Charting the Transnational Dimension of Law: U.S. Free Trade Agreements as Benchmarks of Globalization

Article excerpt

  I. TWO RADICAL CHANGES
 II. PREDICTING THE FUTURE
III. LAW IN THE THIRD DIMENSION
 IV. SEARCHING FOR BENCHMARKS
     A. The five agreements
     B. Imagining a template
     C. Three sensitive issues
  V. THREE PARADOXICAL LESSONS

I. TWO RADICAL CHANGES

We are living in a time of radical changes, "a twilight age," (1) "one of those relatively rare periods in which the future is unlikely to be very much like the past." (2) Octavio Paz expressed it eloquently: "[I]f I am sure of one thing," he wrote, "it is that we are living an interregnum; we are walking across a zone whose ground is not solid: its foundations, its basis have evaporated." (3)

What is this interregnum we are living, this un-solid ground we are walking across? In what respects is our time so radically different from the past? When scholars answer those questions in terms of changes in human behavior, different scholars point to different contemporary traits--including, on the down-side, a self-destructive consumerism, (4) a decline in religion and morality, (5) the decay of human communication, (6) and a surge of human brutality. (7) When scholars answer the same questions in terms of structural changes in society, they come closer to consensus; the radical changes, they say, are globalization and the decline of the nation-state.

Globalization accelerated at amazing speed. By the 1990s, merchandise exports were growing twice as fast, transnational investment three times as fast, and cross-border securities sales ten times as fast, as was growth of the world's domestic production. (8) Global trading in foreign exchange zoomed from $15 billion per day in 1973 to $1.5 trillion per day in 1998. (9) The foreign trade of the United States now equals some 30% of our gross domestic product, compared to only about 10% in 1970. (10)

Globalization has many accelerators, but two are especially powerful. One is technology. In the old days, the goods that moved in transnational commerce were chiefly such blue-collar products as foods, fuels, minerals and metals; now they increasingly are high-tech manufactures, white-collar services and intellectual property rights. By the late 1990s, average labor cost in OECD (Organisation for Economic Co-operation and Development) countries dropped to between 5% and 10% of the cost of production, down from 25% in the 1970s. (11) By 1996, the world's trade in commercial services rose to about one-fourth of its trade in tangible goods. (12)

Globalization's second powerful accelerator is transnational investment, annual flows of which increased six-fold between 1990 and 2000. (13) By 1995, gross sales by foreign affiliates of transnational enterprises were greater than the total exports of the world, and the foreign sales of those affiliates were growing 20% to 30% faster than exports. (14) Seventy percent of all transnational technology royalties, and more than one-third of all world trade, move within those affiliated groups. (15) Of the world's hundred largest economies, only forty-nine are nations; fifty-one are corporations. (16) The two hundred largest corporations account for 28% of the world's economic activity; the five hundred largest conduct 70% of all world trade. (17)

The result is a world changed and challenged by globalization. A Director General of the World Trade Organization complained that "[g]lobalization is the new 'ism' that everyone loves to hate." (18) An African prime minister put it more pragmatically. "[T]here is only one thing worse than globalization," he said, "and that is to be left outside it." (19) As President Clinton noted, "The great question of this new century is whether the age of interdependence is going to be good or bad for humanity." (20) In the words of a Nobel Laureate, "globalization has become the most pressing issue of our time." (21)

There is a growing perception that as national barriers to globalization diminish, so does the regulatory power of the state, and that the consequence is globalization's reciprocal, the decline of the nation-state. …