suggests, this argument about discrimination is deeply sedimented, and continues to be repeated. Yet one must pause to consider the historical context for Viner’s claim. During the closing stages of World War II, Viner wrote that the trend from the 1870s had been an increase in trade barriers of “discriminatory character,” which had the potential for “generating international friction.”Footnote 56 But as Viner recognized, these discriminatory trade barriers were, in significant part, about “preferences to the mother-country in a colonial area.”Footnote 57 More generally, the colonial aspect of economic strife would be evident from Viner’s view that “[t]he major international conflicts of economic interest in the past have arisen out of rivalry for export markets, for trade routes, and for access to sources of supply of essential commodities.”Footnote 58
1. Trade Discrimination, Conflict, and Colonial Trade
My argument is that our contemporary narrative about the connection between trade discrimination and conflict is an abstraction from a specific inter-imperial strife about colonial control that intensified in the era between the two World Wars. The significance of colonial territories to the issue of discrimination in international trade was, of course, entirely obvious to inter-war observers. Writing in 1918 about the question of whether discriminatory tariff policies of states ought to be the subject of international consideration, the American diplomat William S. Culbertson would emphasize:
If there is any one thing above all others that the present war should end forever, it is colonial monopoly and the exploitation of the less civilized parts of the earth in the interests of the business classes of the nations which have been fortunate enough to control those parts politically.Footnote 59
The extract above appears in the context of Culbertson’s argument that the tariff policies of a state in respect of its colonies should properly be subject to international scrutiny. It serves to show that the problem of tariff discrimination was intimately linked to colonial control. Tariff discrimination was a method of controlling access to the resources of colonized areas, and therefore, a central tool of inter-imperial rivalry. The point becomes even more plain if we consider the claims made by the main European aggressor in the lead up to World War II, Germany, during the inter-war years. In what was a statement of grievance (and a defense of Germany’s belligerent stance), Hjalmar Schacht wrote, in a 1937 issue of Foreign Affairs, that Germany would “remain a source of unrest,” as long as the “problem of colonial raw materials” was not solved.Footnote 60 By virtue of the settlement at Versailles, Germany had become a “have not” country: a European, industrialized, “large Power”Footnote 61 without colonies. Schacht argued that “in the golden age before the World War the problem of colonies and raw materials did not have the importance” as it did after 1919.Footnote 62 But as the principles of free trade and gold standard exchange had been jettisoned in those inter-war years, easy access to raw materials, through market exchange was no longer possible. The states that had colonies to exploit were doing so aggressively, and by drawing boundaries of access around them, were essentially pursuing autarchic policies, Schacht argued. The only legitimate solution, he continued, was for Germany to have its own colonies to exploit. In Schacht’s framing, the German claim for colonial territory was not about “Imperialism or Militarism.”Footnote 63 It was “a question of her economic existence.”Footnote 64
There is little to be gained by evaluating the ideological work that Schacht was doing in addressing Germany’s counter-imperial ambitions to an American audience. Instead, it is useful to see how the expression of inter-war belligerence—attributed to the decline in free trade principles, the rise of autarky and discrimination in international trade—was specifically about trade in an imperial context, and importantly, about colonial trade. Although to today’s audience Schacht’s essay might read as a collection of morally desolate statements, in the inter-war context, it posed an entirely righteous question about international relations. Germany, liquidated of its colonies by the Treaty of Versailles,Footnote 65 presented itself, alongside Italy and Japan, as a “have not” nation during the inter-war years. The “have not” status was the trope that organized its claim against the victorious “have” powers of Europe for redistribution of colonies.Footnote 66 Their equation was straightforward: having colonies allowed imperial European states to monopolize access to raw materials and markets and use colonial territory for its own surplus population and investments. Without this access, German industrial production—and therefore its economy—was crippled.Footnote 67 Ergo, Germany needed colonies of its own.
The German claim for colonies was naturally subject to careful evaluation outside Germany, especially in Britain. Out of this evaluation emerged the view that the Germans had a righteous claim: of being denied access to raw materials and markets. But, the solution did not lie in redistributing colonial territories in favor of Germany.Footnote 68 In part, this was because those who were commenting on the German claim believed that the fears of colonial monopoly was overstated,Footnote 69 and that colonial raw materials were anyway not the bulk of the problem.Footnote 70 Yet, as the noted British economist Lionel Robbins agreed, what was correct about the German claim was the fact that Germany had been denied access to raw materials and markets by the broader protectionist tariff systems—Smoot Hawley in the United States, Ottawa Preferences in the British Empire—that had sprung up.Footnote 71 These systems had made it difficult for Germany to obtain the necessary means to pay for raw materials.Footnote 72 The solution, Robbins argued, lay in shifting the principles of international economic relations, rather than in a political resettlement of colonies. As we shall see below, it is this shift—that international economic relations between European powers should be organized on non-discriminatory lines—that lies at the heart of the widespread assertion about the connection between MFN and peace.
To return to the German story: in whichever way one looked at the problem, whether the colonial trade was being monopolized by the “have” states or not, it was clear to many that the inter-war system of trade and finance, had made it difficult for a reparations-bound GermanyFootnote 73 to pay for resources. The liberal economic solution thus centered on the removal of those restrictions on international trade and payments that states had enthusiastically embraced. If trade was to be organized on liberal lines, the problem of differential colonial possessions would disappear. In a lecture titled “The Economics of Territorial Sovereignty,” Robbins argued that under conditions of liberal international policy, there was little economic benefit to the possession of colonies. The main benefit that the British derived from empire was that it allowed liberal freedoms to operate over a large area, enabling the division of labor. It was in essence, a “negative gain” that prevented the problems that would have arisen were British colonies in the possession of a different power that would enact restrictive policies.Footnote 74 From this premise, Robbins concluded that the “have and “have not” problem in international relations, could not be solved through the redistribution of colonial territories, “a re-partition of the world.”Footnote 75 The solution lay in the “total abandonment of restrictionist policies and the construction of an international political system under which such policies cannot arise.”Footnote 76
Thus, while Germany sought a counter-imperial solution for its economic decline and political humiliation in the inter-war years, a non-German commentariat reframed the problem as one of erosion of liberal internationalism. Indeed, Schacht, who stressed the German demand for colonies, had viewed the core problem similarly: “In the golden age before the World War the problem of colonies and raw materials did not have the importance it has today.…The markets where raw materials were procured were completely free.… Long term commercial treaties assured the freedom of international trade.”Footnote 77 From these premises, while Schacht drew a defense of the claim for colonial redistribution, others, like Robbins above, argued, more simply, for a return to nineteenth-century liberalism. At the heart of that liberal solution, as we shall see a little later, was the MFN clause. But before we reach the MFN clause in specific, it is important to appreciate how the liberal policy of non-discrimination, as the solution to the problem of inter-imperial rivalry, was itself bound up with the imperial backdrop in which it was articulated.
2. Empire and Liberalism: The “Non-discrimination” Solution
The realization of Robbins’s wise counsel—international economic organization along liberal internationalist lines—was, as is well-known, postponed to the end of World War II when treaties like the GATT were concluded.Footnote 78 But to understand the precise contours of post-war liberalism, it is crucial to understand how liberal internationalist arguments related to the imperial context.
Robbins’s endorsement of liberal politics had, formally speaking, a universal character. Starting from general premises, he argued that territorial sovereignty ought not to carry with it the “right of restriction.”Footnote 79 National states, Robbins continued, ought to regard themselves as units of “international local government,” having no more the right to administer their territory with an eye to monopoly than local administrations might administer counties.Footnote 80 Exploiting colonial territories in a monopolistic manner, through discriminatory trade policies was thus, in Robbins’s view, entirely illegitimate. But this liberal, putatively universal, international political system—protecting free trade, free migration, and free investment—still assumed a continuing colonial organization of the world economy in a deeper sense. When describing the advantage of colonial possessions as illusory, Robbins argued that as long as the British empire ran its colonial policy on the principles of free trade and Open Door, it would have scarcely made a difference to Britain if these colonies were placed under an “international administration” that followed a similar open policy in administration.Footnote 81 In invoking an “international administration” Robbins would have had a concrete referent: the Mandates system of the League of Nations for governing the erstwhile colonies of Germany and the Ottoman Empire, as a “sacred trust of civilisation.”Footnote 82 Thus, his endorsement of a liberal international politics, harkening to an erstwhile British policy, cannot be understood except as framed by the colonial backdrop. A liberal international politics essentially stood for a system within which colonies were either administered by a liberal power like Britain or were internationally managed as a liberal project.
The twinning of liberal economic principles and the colonial organization of world space was, in fact, a general motif in the inter-war have/have-not debate. Published just prior to the outbreak of World War II, the Royal Institute of International Affairs, in a report titled “Raw Materials,”Footnote 83 noted that a background assumption for the “have not” argument was that the metropolitan sovereign can exploit the colonial territory.Footnote 84 Then, in evaluating the legitimacy of the have-not claim—that the haves were monopolizing colonial raw materials—the report noted that large swathes of colonial territory were in fact, not free to be exploited as a monopoly.Footnote 85 In respect of many colonial territories, administering states were under legal obligations to ensure commercial equality.Footnote 86 These obligations followed from the Mandates provisions in the Covenant of the League of Nations,Footnote 87 or from other multilateral treaties governing colonial territories, such as the General Act of Berlin,Footnote 88 or the successor Convention of St. Germain.Footnote 89 Together, they could be used to puncture holes in the German case that monopolization of colonial raw materials by the “haves” lay at the root of German misery. But more importantly, for our purposes, they demonstrate the imperial landscape upon which ideas of liberal economic organization were shaped. International legal obligations were meant to ensure equality between the industrialized powers in respect of colonial territories denuded of sovereignty.
