Friday, November 21, 2008

Opinion piece on Africa and the global financial crisis

Just a quick post to flag (with hat tip to Opinio Juris) a short opinion essay by Daniel Bradlow - a law professor at the American University Washington College of Law, and one of the chairs/discussants in our sessions at the GAL IV Seminar in Viterbo in June of this year - on what approach African countries should adopt towards the global financial crisis and the international efforts to resolve it. Professor Bradlow suggests four main issues that should be confronted; and his familiarity with the emerging field of global administrative law comes through clearly in the following:

Enable African countries to engage in the institutional reform process: There's general agreement that the institutions of global financial governance, including the IMF, World Bank, and the Financial Stability Forum, need to be reformed. However, less attention is being paid to making the reform process itself transparent and participatory. Given the G20's central role in this process, it needs decision-making procedures that are responsive to the concerns of non-G20 stakeholders in its decisions. Thus, Africa should advocate for the creation of formal channels through which they can submit position papers and voice their concerns to the participants in the G20. They should also call for the G20 to establish a "notice and comment" period prior to all actions and decisions that are likely to have a substantial impact on the poor. This will ensure the views of all interested stakeholders on the proposed action or decision are considered in the G20 decision-making process. In addition, Africa should create regional institutions that focus more specifically on African concerns, and can interact with global institutions and other regional institutions to promote African interests. The African Union's efforts to create an African Monetary Fund and an African Investment Bank are noteworthy in this regard.

The entire piece can be found here, and contains a number of interesting insights from the financing development perspective, amongst other things; it's well worth a read.

Monday, November 17, 2008

The G-20 statement from the Washington Summit

As expected, not much in the way of significant progress was made at last weekend's meeting of the G-20 Head's of State in Washington DC. At least, none that can be discerned from the joint declaration issued at the end of the summit. Again, however, it is worth stressing that GAL mechanisms do play a prominent role in the rhetoric; increasingly, it seems accurate to state that one of the key questions in reforming the institutions of global governance is over which administrative law rules and principles should be applied in each context, not whether administrative law constraints are applicable at all. This can be taken as evidence of the emergence of a generalised "culture" of administrative law within global regulatory governance - which, as I have suggested in some detail elsewhere, should be viewed as one of the crucial elements of the "emergence" of GAL. Here are the key excerpts from the summit declaration:

We commit to implementing policies consistent with the following common principles for reform.

- Strengthening Transparency and Accountability: We will strengthen financial market transparency, including by enhancing required disclosure on complex financial products and ensuring complete and accurate disclosure by firms of their financial conditions. Incentives should be aligned to avoid excessive risk-taking.

- Enhancing Sound Regulation: We pledge to strengthen our regulatory regimes, prudential oversight, and risk management, and ensure that all financial markets, products and participants are regulated or subject to oversight, as appropriate to their circumstances. We will exercise strong oversight over credit rating agencies, consistent with the agreed and strengthened international code of conduct. We will also make regulatory regimes more effective over the economic cycle, while ensuring that regulation is efficient, does not stifle innovation, and encourages expanded trade in financial products and services. We commit to transparent assessments of our national regulatory systems.

- Promoting Integrity in Financial Markets: We commit to protect the integrity of the world's financial markets by bolstering investor and consumer protection, avoiding conflicts of interest, preventing illegal market manipulation, fraudulent activities and abuse, and protecting against illicit finance risks arising from non-cooperative jurisdictions. We will also promote information sharing, including with respect to jurisdictions that have yet to commit to international standards with respect to bank secrecy and transparency.

- Reinforcing International Cooperation: We call upon our national and regional regulators to formulate their regulations and other measures in a consistent manner. Regulators should enhance their coordination and cooperation across all segments of financial markets, including with respect to cross-border capital flows. Regulators and other relevant authorities as a matter of priority should strengthen cooperation on crisis prevention, management, and resolution.

- Reforming International Financial Institutions: We are committed to advancing the reform of the Bretton Woods Institutions so that they can more adequately reflect changing economic weights in the world economy in order to increase their legitimacy and effectiveness. In this respect, emerging and developing economies, including the poorest countries, should have greater voice and representation. The Financial Stability Forum (FSF) must expand urgently to a broader membership of emerging economies, and other major standard setting bodies should promptly review their membership. The IMF, in collaboration with the expanded FSF and other bodies, should work to better identify vulnerabilities, anticipate potential stresses, and act swiftly to play a key role in crisis response.

Both more global administration, then, and more global administrative law. Each paragraph here contains clear evidence of the emerging culture of administrative-law-as-regulatory-common-sense that I have referred to previously: commitments to strengthen accountability, oversight, information-sharing and - perhaps most strikingly, as it is the only point at which the rhetoric seems to go beyond the technocratic governance logic that otherwise is clearly dominant - the participation of even the poorest countries in formulating international standards, are all clear indicators of this shift. Talk, however, although clearly important, remains relatively cheap; and action is unlikely to be particularly rapidly forthcoming. Deadlines for taking initial actions have been set for the end of March 2009, with the likelihood of a further meeting just afterwards. For the next six months at least, then, it seems unlikely in the extreme that a radically reformed global governance structure will influence the manner in which the financial crisis plays out.

