International economic law is the foundation upon which the world economy is built. It is the regulatory framework that governs how countries, organisations, and businesses operate in the international economic arena.
International economic law typically takes the form of treaties. These treaties are often negotiated between countries and developed with support from lawyers specialising in international economic law. They outline the rules that countries – and businesses within those countries – need to follow when conducting business activities globally.
With ties to international law, commercial law, political science, international relations, and social science, international economic law is a wide-ranging area of law with many disciplines.
What are the objectives of international economic law?
The past century has seen significant changes in the international economy, with nations and businesses becoming more involved in moving goods and capital across borders, and increasingly taking a global view in everything from investments to labour.
International economic law was conceived and developed in response to this increase in international economic activity. It works to formalise and regulate the relationships and interactions between countries through legal frameworks, and encourage international cooperation.
Other objectives and principles may include:
- Protecting national sovereignty, including economic, territorial, and political sovereignty, as well as sovereignty over natural resources.
- Peaceful co-existence, which means non-aggression and non-intervention between nations.
- Reciprocity – the mutual and equal benefits for nations.
- The peaceful settlement of disputes.
- Equal rights, equitable treatment, and self-determination.
- The fulfilment of international obligations.
- Respect for human rights and the promotion of social justice.
- International cooperation for development.
- Preferential treatment for developing nations.
- Rules and permissions around expropriation, which occurs when a government takes ownership or control of a foreign investor’s asset within its jurisdiction.
- Guidance for international arbitration, adjudication, and tribunals.
- National treatment, which means that imported goods should be treated the same as locally produced goods.
What is international trade and investment law?
International trade law and international investment law are the legal frameworks that enable trade and investment between different countries. International trade agreements and international investment agreements are among the largest disciplines of international economic law.
International investment law also usually covers international commercial arbitration (ICA), which is a private dispute resolution process for parties of different countries. Through ICA or investment arbitration, a solution or outcome on an international trade or investment dispute – for example, a dispute over an investment treaty or trade agreements – can be decided by an arbitrator (or arbitrators) without having to resort to litigation in national courts. A dispute settlement can be either binding or non-binding.
What is the difference between international economic law and international trade and investment law?
International economic law is sometimes confused with international trade and investment law. This is because some of the oldest institutions and agreements governing international commerce were primarily focused on international trade, investment policy, and investment protection for foreign investors.
However, they are indeed separate areas of law, with international trade and investment law actually being a discipline of international economic law.
What are other areas of international economic law?
In addition to international trade and investment law, international economic law covers disciplines such as:
- International monetary law, which works to stabilise currency exchange rates and encourage international monetary cooperation.
- International financial regulation, which outlines the requirements and restrictions on international banking, insurance, and securities, with the aim of maintaining the stability and integrity of the global financial system.
- International labour and services law, which outlines the rights and duties of employees and employers, as well as trade unions and governments, in regulating the workplace.
- International intellectual property law, which regulates and protects copyrights, trademarks, and patents on intellectual property across borders.
- International tax law, which is applied to the income that companies and corporations earn on their operations and sales abroad.
- International development law, which regulates international development and typically promotes or encourages peaceful and sustainable development relationships.
- International environmental law, which governs and regulates the sustainable use – and trade – of natural resources, and is becoming increasingly important due to climate change.
What are the three types of treaties in international economic law?
Unilateral treaties
A unilateral treaty is more of an unilateral act – it is a piece of domestic law or legislation that is developed and agreed by one nation only. A unilateral agreement is typically a show of good faith from a country that wants to extend rights and protections to foreign traders and investors in an effort to attract foreign investment in addition to boosting regional trade.
Bilateral treaties
Bilateral treaties are economic agreements between two nations. These formal agreements are developed cooperatively and signed by official representatives for each country. They typically outline the terms and conditions, as well as the rights and protections, for a mutually beneficial, reciprocal economic relationship.
Multilateral treaties
Multilateral treaties are economic agreements between three or more countries. They can be difficult to negotiate due to the higher number of competing interests, but typically ease multinational investments and trade importing and exporting while also reducing tariffs.
Major institutions and agreements in international economic law
World Bank
Established in 1944, the World Bank is an international financial institution with 189 member countries working together in partnership. It was created to provide grants and loans to low-income and middle-income countries to help fund capital projects. Since providing its first loan in 1947, the World Bank has gone on to fund more than 12,000 development projects through loans, interest-free credits, and grants.
International Monetary Fund
The International Monetary Fund (IMF) was created alongside the World Bank in 1944. It too is an international financial institution, and is governed by its member nations – currently numbering 190. The IMF works toward three primary objectives:
- Furthering international monetary cooperation.
- Encouraging the expansion of trade and economic growth.
- Discouraging policies that would harm prosperity.
General Agreement on Tariffs and Trade
The General Agreement on Tariffs and Trade (GATT) was a legal economic agreement signed in 1947 to help encourage international trade and restore economic health following the Second World War. It seeked to eliminate or reduce international trade barriers and tariffs while preserving regulations.
The World Trade Organization
The World Trade Organization (WTO) replaced GATT in 1995 and now regulates international trade around the globe. An intergovernmental organisation, the WTO works with national governments to establish, amend, and enforce international trade rules within the trading system to ensure “that trade flows as smoothly, predictably and freely as possible.” WTO law and agreements are negotiated and signed by the majority of the world’s trading nations, and ratified in their respective parliaments, to set international financial law and safeguard global economic development.
Other significant institutions in international economic law
- United Nations (UN)
- International Labour Organization (ILO)
- European Union (EU)
- European Commission
- International Finance Corporation (IFC)
- Bank for International Settlements (BIS)