The have/have-not argument, representative of tensions between industrialized nations over the question of access to raw materials, also became the subject matter of scrutiny by the League of Nations. The League’s “Committee for the Study of the Problem of Raw Materials” was constituted in 1937, which published its report later that year.Footnote 90 The resolution of the League’s Assembly through which the study was commissioned noted that there was a need for an “enquiry into, the question of equal commercial access for all nations to certain raw materials,” which ought to be undertaken with the collaboration of the “principal States … having a special interest in the matter.”Footnote 91 Based on this, the committee assumed the responsibility to evaluate the extent to which international co-operation could go to “facilitat[e] commercial access to raw materials for all countries in the world engaged in peaceful trade.”Footnote 92
The committee began by noting that the problem of raw materials had been largely discussed thus far, as a problem of colonial raw materials. The committee’s view however was that colonial raw materials represented a “relatively unimportant proportion of total world production,” even while it agreed that colonies ought not to be neglected as important sources of raw materials.Footnote 93 This paradoxical position, that colonies were at once to be regarded as important sources, and that their production of raw materials were a relatively small proportion, is explained best by the prevailing sense of the time that colonies ought to be exploited more fully. It is in connection with this idea of a fuller exploitation in fact, that the committee offered its fullest consideration of liberal principles. The committee noted that states that “control colonial territories are in a position to secure special privileges in the colonial territory for nationals of the metropolitan country.”Footnote 94 This form of discrimination constituted a restriction on access to, and development of, colonial raw materials. Therefore, the committee recommended “a progressive modification of this state of affairs in a more liberal direction.”Footnote 95 The committee further considered the view of some states that there were colonial territories that were yet to be fully exploited, and that in respect of those territories, a regime of “open door,” as prevalent in the Congo Basin, ought to be applied.Footnote 96 In the revealing words of the report: “the hope that principle of unrestricted access … might be applied as liberally as possible.”Footnote 97 Given its constitution, with representatives of have and have-not states surely pulling in different directions, it is no surprise that the committee could not offer a ringing endorsement to these liberal propositions about colonial management. But its report serves, above all, as telling evidence for the proposition that the central principles of liberal economic organization—unrestricted access, and equality—were irrevocably tied to colonial management.
The inter-war have/have-not controversy allows us to see through the fetishism that plagues contemporary scholarship as it blandly asserts a correlation between discrimination and conflict and extols the place of non-discrimination obligations in international trade law. It becomes clear that the modern tendency to view international trade law as oscillating between the correlated poles of protectionism and free trade, discrimination and non-discrimination, peace and conflict, is a recursion of the spectrum of colonial policy that oscillated between monopolistic exploitation, and enlightened management. In the context of rising conflict, both the German solution—a redistribution of colonial territories for exploitation—and its opposite, liberal, view—stressing non-discriminatory trade—remained firmly bound within a colonial spatial imagination. In opposition to the monopolistic-exploitation that the Germans resented, and simultaneously desired, the liberal position stressed open door—the policy of non-discriminationFootnote 98—and, in step with the nineteenth-century justification for empire,Footnote 99 obligations of trusteeship.Footnote 100 Non-discrimination obligations, as they were discussed in the inter-war years, were deeply intertwined with the management of colonial territories; they were obligations between industrialized nations, and about access to colonial raw materials and markets. The liberal sentiment at the heart of non-discrimination arguments simply assumed a two-tier globe, where some “peoples [were] not yet able to stand by themselves under the strenuous conditions of the modern world.”Footnote 101
To briefly summarize the point so far: the problem of trade discrimination in the inter-war years was often a problem of access to raw materials and markets, which was articulated by “have not” nations like Germany. Non-discrimination, in response, meant equal access, especially to colonial raw materials and markets. In the next section I will show how this empire-centric understanding of equal access appeared in the first blueprints of the GATT, with MFN as the key legal device. But even before this conjuncture between non-discrimination, “equal access,” and MFN occurred in the text of the GATT,Footnote 102 it is important to note that there existed a clear connection between the empire-centric liberalism of the inter-war era and MFN in particular. The League of Nations, which became an institutional home for projects to revive and govern economic internationalism,Footnote 103 dispensed a series of recommendations for the generalized adoption of unconditional MFN obligations in commercial relations.Footnote 104 As Madeleine Lynch Dungy has recently explored, raising MFN to normative priority was a central plank in the League’s efforts to restore economic globalization, transforming the system of bilateral commercial treaties of the nineteenth century into a multilateral legal framework.Footnote 105 This project of generalizing MFN unfolded in a context marked by the geopolitics of maintaining an empire, and containing rival imperial ambitions.Footnote 106 What the intellectual history above has shown, is that empire was not so much a problem for the project non-discrimination—a bug of the geopolitical context—but constitutive of it. Both the discrimination MFN was to solve, and the non-discrimination MFN was to achieve, was constituted by the division of the globe into metropoles and colonies, imperial and imperialized entities.
B. United States, the GATT, and Non-discrimination
Above, I have suggested that the intellectual origins of post-war settlement on MFN lay in empire-centric inter-war arguments about the governance of colonies. This is one part of the story. The other, more familiar, story revolves around American leadership in shaping the multilateral, non-discriminatory, post-war order. The creation of an international regime centered around non-discrimination is widely seen as a victory of an American principle.Footnote 107 “[N]ondiscriminatory access to supplies and markets” was seen as a cornerstone of American foreign policy.Footnote 108 The centrality of the MFN obligation under the GATT is then easily understood as the internationalization of an American doctrine. The shape of the GATT is widely attributed to American foreign policy ideology, itself shaped by the influence of the free trade dogmatism of Roosevelt’s Secretary of State, Cordell Hull.Footnote 109
In historical sketches of the foundations of the GATT, the American preference for an “open, non-discriminatory, and liberal trading order”Footnote 110 is frequently presented in contrast with the British position in post-war negotiations, through which it hoped to retain, in some measure, the system of imperial preferences.Footnote 111 But the contrast between the American insistence on non-discrimination, and the empire-protective British stance tends to occlude from view the broader imperial frame within which the terms of post-war international economic law were first settled. There are two distinct ways in which we can shine light on how imperialism is directly relevant for understanding the American authorship of the GATT. First, the language in which the United States framed its proposal for a post-war trade order reveals its entanglement in, and the enduring relevance of, the problem of colonial raw materials and markets. Second, the liberal strain in American foreign policy ideology, must itself be understood as a counter-imperial foreign policy meant to displace British domination for an American one.
1. The GATT Text: Connection to Empire
The negotiations for a post-war international trade order commenced on the basis of a document prepared by the U.S. State Department titled Proposals for Expansion of World Trade and Employment.”Footnote 112 The proposals sketched out the broad principles of a liberal international economic order managed through an international trade organization-to-be. A key purpose of a liberal international arrangement, and of the proposed organization was “to facilitate access by all members, on equal terms, to the trade and to the raw materials of the world.”Footnote 113 The distinction between the subjects of the principle, “member states,” and the physical space over which it operates, the “trade and raw materials of the world,” shows that these proposals framed within an imperial backdrop in which some sovereign states manage the whole territory of the globe. As I have noted above, this spatial imagination of world territory, marked by the distinction between sovereign states (including expropriated imperial states) and colonies, between the industrialized world and the resource producing world, was central to inter-war discussions about liberal economic principles. The inter-textual invocation, adoption, and endorsement of that inter-war liberalism can be seen in the following sentence from the Proposals: “the purpose is to make real the principle of equal access to the markets and raw materials of the world.”Footnote 114
The fact that the American proposals reflected a continuity rather than a break from imperialism was brought into sharp relief by the comments prepared by the Indian delegation—at the brink of Indian independence—on the Proposals. These comments are a particularly useful source because the Indian delegation was the only decolonizing delegation present at the early stages of the GATT negotiations. They noted that the stress on “equal access” was attributable to the fact that the bilateral Anglo-American negotiations, whose outcome was recorded in the Atlantic Charter, was centered around the question of equal access. “Equal access” was meant to govern competition between powers whose economic dominance depended on accessing raw materials for their domestic industries, and markets for their finished products.Footnote 115 Even though India endorsed the idea of an international order based on the MFN principle,Footnote 116 it registered its dissent on the “equal access” principle as it had been framed in the Proposals.Footnote 117 Likewise, one contemporaneous academic observer in India noted that the principle of “equal access … in so far it has any definite meaning at all, has harmful consequences for poor and undeveloped countries like India, specially when there are no corresponding obligations of equal access to capital goods or equal access to territories.”Footnote 118
Now, it is not my suggestion that we conclude on the basis of the observations above that the post-war order was being deliberately forged to perpetuate inequality between the industrialized world and other countries.Footnote 119 But the sharp reaction to the equal access principle, from a key participant in the post-war negotiations for an international trade regime, serves to demonstrate the affinity between non-discrimination and the imperial ordering of international relations. The American proposals, furthering the idea of non-discrimination, were aimed at solving a problem that was internal to industrialized countries, and addressing questions of competition between them, in a taken-for-granted imperial backdrop.Footnote 120 The statements in India should be read as holding up that mirror.
2. American Foreign Policy and Empire
Apart from the fact that the Proposals, from which the GATT emerged, drew on the liberal-imperialist arguments of the early twentieth century, the more general entanglement of American foreign economic policy with questions of empire must also be noted. We know that American foreign economic policy became centered around the reciprocal reduction of tariffs after 1934 when Congress passed the Reciprocal Trade Agreements Act, which empowered the president to reduce U.S. tariffs through reciprocal bargaining with other nations.Footnote 121 This represented a break from the sharply protectionist direction that American policy had taken with Smoot-Hawley tariffs. The change toward a more liberal foreign economic policy took place under the stewardship of Secretary of State Cordell Hull, whose faith in liberal doctrine—free trade is the foundation of peace—has been widely written about.Footnote 122 The post-war GATT is seen as the internationalization of this faith, elevating the American system of reciprocal, non-discriminatory tariffs reductions into international law.Footnote 123
Few would disagree that the internationalization of American foreign policy was a projection of American power globally.Footnote 124 But there is a simultaneous narrative that by encoding the liberal tenets of its foreign policy, especially non-discrimination, into international law, the United States helped create a post-war order that constrained its own exercise of power.Footnote 125 In their law school casebook on WTO law, Mark Wu and Petros Mavroidis note for example: “As the ascendant power during the post-war years, the US could have extracted a better deal had it chosen to negotiate with its trading partners one-by-one…. But it recognized that by requiring MFN treatment, the trading order … would be built on a more solid foundation.”Footnote 126 This narrative however, occludes from view the fact that “non-discriminatory” international legal order was an articulation of the vision of a new American empire.Footnote 127 As the historian Warren Kimball has argued, Hull’s free-trade boosting foreign policy can be properly understood as the “imperialism of equality.”Footnote 128 While Hull is credited for putting American foreign policy on a freer-trade path, which would, in turn, shape post-war international order, Kimball argued that more than liberal trade, Hull mainly favored non-discrimination. Hull stressed equal access to raw materials and believed that the “raw materials of the colonial empires should be made available to the industrial nations of the world.”Footnote 129 Even an elementary degree of realism would allow us to conclude therefrom that this non-discrimination in access would have particularly favored the United States, which was then establishing itself as the leading industrial nation. In short, non-discrimination was a counter-imperial strategy, to displace one empire (British) for another.Footnote 130
Let me briefly summarize the argument so far. There is a widespread narrative that the GATT, with a focus on non-discrimination, emerged out of lessons learned from the inter-war era when conflict was exacerbated by discriminatory trade barriers. What I have argued above is that this generalizing narrative is an abstraction both from the concrete experience of discrimination and conflict between colonial (and erstwhile colonial) powers in the inter-war era, and from the specific liberal arguments that emerged in that context. Inter-war liberalism, to which the GATT owes its intellectual foundations, was shaped by the colonial organization of the globe. Reference to non-discrimination as foreign policy was often about the management of colonies rather than about generalized equal treatment between all states. The colonial context, in which industrial states accessed and virtuously governed colonial territories, was economic liberalism’s condition of possibility. In whichever way one writes the history of non-discrimination in the GATT, whether with reference to arguments within Europe, or by stressing the role played by the United States, the co-constitution of the non-discrimination principle and the colonial organization of world space is inescapable.
