Academic journal article Denver Journal of International Law and Policy

The Spaghetti Bowl Revisited in the Context of Corruption: Understanding How Corrupt Countries Could Subvert the WTO's Rule-Oriented System through Preferential Trade Agreements

Academic journal article Denver Journal of International Law and Policy

The Spaghetti Bowl Revisited in the Context of Corruption: Understanding How Corrupt Countries Could Subvert the WTO's Rule-Oriented System through Preferential Trade Agreements

Article excerpt

I am still convinced that it is in the national interest of every trading nation to abide by the rules, which were accepted as valid for good times and bad. One of the major benefits of international [trade] is that [it] offer[s] equal opportunities and require[s].... [t]hose who believe in the open trading system ... [to] correct those rigidities in their economic and social systems which obstruct ... economic growth.... (1)

Bribery and corruption have become a scourge on international trade. [They have] literally become an epidemic.... [They have] a deleterious effect on trade and create[] unfair and unbalanced situations. (2)

I. INTRODUCTION

Coined by Professor Jagdish Bhagwati of Columbia University, the term "spaghetti bowl" (3) refers to the proliferation of free trade agreements--the nearly two hundred regional and bilateral trade agreements that exist today and that comprise a "maze of free-trade areas ... and customs unions...." (4) Sanctioned under the World Trade Organization ("WTO") Charter, in particular under Article XXIV of the General Agreement on Tariffs and Trade ("GATT"), free trade agreements arise when "countries extend [their] preferences in different directions." (5) In more direct terms, countries engage a particular country or region with which they would like to trade, at the exclusion of all other countries or regions. Free trade agreements are, therefore, also known as "preferential trade agreements" ("PTAs"). Because these agreements depend on national preferences, (6) the reasons countries enter into them are not always clear--one country's motivation for seeking a PTA may be different from another's. The WTO Charter does not require countries to disclose their rationales for entering into a PTA. In fact, the lone condition tied to a PTA is that it must liberalize substantially all the trade between the constituent territories, (7) meaning that it must account for the bulk of their trade. (8)

While many scholars have considered the theory, consequences, and positives and negatives of PTAs, (9) few have addressed the reasons why countries pursue them and why they pick the partners they do. (10) Indeed, authors of recent literature on PTAs implicitly assume that these agreements are similar. (11) But in today's age, when culture, goods, and money "cross borders more than at any time in history," (12) PTAs are more likely to be some of the most diverse instruments in the world, rather than near facsimiles of each other. To be sure, the majority of them vary not only in content but also in form, reflecting "sharp differences in the objectives of the countries seeking them." (13) These objectives include increased market access, the implementation of domestic policy reform, the creation of leverage in bilateral or multilateral bargaining power, and the formation of strategic linkages, some of which may be related to national security. (14) But this list is hardly exhaustive, considering the profound differences in national institutions, economic conditions, and socioeconomic backgrounds around the world.

This Article proposes that some countries could have far more nefarious objectives in their pursuit of PTAs--corruption--and that corrupt schemes involving PTAs could threaten the rule-oriented infrastructure of the WTO and the efficacy of the WTO as a free-market force. The term "corruption" is an amorphous one, encompassing a range of behaviors and activities, (15) so this Article defines it broadly as "the misuse of public power for private gain." (16) While scholars have agreed that corruption creates an "awkward disruption of trade," an interference with the laws of free trade and liberal expansion, they have not identified the ways in which the WTO's rule-oriented system is vulnerable to corrupt schemes. (17) Because corruption can undermine international trade, an understanding of how it could infiltrate and operate within the WTO's rule-oriented system is the first step toward stopping it. …

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