International lawyers are of course entirely familiar with the idea, most distinctively associated with Antony Anghie, that the fundamental doctrinal categories of international legal argument were forged in the “colonial encounter.”Footnote 131 In a limited sense, the argument above is an extension of Anghie’s proposition to the specific case of non-discrimination in international economic regimes, and to a core category of modern economic thought. A vast literature in political theory on liberalism and empire also places the argument so far on a deeply trudged upon theoretical ground.Footnote 132 The idea that post-war international institutions were originally conceived to continue, rather than disrupt, an imperial vision of world order is also familiar.Footnote 133 There is, however, something more to the argument here. Rather than reading the historical record above to show that GATT was born in a context in which imperial ideas were re-inscribed, it is my suggestion, that the sharp boundary between subjects of the international norm (industrialized states), and a colonial space over which the norm was enforced, reveals something constitutive about international legality.Footnote 134
The idea that an inside-outside distinction is constitutive of legality draws on Carl Schmitt, although the idea that normativity is dialectically constituted has deep roots in western philosophy. Nonetheless, as an iconic statement of this view in international law, it helps to refer by shorthand to Schmitt’s distinctive ontological claim about international legality. Schmitt argued that for any international norm to be meaningful legal, a bracketing of world space, a line demarcating the inside, where the norm applied, from the outside, was necessary.Footnote 135 This claim is sometimes seen as inseparable from Schmitt’s more notorious claim about the “political” being constituted by the friend-enemy distinction.Footnote 136 But more relevant to my purpose here is the fact that the history of the MFN-as-non-discrimination norm comports neatly with this bracketing-of-space-is-necessary theory of international law. From this position, Schmitt further argued that any attempt to universalize international law, denuding it of a clear inside-outside boundary, would necessarily be a jurisprudentially empty exercise. Politically, Schmitt argued, all attempts to universalize international law was essentially the legal form for a new (presumably American) hegemony.Footnote 137 But irrespective of whether one treats this proposition about American hegemony as persuasive, what following Schmitt as a theorist alerts us to is the fact that any attempt to elevate non-discrimination, from its original imperial context to universality over the second half of the twentieth century would at least be a fraught exercise, and would need a radical reconstitution of the foundations of post-war international law. This theoretical prediction is borne out in history. The next parts of this Article offer an account of that transformation and demonstrate the difficult ideological work that had to be done in order for our contemporary sensibility about the universal value of non-discrimination to emerge.
Finally, before I part ways with this inter-war history, let me also preview another important element of the inter-war historical context, to which I will return in Part V below. Between the poles of monopolistic colonial control and non-discrimination between empires, a third idea of managing the world economy also gained traction in the inter-war years: international planning. As historian Jamie Martin notes, the inter-war era saw the “first peacetime experiments in international economic planning,” as empires agreed to international arrangements for stabilizing the prices of primary commodities.Footnote 138 International commodity arrangements that sprung up in the inter-war era are interesting because on the one hand, they reflected a form of international governance that broke the prerogative boundary that a metropole theoretically could, and sometimes did, draw around its colony on economic questions. On the other, they demonstrate that the prerogative boundary did not have to be pierced by the kind of commitment to economic liberalism that Robbins had endorsed. Rather, these arrangements reflected a transplantation on the international scale of the experiments with economic planning, reflected in ideas of full employment, that were shaping domestic economies like Britain.Footnote 139
Bringing these inter-war planning experiments to light thus complicates the intellectual genealogy of post-war international institutions like the GATT even further. As I have argued so far, the widespread argument that post-war non-discrimination was simply the realization of liberal wisdom in light of the experience of inter-war non-discrimination, misses the centrality of the imperial context in inter-war debates about trade discrimination. But as my brief gesture to the story of inter-war planning further suggests, this conventional argument is doubly wrong. It takes the liberal, MFN-centric idea of non-discrimination as the realization of discrimination’s antithesis, missing the fact that in the inter-war period, international rules about commerce first emerged with a focus on planning. As Part V will show, a dialectical understanding of the relationship between planning and non-discrimination, gives a better account of the emergence of those post-war regimes whose study forms the field of international trade law.
III. MFN, Economic Efficiency, and the Cold War
In the part above, I argued that the post-war adoption of the MFN obligation in the GATT cannot be understood except by reference to the colonial context in which questions of non-discriminatory access to colonial raw materials and markets were litigated. I have shown an indelible imprint of that debate in the foundational records of the GATT. That argument showed the peace justification for the MFN obligation cannot be easily generalized, inasmuch as the counterfactual conflict that it rests on, the conflict generated by discrimination, is specific to the colonial context. In this part, I turn to the economic efficiency justification for the MFN norm. To understand its valence, I turn to the early Cold War era, when this explanation for the MFN clause gained prominence, and has since been widely repeated. I will show how the efficiency justification was articulated as a powerful rhetorical tool in a complex Cold War debate, that involved both a general question of international law (is non-discrimination a customary norm?), and a more practical legal-economic question (should MFN structure the East-West trade?). The historical reconstruction of these two debates will show that the economic efficiency justification, paradoxically, served to limit the development of deeper normative constraints on the economic sovereignty of states.
As World War II was drawing to a close, a broader debate about how international law ought to regulate commerce between sovereign states was unfolding. The horizon of expectation was that international law might evolve into a rich normative order exercising constraint on states on matters of commerce. Non-discrimination obligations, inscribed through international law, were seen to bear the potential to depoliticize the commercial international order. Yet, perversely, as the reach of the non-discrimination norm in international law was debated, the dust ultimately settled on its limited reach. MFN, instead of being generalized, was re-asserted as an essential tool in securing spheres of influence in great power rivalry. This settlement about MFN, as a tool for conducting rivalry, is linked inextricably to the widely cited efficiency justification for MFN.
In this part, the argument unfolds in three steps. First, I describe how, at the end of World War II, international lawyers with a progressive view of international law envisioned a future where customary rules constrained the ability of states to conduct commercial jealousy. Second, I describe how that vision of progress was doctrinally brought to a quick halt, through circumscribing the MFN norm. And crucially, third, I describe how this circumscription of the MFN norm is intimately connected to the emergence of the efficiency justification for MFN. The broader suggestion throughout is this: economic efficiency, which is the outcome of a generalized market pattern has an elective affinity with the idea of generalized non-discrimination. But the historical record demonstrates the opposite: efficiency has been invoked to draw lines and practice discrimination between states.
A. Progress and Customary International Law on Commerce
The claim that the MFN clause is a helpful tool to organize an economically efficient international trade regime has intuitive appeal.Footnote 140 But this justification, like the peace justification above, was articulated in history. The political context in which this justification gained salience was the Cold War; but the intellectual backdrop was marked by the extremely interesting question of whether states enjoyed unbounded economic sovereignty. I begin my historical reconstruction therefore, with setting out this background intellectual context.
At the 1941 annual meeting of the American Society of International Law, Quincy Wright, already then a leading scholar of international law and relations, observed that both authoritarian and liberal states had, through the extensive use of levers over foreign commerce, turned their economies into “instrument[s] of national power,” to “coerce political rivals and to squeeze [out] economic competitors.”Footnote 141 This breathtaking use of power, Wright argued, rested on the commonplace assertion that states have complete economic sovereignty, which is to say, “sovereign power with respect to commerce.”Footnote 142 Yet the foundations of this assertion in international law, Wright argued, were somewhat less stable than widely assumed. He queried further: might “the persistence with which commercial treaties have called for equality of treatment might give some evidence of a general rule against discrimination[?]”Footnote 143 And although this argument, Wright conceded, was a weak one, and in general he concluded that there existed no evidence of customary rules limiting the commercial sovereignty of states, Wright’s view was one of progress. “The economic sovereignty of states must be limited by rules of positive law if a more stable and prosperous world order is to be achieved,”Footnote 144 he concluded.
A similar sentiment about progress structured Georg Schwarzenberger’s 1945 study of British treaty practice around the MFN clause. While concluding that the MFN standard of non-discrimination could not be derived from customary law, Schwarzenberger would nonetheless assess the standard as answering a fundamental need—equality—for international economic relations.Footnote 145 Even in the argument that the MFN standard could not be derived as a matter of customary law, there was a discernible hope for progress. Schwarzenberger argued: “It is probably futile to attempt to derive … m.f.n. treatment from the principle of freedom of commerce,” because freedom of commerce had “[not] yet developed into a rule of customary international law.”Footnote 146 And while it was not Schwarzenberger’s argument that if there was a customary rule on freedom of commerce, an MFN obligation would automatically follow, it is not difficult to see that the progressive quality of Schwarzenberger’s argument implied progress toward a customary principle of non-discriminatory freedom of commerce. After all, in the article in question, Schwarzenberger asserted that non-discrimination, in the form of the MFN principle, answered a basic need of international society.Footnote 147
This development in international law that was hoped for, would not be. As we shall see below, it is by asserting a connection between the MFN norm and economic efficiency that the progressive development of international law toward a customary norm of non-discrimination was halted. At present, there remains doctrinal consensus on the proposition that the MFN obligation is a treaty-based obligation.Footnote 148 States are obliged to extend MFN treatment only to those states with whom they have a treaty containing an MFN clause, in respect of matters covered by said treaty. Thus, on matters of international trade covered by WTO rules, such as on tariffs, WTO members must extend MFN treatment to other WTO members.Footnote 149 Similarly, on matters of international investment, states are usually obliged to extend MFN treatment to those states with whom they have assumed such obligations under bilateral (or regional) treaties.Footnote 150
Given the vast network of bilateral investment treaties and the large membership of the WTO, most states are, as a matter of fact, obliged to extend MFN treatment to most others, on matters of economic relations. But despite the ubiquity of the obligation, it is important to note that international lawyers have not derived from it a customary norm about treating other states in a non-discriminatory manner. Rather, and in sharp contrast with both Wright and Schwarzenberger’s flirtations on the question of deriving non-discrimination obligations from a customary rule on freedom of commerce, international economic lawyers, from the jurisprudential perspective, rest largely on the treaty-form as their primary source.Footnote 151 The history of this doctrinal settlement shows how the economic function of the MFN clause, paradoxically, was crucial to prevent its passage into a rule of customary law.
B. The Doctrinal Settlement: MFN Is Not Customary Law
In about three decades after Quincy Wright suggested that international law might progress to develop customary constraints on states in their exercise of economic sovereignty, the question was doctrinally settled in the opposite direction. States were not obliged in customary law to act in non-discriminatory ways; an explicit undertaking of such an obligation was necessary. The doctrinal settlement of this matter is best seen in the International Law Commission’s (ILC) work on the nature of the MFN obligation, which culminated in the 1978 Draft Articles on Most Favored Nation Clauses.Footnote 152 While this work is usually cited by trade law scholars somewhat perfunctorily,Footnote 153 a closer look at the ILC’s work, situated in the context of the 1970s, offers some important insights into the career of the non-discrimination norm in international law. It shows how MFN, while sounding as a norm of non-discrimination, remained bound to the much more discriminating, and realist, background of Cold War geopolitics. And this demonstration below will complete my sketch of the intellectual and political backdrop in which the argument about MFN’s economic efficiency was articulated.
The ILC’s work on the MFN obligation commenced as an offshoot of its work on the law of treaties. Between 1968 and 1978, two special rapporteurs, Endre Ustor of Hungary and Nikolai Ushakov of the former Soviet Union, prepared eight reports that assessed the history and the practice of states around the MFN obligation.Footnote 154 These reports document the practice of states around the MFN clause, with a view to codifying the nature of the legal obligation that the clause generated. The resulting draft articles adopted by the ILC thus codify international legal doctrine on questions such as: who owes a most-favored nation obligation to whom;Footnote 155 what is entailed by the phrase most-favored nation;Footnote 156 what variations attach to the obligation;Footnote 157 when does the obligation kick-in;Footnote 158 the field of activities over which the obligation applies;Footnote 159 exceptions to the obligation, etc.Footnote 160
Endre Ustor’s first report contained a historical broad sweep on the MFN clause. Given the doctrinal task at hand, Ustor’s historical survey was essentially a survey of state practice in the longue durée. But nevertheless, important questions of political economy intervened on the presentation. Ustor noted that the unconditional form of the MFN clause was at “the height of its effectiveness” in the “era of ‘free trade’” in the second half of the nineteenth century, and in that period became an organizing principle for a dense network of commercial treaties.Footnote 161 By contrast, the intensification of rivalry and economic depression in the inter-war period are recorded as the context for states retreating from the MFN obligation.Footnote 162 Yet, Ustor continued, it was in that inter-war context, marked by a turn in state practice away from MFN, that the interest of international lawyers and economists in the MFN clause intensified.Footnote 163 A number of inter-war conferences on international economic relations would thus issue forward-looking statements about the desirability of conducting international economic policy on MFN lines, without any concrete obligation being assumed.Footnote 164 This tension, between growing endorsement of MFN as a normative principle and the retreat in state practice, mimicking a utopia/apology structure,Footnote 165 in turn, offers a useful lens to understand the ILC’s conclusions.
For the purposes of my argument here, Article 7 of the draft articles, dealing with the “legal basis of most-favored nation treatment,” is particularly instructive. Article 7 provides that a state is not entitled to claim MFN treatment from another state unless the latter state has undertaken such an international obligation. As the commentary to the article clarifies, it was the view of the ILC that such an obligation is usually undertaken in a treaty containing an MFN clause.Footnote 166 In essence, Article 7 is a statement of the position, in 1978, that despite a wide network of commercial treaties containing MFN clauses, which is to say, despite the ubiquity of the obligation, there existed no MFN obligation in customary international law.Footnote 167 This position continues to be our present doctrinal view. But what is critical is the ILC’s observation that there existed a “general duty not to discriminate between states,” which nonetheless did not imply the existence of a general MFN obligation.Footnote 168 This separation of the MFN obligation from an apparently customary principle of non-discrimination reveals the utopia/apology structure at work, where the ILC preserves the economic sovereignty of states to choose its favored partners, while suggesting, in general terms, that there exists a normative standard—non-discrimination—to guide the exercise of such sovereignty. If we are to historicize this balance,Footnote 169 as I propose to do below, the connection between MFN and great power politics in the post-war era will appear in sharp relief. As will become apparent, what the period reveals is less the connection between MFN and non-discrimination, and more, how the MFN norm drew the lines along which discrimination was to be expected.
C. The Economic Efficiency Justification
Above, I have shown how between 1941 and 1978, an interesting provocation about the nature of international economic law, of whether it could bind states to act in a non-discriminatory manner as a customary rule was asked and ultimately answered as a bland proposition. The International Law Commission concluded that only the explicit assent to an MFN clause created the obligation. As would seem entirely obvious, the historical context in which the ILC’s work on the MFN clause unfolded was overwhelmingly determined by the Cold War. The doctrinal settlement above was therefore not about an abstract question in international law, but about a very practical question of the moment: whether MFN obligations ought to structure the regulation of trade between socialist and capitalist states. This was the economic counterpart to the doctrinal legal question, and in this debate about structuring the East-West trade, the efficiency justification for MFN became clearly articulated. Below, I reconstruct this debate, and then tie the threads of the two questions, the economic and the legal, together.
The instigation for this debate on the role of MFN in structuring the East-West trade was a proposal submitted by the Soviet Union to the United Nations Commission for Europe (Commission) to negotiate a Europe-wide agreement on economic cooperation. The Soviet proposal was that the agreement aim at the “elimination from commercial and other economic relations of all kinds of obstacles and restrictions of a discriminatory nature.”Footnote 170 Article 5 of the proposed agreement contained an “unconditional and unrestricted most-favoured-nation” obligation that European states would extend to each other on matters of trade and shipping.Footnote 171 The capitalist states of Europe, in their comments to the Commission, all quickly brought an end to any possibility of progressing on the Soviet plan. Their comments reflected three common themes: first, that the Soviet proposal for an agreement containing largely general principles of conduct would achieve little.Footnote 172 Second, the international institutional mechanisms proposed would replicate the work done by other international institutions.Footnote 173 Finally, and most importantly, the capitalist states were nearly unanimous in their view that the most favored nation clause was unsuitable for organizing trade between states following sharply opposed systems of internal economic organization.Footnote 174 In this vein, some of them suggested that the MFN clause guaranteed something valuable against them, but nothing in their favor, and against the planned economies.Footnote 175 But what this element of value was, was hardly apparent in the statements made by the states themselves. The task of articulating that, fell eventually to American international lawyers which I discuss below.
The Soviet proposal for organizing European economic cooperation along MFN lines must be understood as Cold War strategy, to see if Europe, with the Soviet Union inside, offered an alternative boundary to the one that was drawn between an American-led West and the Soviet-led East. That the United States also submitted a response to the Soviet proposal in the UN Commission for Europe, puts the overwhelming Cold War context in sharp light. It also offers a clear example for the commonly made critical argument that the United States acted as an overseas hegemon in Europe drawing the friend-enemy line for European politics.Footnote 176 The MFN obligation served to mark out this line. The Soviet Union, by positing that all European trade—including the East-West trade—should be governed by MFN, was plausibly both drawing a line that excluded the United States and blunt the value of liberal trade within the capitalist, GATT-centric, bloc.Footnote 177 The United States, and its European allies, were re-inscribing the value of their own MFN line in return by suggesting that the norm served some purpose between liberal economies, that it could not serve between economies organized on opposing ideologies.
Even though this debate over MFN instigated by the Soviet proposal seems entirely reducible to Cold War politics, it nonetheless raised an interesting question of international law, which was answered by the ILC, as noted above. By suggesting that the East-West trade be organized on the MFN principle, the Soviet Union had suggested that the MFN obligation expressed the ideal of sovereign equality.Footnote 178 By this suggestion, the Soviet Union was virtually ventriloquizing Schwarzenberger, as discussed above.Footnote 179 It is against this view of the MFN clause that its instrumental justification—economic efficiency—was articulated by American international lawyers.
The prominent publicists for the American view on the subject were Martin Domke and John Hazard. They argued that an MFN clause between a socialist and liberal market economy would not operate to increase trade flows—the condition for efficiency—between them.Footnote 180 This was because an MFN clause did not oblige a state which monopolized international trade through a government entity (commonly known as “state trading”) to carry on its trade on the basis of commercial considerations.Footnote 181 Without that assurance, the equality established by the MFN clause would not be effective in increasing trade (and by extension, achieve efficiency).Footnote 182 This American view stood in direct contrast to an earlier view offered by Schwarzenberger that the MFN clause was an infinitely flexible legal device, suited for organizing international economic relations even with planned economies.Footnote 183 Schwarzenberger argued that the “minimum—and permanent—function” of the clause, the “prevention of discrimination,” in fact assumed particular valence in organizing economic relations between capitalist and socialist economies.Footnote 184 For Schwarzenberger, the underlying guarantee of equality was sine qua non for ensuring that international transactions are conducted between these economies on the basis of commercial considerations only.Footnote 185
The schism between Schwarzenberger’s 1945 view and that of the Americans in 1958 is obviously related to the broader change in the international context between the immediate post-war and the Cold War moments. The American view, denouncing the importance of MFN clauses in conducting economic relations with planned economies is a reflection of Cold War belligerence in legal form. But it is not just that. The Cold War context allows us to see a deeper shift in scholarly understanding about the central purpose of non-discrimination in international economic relations. In 1945, Schwarzenberger argued that the endurance of the MFN standard indicated that “there is something basic in this international pattern of conduct;” that the standard “answer[ed] to constant needs of international society,” which transcended the “peculiarities … in social and economic systems.”Footnote 186 In sharp contrast with this view, in which the egalitarian form is seen as an expression of some deep truth about international society, American lawyers asked more directly, if MFN could serve to increase trade with socialist economies.
There is of course something characteristically American about the shift from metaphysical to pragmatic justifications,Footnote 187 from abstract egalitarianism to concrete economic gain. But more importantly, the shift to the instrumental justification—increase in trade—allows us to see how the MFN obligation, in the Cold War era, was stripped, at least in the American understanding, of a non-discrimination normative halo and cast plainly as a limited tool for conducting international relations in a time of geopolitical tensions. If non-discrimination could not serve the function of increasing trade flows, American scholars argued that it ought not to structure East-West trading arrangements.Footnote 188 The argument followed U.S. practice, as the United States, in 1951, suspended MFN treatment for communist states, including to Czechoslovakia to which it was otherwise bound by the MFN clause of the GATT.Footnote 189
The converse of the American position, noted above, was that MFN obligations ought to structure trading relations between planned and capitalist economies. As also noted above, contemporaneous observers interpreted the socialist states as staking the position that the MFN principle was an expression of the sovereign equality of states.Footnote 190 Yet, irrespective of whether socialist states viewed the MFN principle as an expression of a deeper norm of equality, it is important to note that they too, did not endorse MFN as a principle of customary law.Footnote 191 This deeper congruence between the American and Soviet positions—that the MFN obligation must be expressly undertaken—ultimately shaped the ILC’s conclusions, as noted above. Because socialist states ultimately refused to derive a binding norm of international conduct from the general idea of sovereign equality, non-discrimination became inscribed in international law as an empty normative ideal.Footnote 192 Its concrete manifestation, the MFN obligation, became dislodged from this ideal, and over time, increasingly identified with, and assessed in relation to the justification of liberalizing trade.Footnote 193 And more importantly, it ensured that the MFN obligation remained a tool for conducting geopolitical alliances and rivalry.Footnote 194
The contemporary widespread use of the economic efficiency justification for the MFN obligation cannot be easily separated from the Cold War history above. Two arguments about MFN’s economic rationality are commonly deployed: first, by preventing states from applying different conditions to imports and exports based on their origin, MFN minimizes distortion of the market, allowing efficient allocation. Second, MFN encourages trade liberalization across the board, allowing comparative advantage to work by deepening the efficient division of labor.Footnote 195 But consequences of norms do not simply exist; they must be so articulated. In the context of the MFN norm, we saw that these economic justifications were articulated by the United States in order to deny the position that MFN ought to structure East-West trade. It was argued that MFN ought not to apply in the context because it would neither increase trade with the Soviets,Footnote 196 nor allow the market principle to work because the MFN obligation would not guarantee that a Soviet foreign trade enterprise conduct transactions with an enterprise in a free market economy.Footnote 197 By re-articulating the MFN norm as valuable for its economic reasons, the United States thus disconnected it from a broader non-discrimination idea, and effectively halted the progressive development of a customary MFN rule in international law. In other words, connected to its economic function, MFN operated to sharpen the Cold War divide.
In this part, I have shown that MFN’s economic function must be appreciated in light of the Cold War historical context in which this function was articulated. This means that the commonplace functionalist assertion about MFN serving economic efficiency is marked by a questionable naturalization of a historically contingent idea. To put this in further sharp relief, let me introduce a last bit of evidence, in the form of the negotiations over Poland’s attempt to accede to the GATT in 1958. When the deputy executive secretary of the GATT at the time, Jean Royer, met with Polish representatives to discuss the possibilities for Poland’s accession, he conveyed that in exchange for MFN status, it would be possible for GATT member states to negotiate, even in the absence of a tariff system, specific import commitments from Poland and accept specific share allocations in Poland’s import trade.Footnote 198 This plan would have been sharply at odds with the assertion that American international lawyers had offered, that MFN, by virtue of its economic function, was meaningless in the context of relations with planned economies.
Poland’s eventual accession to the GATT in 1967 followed a somewhat different formula instead of this quota allocation plan;Footnote 199 but the formula itself—contemplated from within the GATT—shows that the naturalized connection between MFN and liberal-market arrangements, and the naturalized opposition between MFN and a planned economy is mistaken. Rather, the discussions over the accession of Poland show that the ideas of planning and MFN-as-non-discrimination were theoretically held together within the GATT in its early decades. Further intellectual labor would have to be performed to cement the market-centric understanding of MFN; and in that process, the principles of planning and non-discrimination would come apart. In the next part, I demonstrate first how this radically liberal view of MFN emerged, and then, in the final part, I return to the dialectic between planning and non-discrimination.
IV. MFN and the Price System
The two parts above show that the MFN obligation, while often being described as a norm of non-discrimination, has historically been a legal device that structures difference, rather than equality. In my first rendition above, MFN appeared as a device for organizing relations between industrial powers in their quest for domination over colonial raw materials and markets.Footnote 200 In the second, I showed that MFN was denuded of its potential to depoliticize economic relations by being defined as a device to mark, rather than melt, boundaries between Cold War worlds.Footnote 201 In each case, non-discrimination is ultimately intelligible in conjunction with its boundary, through the eminently discriminatory act of exclusion. Yet, contemporary writing in international trade law, to include both scholarly and pedagogical materials, is replete with the assertion that non-discrimination, expressed especially by the MFN norm, is a fundamental (and deeply justified) norm of international trade law.Footnote 202 The widespread-ness of this sensibility is a testament to the fact that international trade lawyers have scrubbed clean MFN’s deep entanglement with hierarchy and exclusion in fashioning their discipline. This part studies the emergence of MFN’s contemporary mythology.
To be clear, it is not my suggestion that international trade lawyers have fashioned the virtues of the MFN obligation out of whole cloth. MFN’s association with economic rationality and international legal morality (the sovereign equality of states) are clearly old ideas as the parts above have testified. Yet, it is their coming together in an altogether new matrix, making it a non-discrimination norm par excellence, in the 1980s GATT universe that is the subject of this part. As I will show below, in sharp contrast with its earlier history, the nature of the MFN norm was re-articulated in a GATT-centric intellectual universe. MFN was reworked in this universe as a necessary and sufficient condition for the system of international trade law. This re-description involved a three-part equation: the equation of international trade law with a world trading system; the equation of a world trading system with a worldwide price system, and the working of a worldwide price system with MFN.
The general argument, that a new idea of international trade law emerged in the 1980s, linked to the idea of transmissible price signals, has become a fairly well-known point following the widespread success of Quinn Slobodian’s Globalists.Footnote 203 Some of the materials introduced below will therefore be familiar to some readers attuned to the existing historical scholarship on international trade law. Nevertheless, a part of the novelty here lies in showing the significance of the MFN for this intellectual transformation. This then establishes the broader jurisprudential point that our contemporary sensibility about MFN emerged from a set of highly controversial, and ideologically laden wagers about the nature of international trade law.
Below, I first demonstrate the citational connection between contemporary writing about the MFN clause and the texts produced in the 1980s GATT universe. I offer a close, contextually sensitive, exegesis of a key GATT text, the 1983/84 annual report International Trade, and how its distinctly ordoliberal views have been transmitted over time. Then, through a reading of Robert Hudec’s remarkable auto-critical study of the ordoliberal MFN project, “Tiger, Tiger,” I further flesh out the uniquely radical nature of the ordoliberal worldview, and therefore, its practical limitation.
A. The Emergence of the Contemporary MFN Sensibility: The “Justifications” for MFN
In his 2011 Hague lecture on non-discrimination obligations under WTO law, William J. Davey recounted that “at least five justifications have been offered for the most-favoured-nation rule in the context of tariffs.”Footnote 204 These justifications were as follows: (1) “the rule is economically efficient”; (2) the rule “promote[s] multilateral trade liberalization”; (3) the rule “promotes the idea of sovereign equality”; (4) the rule “promotes efficient administration,” inasmuch as a discriminatory regime is difficult to administer; and finally, (5) the rule “can serve to control rent-seeking in domestic political systems.”Footnote 205 The synthesis of justifications however, was not Davey’s own. The lecture cited to a 1984 issue of a newsletter GATT Focus published by the GATT Secretariat, where the five justifications were listed together.Footnote 206 They appeared in a text box with the title “MFN Commitment – Basis of the Trading System.”Footnote 207 In this way, the GATT Secretariat communicated to readers of the newsletter, a complex proposition in a digestible form: first, that the MFN obligation is central to the legal regime; and that the obligation rests on a series of valuable justifications. Encapsulated, the proposition became a nugget, easily transmissible, and reproduced, as Davey’s 2011 lecture shows.
1. The 1983/84 Report: Ideological Context
The justifications for the MFN obligation summarized in the textbox had been articulated by economists employed by the GATT Secretariat earlier that year in their 1983/1984 International Trade report.Footnote 208 This report was summarized in the September–October 1984 issue of the GATT Focus as follows:
In the last quarter of 1983 there was a sharp acceleration in the value and volume of world trade, which seems to have continued in the first months of 1984…. Nevertheless, the current recovery remains highly differentiated and has failed to spread internationally…. Among the reasons suggested by the GATT economists, trade policies[,] and, in particular, fragmentation of the world market caused by discriminatory protection are emphasized.Footnote 209
What the GATT Focus had thus highlighted—if only too obviously with the header text “Focus On”—was a view, far from uncontroversial, that the primary problem for international trade was not protection itself, but discriminatory protection, against which the MFN obligation was the legal weapon of choice. As we shall see below, this interpretation of the patterns of international trade that occasioned the editorial commentary on the MFN obligation belonged to a very specific ideological universe.Footnote 210
The MFN sound bite in the GATT Focus newsletter was a compression of a longer discussion of the centrality of non-discrimination in that year’s annual “International Trade” report. “International Trade” had been published since 1952 as a GATT annual report, with an emphasis on the GATT Secretariat’s analysis of trends in international trade.Footnote 211 While published without attribution to any authors, it is evident that much of the material would have been prepared by the Trade Intelligence Unit, which appears to have been a distinct division in the GATT Secretariat from the early 1950s.Footnote 212 At the end of 1979, this division was renamed the Research and Statistics Division, headed by Jan Tumlir.Footnote 213 The 1983/84 edition of “International Trade” would have certainly been prepared under Tumlir’s direction.
Tumlir’s role in shaping the GATT as an ordoliberal institution, or at least, as an institutional home for ordoliberal intellectuals is a well-trodden ground of historical study.Footnote 214 The commentary on non-discrimination in the 1983/84 “International Trade” report offers an important concrete expression of this ideological form. The 1983/84 study was published in a period of recovery after a recession.Footnote 215 In this context, the question that the report set out to answer above all, was the “highly differentiated” nature of the recovery.Footnote 216 The problem was that recovery in the United States had not spread rapidly across the globe. Why? The report argued that the “main channel through which recoveries spread internationally” is “[b]right longer-term prospects for world trade.”Footnote 217 It is the bright outlook that generates trade-related investment everywhere, the report argued and then set out to show why this outlook had not emerged. What was needed was “long-term business confidence” which had not been restored, in large part, because of how states were signaling the future of their trade policies.Footnote 218
The way to understand the prescriptions in the 1983/84 report is to view them as institutionalist ideas—economic activity depends on institutions and the credibility of government commitmentsFootnote 219—in a particularly austere key. What governments needed to signal in order to restore business confidence was their “determined effort … to roll back protectionist forces.”Footnote 220 Without a “[d]etermined resistance to protectionist pressures,” the business climate remained uncertain because “profits earned behind protectionist walls become rapidly translated into wage claims and … temporary protection thus becomes permanent.”Footnote 221 As would be evident, the report was not mounting a defense of liberal trade from the usual welfare-maximization point of view. In discussing the question of recovery, there was no time spent on the usual economistic arguments about efficient allocation of resources. To the contrary, the report took the eminently practical view—not unlike Keynesianism—that economic recovery simply depended on business investment, and investment, on investors. From that premise, the report made the more radical ordoliberal move about investment depending on governments signaling their resistance to majoritarian (wage claim) demands.
2. The MFN Obligation and Price Signals
The risk of sliding into protectionism, and with it, the risk of sedimented wage claims, was one part of the problem for investment. The other problem was that the world economy was not “functioning as an integrated system.”Footnote 222 Arguably, this was the bigger problem. The fact that recovery had not spread from the United States to other parts of the world was because the fundamental vector, the system of price signals, was not working.Footnote 223 As the signature of Jan Tumlir, the report argued that what was needed was “international trade in a stable, liberal framework … that connects national price systems into an international one.”Footnote 224 And then, in a crucial further move, the report argued that the international price system, whose rehabilitation was essential, had been broken not simply by protection, but discriminatory protection. Thus, to the complex problem of how should states signal their commitment to fighting protectionism, fighting majoritarian claims, and rehabilitate the international price system, came the seductively simple answer: MFN. The report put it straightforwardly:
When discrimination in international trade becomes acceptable, the general level of protection cannot but rise. Indeed, there is no way of maintaining an international trade system, in the full sense of word referring to regularity, orderliness and predictability, without the most-favoured nation commitment. Non-discrimination is the conditio sine qua non: the one necessary and sufficient system-forming condition.Footnote 225
This breathtaking endorsement of the MFN obligation as the “necessary and sufficient” condition for international trade order, was qualitatively different from older statements about the MFN being the most important obligation in international trade law.Footnote 226 As we have seen in the earlier sections of this Article, international lawyers, economists, and policymakers had discussed the importance of the MFN obligation in relation to its role in tempering conflict (that was bred by discrimination),Footnote 227 its role in organizing international economic relations on the basis of sovereign equality,Footnote 228 and its role in increasing trade flows.Footnote 229 Here, however, was a significant and a radical jurisprudential move. In place of a number of functions that the MFN obligation might perform in organizing international economic relations—reducing conflict, upholding equality, or increasing efficiency—Tumlir and his colleagues suggested that the very existence of international economic order (and by implication, lawFootnote 230) depended on the MFN obligation. Even though the report would then go on to list five justifications for the MFN obligations,Footnote 231 which in turn would be transmitted as a nugget into the future as indicated above, it is apparent that for Tumlir and his colleagues, the importance of the MFN obligation exceeded the sum of the justifications.
B. The Radical MFN Project and Its Failure
The Tumlir-led ordoliberal project, which centered the MFN obligation as the sine qua non for the international trade law, in fact did not translate into a robust international practice in which states started treating their MFN obligation as sacrosanct. Paralleling the trajectory of the progressive post-war project within which a future customary norm of non-discrimination was imagined, here too, the practice of states ended up diverging widely from the academic plan.
As the text of the 1983/84 report centering the MFN obligation indicates, it was written in a context in which states were threatening to radically turn away from MFN. Like our present moment, the turn away from MFN was particularly pronounced in the United States. William R. Cline, writing for the Institute for International Economics in Washington D.C. in 1982, summarized the context as follows:
More than thirty bills have been introduced … calling for US government action to achieve “reciprocity in foreign trade….” US reciprocity objectives in the past meant seeking reciprocal changes in protection in trade negotiations; the new approach seeks reciprocity in the level of protection bilaterally and over a certain range of goods…. Whether or not any of these bills pass, the surge of congressional interest in this approach marks what may be a watershed in US commercial policy and requires a reexamination of that policy. Reciprocity enforced by retaliation would violate the fundamental principle of unconditional most-favored-nation (MFN) treatment … and would risk trade wars through counterretaliation.Footnote 232
One might easily think that the extract above refers to the trends in American trade policy ca. 2025, rather than 1982. Then, as now, the search for reciprocity in trade relations was driving the turn away from MFN treatment; and critics were arguing that the term reciprocity was being employed to undermine a tradition in American trade policy of reciprocally lowering trade barriers.Footnote 233 It is in this context where the state practice around the MFN obligation appeared shaky that intellectuals in the GATT universe refashioned the MFN obligation as the core obligation for international trade law. As I have described above, Tumlir et al. went beyond a set of traditional justifications for the MFN obligation and ascribed to it a deeper sense of fundamental-ness. Yet, instead of this view becoming a guide for states, this transformation produced an ever-deepening schism between the academic position and state practice.
On the one hand, international lawyers of the ordoliberal ideological persuasion, such as Ernst-Ulrich Petersmann wrote agendas for constitutionalizing GATT law, hoping to embed, among others, GATT’s non-discrimination norm into domestic legal systems.Footnote 234 On the other, states continued pursuing discriminatory trade policies in the form of discriminatory tariffs through regional trade agreements and systems of preferences for developing countries, and discriminatory quantitative restrictions, especially in the form of voluntary quotas (most notably, for Japanese exports to the United States).Footnote 235 It is this schism that Robert E. Hudec, then professor of law at Minnesota, and a leading scholar of international trade law, studied in an essay titled “Tiger, Tiger in the House,” which offered a critical, or perhaps more correctly, self-critical evaluation of the project of shoring up the non-discrimination norm.Footnote 236
“Tiger, Tiger” was published in a collection of essays by the leading GATT scholars of the day, edited by Petersmann and Meinhard Hilf in 1987 at the start of the Uruguay Round of GATT negotiations. Petersmann’s own contribution to the volume was an eighty-page agenda for deepening the GATT’s legal disciplines through domestic courts.Footnote 237 By contrast, Hudec asked why academic defenders of the MFN obligation—economists and lawyers—had failed to persuade states. Hudec’s essay offered several piercing insights, not least of which was the historical one that the “modern MFN concept” did not in fact have “a very solid historical foundation.”Footnote 238 And while in comparison with the revisionist narrative in this Article, Hudec may have overestimated the historical vintage by suggesting that modern idea of MFN—non-discriminatory tariffs—can be drawn from the 1860s, when MFN clauses became a part of a “European system of treaties,”Footnote 239 he was entirely correct to note that the association of MFN with non-discrimination was an inversion of the discrimination that states sought to achieve through early MFN clauses. In this sense, Hudec’s view was revisionist when compared to the numerous accounts of MFN clauses that were available to him, which tended to trace this obligation to much earlier period.Footnote 240 In a similarly iconoclastic vein, Hudec argued that the standard arguments defending MFN with lessons from the inter-war era, arguments rooted in economic inefficiencies and political conflict, did not easily translate to the actual structures of discrimination in the post-war GATT system.Footnote 241 States had learned to domesticate the (discrimination) tiger, sort of.Footnote 242
Having thus evaluated why critics of discrimination had failed to make their imprint on practice, Hudec then clarified the stakes of shoring up the MFN norm. The problem was that MFN had been defended as a non-discrimination norm, a term which carried with it a sense of justice and fairness. But the fact was that the modern MFN idea was not about fairness at all; it was “a mistake to characterize MFN treatment as a policy of ‘non-discrimination’ in the normative sense of that word.”Footnote 243 It was valuable because it “allow[ed] the price mechanism to work.”Footnote 244 This justification had not been defended vigorously, Hudec argued. A “rallying cry”—“Life is not fair, and neither is the MFN principle”—was necessary.Footnote 245
And here lies the tragedy. What GATT-adjacent lawyers and economists had worked out was that the central justification for organizing international trade relations around the MFN obligation was that it made those relations orderly, and rule-governed. Other external justifications cited historically, rooted in welfare economics and peace, were appendages. Hudec had shown that these external justifications were no longer persuasive. And the deep justification—of upholding an orderly price system—was simply unlikely to persuade states. The caricature of a rallying cry betrayed this. In this rallying cry, one might see the ordoliberal project confronting its extremely idealist, almost utopian vision. Published only a few years after Hudec’s essay, John Jackson would note in his widely cited monograph “The World Trading System,” that the United States had “gradually moved away from its earlier adamant support of MFN … toward a more ‘pragmatic’ (some might say ‘ad hoc’) approach, of dealing with trading partners on a bilateral basis, and of ‘rewarding friends.’”Footnote 246 The sharp distinction between what Hudec viewed as the ideal, and what states pragmatically chose, underscores the utopianism of the ordoliberal position. As Jackson perceptively noted, the United States was “rewarding friends.”Footnote 247 In a world of sovereign states—which by nature form alliances and rivalries—it ought to have been odd to think that states would do anything but that!
To briefly summarize, in this part, I have argued that our contemporary sensibility about MFN’s fundamental-ness is connected to an ordoliberal intellectual program. The suggestion throughout has been that it is the radical quality of the program that both makes “MFN-is-fundamental” an intelligible proposition and shows how poorly that proposition must perform in the real world of international trade law and politics. Above, I have stressed the internal GATT context to demonstrate what was so stark, and so deeply interesting, about that intellectual program. To conclude the story, let me offer, in the paragraph below, a brief description that embeds this GATT-centric ordoliberal program in a broader context.
Slobodian has earlier argued the ordoliberal program for international order general must be understood in light of its primary target, the redistributive agenda that shaped decolonization, and the project of the New International Economic Order (NIEO) in the 1960s and 1970s.Footnote 248 As I will show below, in Part V, the NIEO project sought to raise planning as a central norm of international economic order. The price-system-centric account of GATT law, with MFN as its linchpin, should be understood as a project to seal the GATT from these planning currents. The opposition appears in sharp relief in Robert Hudec’s (whose work on upholding the price-system view of MFN I narrated earlier) well-regarded account of the relationship between developing countries and the GATT.Footnote 249 Hudec understood that the NIEO project outside the GATT was a source of momentum for developing countries acting within the GATT to reshape GATT obligations, away from strict MFN and toward differential treatment in their favor.Footnote 250 This push, he argued, was misconceived. Developing countries would themselves benefit if they were to commit to MFN.
MFN obligation is the only foundation on which can be built a legal policy that will be effective in promoting and protecting market access for developing countries. Consequently, the first major recommendation of this study is that developing countries should re-direct their long-term objectives to the strengthening of the GATT’s MFN obligation in all respects.Footnote 251
The price-system justification, which raised MFN to normative centrality, and fashioned it as the necessary and sufficient condition for international order, is thus interesting for two reasons. First, as an internal matter, it shows how views about MFN’s fundamental-ness belong to an intellectually radical universe, and that it is only in that extremely interesting form, that the heightened ideas of the MFN norm make sense. Second, it also shows that this articulation is linked to the broader project of the era to secure the capitalist world order from the challenge that developing countries raised as they coalesced around the NIEO. As the part below shows, this conflict of norms, between NIEO-centric redistribution, and GATT-centric MFN, should be understood as a turn in the historical dialectic between planning and MFN.
V. Disciplinary Implications
The historical sketches above have shown that even though contemporary international trade lawyers often speak of the centrality of the MFN obligation for international trade law, the project(s) of shoring up the MFN norm have been fraught ones. In the early decades of the twentieth century, MFN treatment was offered as a solution for conflicts that discriminatory trade barriers were said to brew. Yet, as I have shown above, this conflict was conflict in the context of empire, and thus, the project of connecting MFN treatment to pacific international relations became bound up in an imperial division of world space. Following this story of empire, the post-war project to universalize MFN, through a possible customary rule against discrimination, came to be thwarted as the norm confronted the reality of Cold War politics. Indeed, the most widely cited justification for the MFN clause—economic efficiency—emerged precisely to thwart the reach of the norm, and to re-inscribe its discriminatory (as opposed to non-discriminatory) character. Thus, in both the inter-war and post-war instances, MFN became tied up in some form of boundary drawing: between metropoles and colonies, or between the West and the East. It is only in the 1980s that a radical justification for MFN as the central organizing principle of international trade law emerged. Yet no sooner this justification for MFN—that it made international trade relations orderly, like a price system—was articulated, than it seemed utopian.
As a result of the aforesaid historical trajectory, our contemporary sensibility about the centrality of the MFN obligation should be best understood as an aporia: a contradiction that is the inheritance of three uncertain projects, which must, all the while, confront the fact that states have often honored the obligation in its breach. While its justifications, especially that it organizes international trade on an efficient pattern, and makes peace possible, are routinely sounded, a historical investigation shows that these justifications undercut, rather than uphold, the non-discrimination claim associated with MFN. And even apart from the historical argument I have developed above, contemporary consequentialist analysis has shown that the most commonly invoked economic efficiency justification is a rather complicated one: one that holds only under a number of assumptions and is therefore, hard to categorically defend.Footnote 252 As Horn and Mavroidis have shown, the economics literature “tend[s] to support the clause,” but “this positive verdict is then typically based on rather involved analyses, whereas the simpler arguments for MFN do not seem to hold up.”Footnote 253
All this ultimately begs the question of whether international lawyers should continue to assert MFN as the fundamental norm of international trade law? Absent the resolute ordoliberal conviction that MFN is the necessary and sufficient condition for an international economic order, might it not be valuable for us to ask if international trade law may be organized centering a different principle? I do not propose a full answer to the question here. But, as a first step in the process of rethinking how we should describe what are the normative foundations of international trade law, I sketch out how historically, rather than MFN-as-non-discrimination, the idea of “planning” played a crucial role in organizing legal orders for international trade.
Below, I trace the roots of planning in state practice; but more importantly, I show that there is a historical interplay between planning and MFN. This is not with a view to demonstrating that planning is a better norm to organize international trade relations. Rather, as with the three prior sections of this Article, my concern remains with disciplinary narratives. What I have challenged so far is a narrative that fetishizes MFN, treating it as a non-discrimination norm whose elevation to centrality is essentially the story of progress to a rational international trade law. In this last part, I want to offer a history of a conflict between principles, one which offers a more accurate account of MFN’s rise to centrality and makes the role of politics clear in shaping our disciplinary sensibilities. What I show below is that the evolution of international trade regimes through the twentieth century can be interpreted as the evolution of a dialectic between planning and non-discrimination. The story below injects into my intellectual history the crucial point that the academic construction of MFN’s centrality rests on removing from the purview of the discipline the role that planning played in projects of organizing international order. Planning was defeated in politics, but the fact that the discipline of international trade law has simply ventriloquized this outcome, should give us reason to pause. At the very least, this part highlights the fact that a central mythology of the discipline is the contingent outcome from a series of historical possibilities.
Again, to be clear, the fact that planning presented a historical possibility does not, by itself, offer a sufficient external justification for whether future international trade law ought to be organized on this basis. Let me nevertheless mention that during the 1970s, when the conflict between planning and MFN became sharply articulated,Footnote 254 the idea of planning, or as B.S. Chimni put it, the principle of “a managed world economy,”Footnote 255 was seen as a principle undergirding the progress to a more equitable world. For academic proponents of planning like Chimni, it was a better alternative to one organized in faith about efficiency through markets, inasmuch as efficiency was seen as an ideologically laden claim, embraced incompletely by the developed world, practically resulting in a perpetuation of inequality between states, and blind to actual organization of international trade through monopolistic corporations.Footnote 256 However, one does not have to endorse Chimni’s (or any Third-Worldist) position at all, to at least see that a narrative about MFN’s fundamental role in organizing international trade law that essentially ignores this alternative, and its historical clash with an alternative progressive view of international order, is worth questioning.
My aim below is to show the significant role that ideas of planning played in shaping international trade law, and to do so, I retrace the chronology in Parts II to IV above. First, I show that planning was central to the organization of imperial-era world economy, evidenced by the first treaties for the circulation of primary commodities. As Michael Fakhri has shown, the history of international trade law can in fact be narrated through tracing the history of sugar arrangements.Footnote 257 Recall here the second part of this Article, which showed that non-discrimination emerged in the inter-war era as an argument bound to an imperial backdrop. That history can now also be understood as the story of one imperial logic (non-discrimination) emerging alongside another imperial logic (planning) in which metropoles dictated the production, and sale of colonial raw materials. Second, I argue that the dialectic between planning and empire unfolded through episodes through the post-war period. As we shall see, the emergence of the GATT itself can be situated within this dialectic that held MFN and planning together. Third, as commodity arrangements moved from the period of empire into the period of decolonization, they were updated to focus on the interests of developing countries, and in this period, planning posed a challenge to the MFN-centric GATT order.Footnote 258 The idea that planning could be the central norm for international economic law, at the expense of MFN, assumed maximum valence during the 1970s, at the height of enthusiasm for a NIEO. With the political defeat of this NIEO project, planning, as a norm for organizing international order disappeared sharply from view. This disappearance is synchronous with the ascendance of ordoliberal ideology in trade law circles, and the crystallization of the narrative that MFN is sine qua non for a rules-based international order.
A. Planning and International Economic Organization: Imperial and GATT-Era
The term planning often invokes the image of a socialist political economy, where production and perhaps consumption are controlled by the state, or of the post-colonial mixed economies that laid out plans for rapid industrial development in the mid-twentieth century. My use of the term is more general: I take planning to refer to a governing impulse that is based on confronting commodities in a concrete sense, alive to their actual production and consumption. When the thrust of the system of economic governance is substantially the commodities themselves, I interpret that system to be based on planning. The conceptual opposite of such a system of economic organization is one whose primary thrust is on commodities as pure exchange-values, i.e., when the actual conditions of production (i.e., the interest of producers), or consumption, do not matter; all that matters is the fact of a market-determined price.Footnote 259 As I have demonstrated above, the ordoliberal vision of a world economy that works through price signals is a description of a perfected form of this latter economic organization. As noted, through a radical intellectual innovation Tumlir and his colleagues fashioned MFN as the central principle of such an economic organization, scrubbed clean of any residue of planning.Footnote 260
1. Imperial Era
In contrast to the distinct ordoliberal articulation of what the GATT-order ought to be, planning played an important role in shaping international trade regimes till the 1980s. Fakhri has earlier argued that some of the central ideas of our institution-centric modern international trade law can be traced to international sugar treaties starting with the 1902 Brussels Convention.Footnote 261 The fact that many rules that are central to modern trade law were present in the 1902 convention—such as MFN, rules on subsidies, and countervailing duties—is certainly interesting.Footnote 262 But what is key is the fact that if the Brussels Convention can be seen as a precursor instrument for trade law, it is stark that its legal obligations, including MFN itself, was tied to the production and circulation of a specific thing.Footnote 263
As it turns out, sugar was one of a set of commodities whose management in the early twentieth century produced a body of international rules on international trade. Apart from sugar, international agreements regulating the production and trade for tin, rubber, tea, and coffee were concluded during the inter-war era.Footnote 264 These arrangements were often cartel-like arrangements, with legal provisions directed at controlling the quantity produced, price, and availability of buffer stocks.Footnote 265 As is easy to see, these commodities were colonial raw materials;Footnote 266 their management through international arrangements was a part of how empires managed the exploitation of their colonies.Footnote 267 In this process, these rival empires seeded the foundations of an international economic order centered around planning.Footnote 268 As I have indicated earlier, in the inter-war period, non-discrimination was one of two possible solutions to the problem of sharpening rivalry over access to raw materials and markets. If anything, this non-discrimination solution made little headway in shaping international regimes meaningfully, despite the League’s efforts to shore up liberal regimes.Footnote 269 By contrast, the planning-centric experiments went much further in creating international organizations that made deep incursions into what might have otherwise been sovereign prerogative.Footnote 270 These planning-centric experiments were thus the precursors of modern international trade order with its distinctive emphasis on supranational institutions.
Once we see the significance of planning in the inter-war era, the proposals about non-discrimination that I traced in Part II above, can be re-interpreted in a new light. Those proposals, seeking to encode liberal doctrine into international order, are better understood as one part of a broader inter-war story, in which liberal solutions to the problem of discrimination in access to raw materials existed in tandem with the search for solutions that were oriented toward planning.Footnote 271 Thus, when contemporary trade lawyers assert the genealogy of post-war non-discrimination in the inter-war experience of discrimination and conflict, they write out the historical context in two significant ways. As Part II showed, they write out the history of empire as backdrop. As this part has now shown, they also deplete the richness of the inter-war normative context in which ideas of both non-discrimination and planning were simultaneously at work as principles to govern the international economy.
2. The Foundations of the GATT
In Part II above, I challenged the commonplace narrative that the GATT emerged with MFN at its center because of the experience of the ills of trade discrimination in the inter-war period. Here, I will demonstrate in fact that the GATT itself must be seen as an instrument shaped by the dialectic between planning and non-discrimination.
The GATT was originally embedded in the broader charter for an International Trade Organization (ITO).Footnote 272 Seen as a whole, the ITO itself encoded elements of a plan-centric vision for international economic regulation. Its thrust on full employmentFootnote 273 was contemporaneously viewed with deep suspicion in American business circles as encoding a system of planning internationally.Footnote 274 Further, an entire chapter of the charter contained principles for establishing commodity arrangements, and these provisions could be set into motion by any country “substantially interested in the production or consumption of, or trade in, a particular primary commodity.”Footnote 275 The ITO was imagined as an organization that would coordinate the development of inter-governmental commodity control arrangements, and these arrangements were meant to explicitly confront the problem of markets being unable to adjust the production and consumption of primary commodities.Footnote 276 It was contemplated that such arrangements would be designed to achieve price stability, at prices that would be fair to consumers, and ensure reasonable return to producers.Footnote 277 Had the ITO charter been ratified and its provisions become the primary source of international trade law in the post-war era, it is apparent that planning as a norm would have been at the core of international trade law. As scholars like Robert Howse and Anne Orford have earlier indicated, the idea that the GATT’s intellectual foundations are essentially liberal is a controversial one.Footnote 278 To their arguments, I have added here that a part of the diversity of projects in which the GATT was embedded included a project of planning.
All this puts the ideological stakes of the opposition raised by American capital, which helped seal the charter’s future—it was not brought to the Senate for ratification—in sharp relief.Footnote 279 Over time, the GATT could be narrativized as the core instrument of post-war international trade law that stressed abstract non-discrimination—the MFN-fetishistic narrative I have challenged in this Article—precisely because it was dis-embedded from its original context.
B. Post-war Commodity Arrangements
Even though the ITO did not take off as an international organization, inter-governmental commodity arrangements remained a salient feature of post-war international economic regulation. They gained particular momentum in the 1970s when the UN Conference on Trade and Development (UNCTAD) became the institutional mechanism for their development.Footnote 280 With the UNCTAD institutional mechanism in place, they emerged as key instruments of the blueprint for a New International Economic Order.Footnote 281 Coordinated through the UNCTAD, commodity agreements evolved in the post-war era into instruments focused on providing commodity-export oriented developing economies, stable export earnings, necessary for their economic development.Footnote 282
This was a significant development in the nature of commodity arrangements. The UNCTAD-centric program for commodity agreements had essentially yoked what was earlier a stress on price stabilization to a stress on stabilizing the earnings of developing countries.Footnote 283 Improving the condition of developing economies thus became the last normative orientation for commodity agreements that had operated as instruments of international planning since the early twentieth century.Footnote 284 The idea that international trading arrangements should be oriented around the interest of developing countries in securing their export income in fact went beyond international commodity arrangements. The 1975 Lomé Convention, for example, signed between Europe and a number of former Belgian, French, and British colonies, for example, obliged Europe to “implement a system for guaranteeing the stabilization of earnings from exports”—involving a list of fourteen product categories—from its partners.Footnote 285
The turn in the normative orientation of post-war commodity arrangements is significant for my argument here in two ways. First, in this era, the new normative thrust allowed scholars like Chimni to study commodity arrangements as a distinct source of norms for international law. At the height of the NIEO moment, he argued that commodity arrangements were evidence of the emergence of a broader international legal principle: a “managed world economy.”Footnote 286 This was both a descriptive claim—that practice had emerged to support planning as an international legal norm—and a normative one: that this norm served the equitable purpose of improving the economic status of developing economies. In this sense, the project of enshrining planning as a central legal principle of international law was exactly like the project of placing MFN in the disciplinary center. In the 1970s, both were claimants to being central norms for plausible international orders.Footnote 287 As my brief discussion of Robert Hudec’s work in the previous part showed, the ordoliberal project of securing MFN was intimately connected to the fact that the NIEO movement was threatening to shape the laws of the international economy.Footnote 288
Second, the emergence of commodity arrangements with a focus on developing country interests sharpened the tension between planning and non-discrimination as rival principles for organizing international economic relations.Footnote 289 Institutionally, developing countries organized around the UNCTAD, posing its focus on economic development as a counterweight to the GATT’s liberalization-centric orientation.Footnote 290 As scholars like Hudec had correctly perceived, the impetus gained with the NIEO movement had been brought to bear upon the GATT itself.Footnote 291 The disciplinary push to enshrine MFN as the fundamental norm of international law was the conservative reaction.
Given this history, we must treat with caution the commonplace tendency to argue that commodity arrangements simply constituted a domain of exception from the general international law of the GATT.Footnote 292 Instead, we should treat the desire to impose the norm/exception frame on the relationship between non-discrimination (MFN) and planning as a project, whose success would ultimately hinge on the political defeat of the NIEO.
C. MFN Versus Planning: Was There a Resolution?
Presently, the term “international commodity arrangements” refers to a set of treaties that are, as the UNCTAD defines it, arrangements of an administrative nature. They cover cocoa, coffee, cotton grains, olive oil, table olives, sugar, and tropical timber. For each commodity, the relevant treaty is a data collection, analysis, and publication arrangement. None of them “contain economic provisions.”Footnote 293 This means that contemporary treaties do not perform the function that had earlier marked them out as a form of international economic organization in the post-war period: they regulated price and supply of commodities.
The transformation of commodity arrangements, from international treaties for planning the production and consumption of commodities to administrative arrangements, often with vague provisions about development of producer economies,Footnote 294 is a microcosm of the transformation of post-war international economic law. Once the NIEO project folded, planning, as a norm, receded from view. Commodity arrangements themselves, which were evidence of the norm, became evidence for its absence. In 2016, the UNCTAD recorded: “At present, Governments do not appear to be prepared for discussions concerning the producer-consumer schemes for price stabilization through market intervention in the framework of existing [international commodity arrangements].”Footnote 295 This transformation offers us yet another crucial insight about MFN’s perceived centrality. MFN is seen as central to international trade law because its rival principle—planning—was marginalized. Planning’s marginalization in state practice was the outcome of the ascendance of what may be broadly described as neoliberal ideology (of which, the ordoliberalism spoken of above is a particular European version) in shaping the economic policy of developed states. The concerted efforts of these states led to the NIEO folding.Footnote 296 Similarly, the GATT’s success in becoming the pre-eminent international institution for organizing trade relations, and its centrality to our imagination of international trade law as an academic and practical discipline, is inseparable from the concomitant decline of the UNCTAD.Footnote 297
Those inclined to a Marxian view of history would see the ascendance of MFN over planning-centric arrangements as essentially the broader history of capitalism—the expansion of a market over all other forms of organization—re-enacted over the brief duration of the post-war era. But if the history in this part has suggested anything, it is that MFN’s emergence as a central legal principle of international economic law was contingent on a series of events: the failure of the ITO, the defeat of the NIEO project, and the decline of the UNCTAD. Thus, it is clear that we would err if we deduced from MFN’s rise something transcendental about international economic law. Our received wisdom, that international economic law is naturally oriented around non-discrimination, to which planning-centric arrangements constitute exceptions, is fraught with precisely that error.
As noted above, the UNCTAD, circa 2016, declared that there was an absence of any impetus toward managing international trade. But this statement contained within it, the history of the opposite state practice: what was absent “at present,” planning, was what had been practiced in the past. The inheritance of the ordoliberal position, that MFN is a necessary condition for a rules-based order, is the fear that in its absence, international trade law essentially devolves into a norm-less regime of power. A more careful approach to narrativizing MFN, with keen attention to the importance of the planning-MFN dialectic, will allow us to offer a more nuanced account of contemporary shifts as well.
The headline-grabbing character of contemporary American trade policy, which is particularly belligerent and dismissive of norms, might lead us to conflate the wholesale departure from MFN with the absence of norms altogether. Yet, only recently, other, more norm-bound proposals for reforming international trade law also emerged, even within the United States, that can be best understood if we appreciate the longstanding importance of the planning norm. For example, recent proposals, far from utopian, about re-organizing aspects of the international trade in steel, such as the “Green Steel Deal” that Timothy Meyer and Todd Tucker sketched, can be seen as inheritors to this long tradition of planning the international economy.Footnote 298 Meyer and Tucker’s proposals, which seemed to capture the pulse of the Biden administration, involved leveraging a set of discriminatory trade policy tools by the United States and Europe in coordination, both to further decarbonize their own industries and to induce decarbonization in carbon-intensive production sites in India and China.Footnote 299 Were these proposals implemented, and were they subject to review under WTO law, they may have passed muster under GATT’s general exception clause.Footnote 300 But this is hardly the point. What the proposals show is that the idea of planning, entailing a departure from the producer-agnosticism of the MFN norm, and alert to the actual production and consumption of commodities like steel, remains relevant for thinking about international trade law.
VI. Conclusion
This Article has shown that the widespread sense among international lawyers that MFN is a critical obligation for a system of international trade law is the outcome of three projects for organizing international relations over the twentieth century. Embedded historically, each project raises doubts about, rather than inscribing the importance of, the MFN norm. They reveal that MFN’s centrality has had to do, first, with organizing a hierarchical international system of exploiting raw materials and markets; second, with organizing Cold War belligerence; and third, with chasing the utopian logic of a worldwide price system. In short, the genealogy of the MFN mythology raises questions about whether a rules-based international trading order must necessarily be organized on an MFN logic.
The historical argument developed here is, ultimately, an invitation to consider if we might offer a better account of the organizing principles for the system of international trade law. As a final point in that strain, let me offer a brief theoretical spin to the argument in this Article. The ordoliberal proposition—MFN is a necessary and sufficient condition—for international trade law,Footnote 301 rests on the idea that international law ought to secure the conditions for global competitive interaction: a perfectly transactional, market-centric sociality.Footnote 302 But states that create, uphold, and breach international law are ultimately incredibly poor vessels for creating such an order between themselves. States are sometimes friends, and sometimes enemies, and the deepest theoretical traditions in international law show that it is a normative order for organizing cooperation, and managing conflict between them.Footnote 303 From this point of view, MFN as a tool to organize inter-imperialist competition for colonial raw materials and markets, or as a line drawn to secure the West from the East, is more jurisprudentially coherent, than the universalist, global, non-discriminatory notion of MFN that we have come to share. From this point of view, it is also extremely coherent and understandable that through much of the twentieth century, states have sought to develop an international economic regime that encodes elements of planning. Taking this history into account shows that our contemporary notion of MFN, as the abstract central norm, is ultimately utopian. As a corrective to that utopianism, above, I have sketched a brief history of how planning has been a part of international trade law. It is not my suggestion therefrom that international trade law should be oriented toward planning, but that no good normative account of international trade law can afford to ignore its importance, and its enduring relevance.
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