Global administrative law and the WTO: The Appellate Body decision in the EC-Hormones dispute

The recent(ish) decision by the Appellate Body of the WTO, the latest installment in the EC-Hormones saga (United States — Continued Suspension of Obligations in the EC — Hormones Dispute) contains much of direct global administrative law significance. As Gregory Schaffer, a commentator who has already published within the GAL project, the decision has a real "such issues as standard of review, burden of proof and due process". I will post on this in more detail later in the week; in the meantime, Schaffer's excellent analysis of the issues involved from a GAL-perspective can be found here, and the decision itself can be found here.

Friday, November 14, 2008

GAL and the "New Bretton Woods": Unrealistic expectations and conflicting governance logics

With the heads of the "G-20" States meeting in Washington DC tomorrow to discuss a global response to the current financial crisis, calls for treating these talks as a new "Bretton Woods" conference, in which the institutional framework of global financial governance would be radically restructured, have grown. As I posted previously, two things are striking about the current debates: firstly, that there appears to be a significant degree of consensus that increased global administration is required to deal with the crisis; and secondly, that almost all of the reforming voices, be they governmental or from civil society, explicitly endorse at least some form of administrative-law type regulation of the reformed administration. It is worth, however, making a couple of more cautionary points in this regard, relating in particular to the unrealistic expectations of major progress being made in Washington over the weekend; and the second, mroe conceptual, relating to the importance of differentiating the demand for global administrative law in function of the governance logic that lies behind it.

Unrealistic expectations
The folks over at Opinio Juris have a couple of posts cautioning that, whatever the desires of certain - in particular European - leaders, it is extremely unlikely that any radically or even major restructuring of the current institutional setup for governing international finance will be agreed upon this weekend. The Washington Post has more detail on precisely why this might be:

Different leaders bring to the meeting different perspectives and expectations.

"That's the dangerous part in trying to achieve a common agenda. They'll try to push their own perceptions of what a global architecture should look like and who should be the dominant players," said Charles Freeman, a former Bush administration trade official now at the Center for Strategic and International Studies.

"I'm not sure that even an Obama team wants to see the United States' style and method of capitalism and financial markets converted. We value our flexibility here, and I don't think we're willing to capitulate to as much regulation as the Europeans are suggesting, particularly the French."

Sarkozy and other European leaders are proposing an early warning system to watch for imbalances in financial markets. They also want an expanded role for the International Monetary Fund as the world's financial watchdog, improved supervision of financial players and action to close loopholes that let some institutions avoid regulation.

"We need monetary and fiscal policy coordination across the world," said British Prime Minister Gordon Brown in outlining his own broad proposals for the summit to address. Among other suggestions, he wants China to use its nearly $2 trillion in reserves to help top up an IMF emergency loan program.

But China indicated on Tuesday that its focus is on its own economy. Beijing unveiled what amounted to a $586 billion two-year economic stimulus package that includes more spending on construction, tax cuts and social programs in China - but no mention of efforts abroad to lift other economies out of the ditch.

Russia, meanwhile, doesn't want to expand the IMF's powers as European leaders propose. Instead, Moscow wants the IMF's role reduced to make way for entirely new international financial institutions.

Amid high-flying but dueling rhetoric, prospects for major breakthroughs at the summit seem scant.

This is before we even get to the desires of those not invited to Washington this weekend - which include, it should be recalled, the vast majority of the world's States. Moreover, as the IFIWatchnet and Bretton Woods Project websites amply demonstrate, global civil society actors are taking more than a passing interest in the outcomes of any talks. For example, in parallel to the G8(+) moves to deal with the problem, Miguel D'Escoto, the President of the UN General Assembly, has established a task force to review the global financial system, arguing that any efforts to deal with the crisis should be "inclusive, not exclusive", and noting further that "The place to discuss is neither the G8, nor the G20, nor the G25 or the G63. It is the G192, which is the General Assembly of the United Nations".

Given the vast array of different views, even amongst powerful actors, as to what the correct course of action should be, not to mention the Presidential situation in the most powerful actor of all, it is not in the least surprising that prospects of any lasting progress at all in Washington seem slim. At present, it would appear that we have universal consensus on only the major premise of what the classic British comedy series Yes Minister memorably referred to as the "politician's fallacy": "some thing must be done; this is something, ergo this must be done". It seems that it may will take some time and much negotiation before a sufficient amount of agreement exists on the minor premise for any actual action to be taken...

Conflicting governance logics
These, then, are the practical reasons why we should not expect a huge amount of GAL-signifcance to emerge from this weekend's summit. As I have suggested previously, however, one of the most striking features of the buildup has been the near-ubiquity of global administrative law-type rules and principles in the various reform proposals that have been put forward - further evidence, perhaps, of the emergence of GAL culture or sensibility as part of an increasing regulatory common sense. In the remainder of this post, however, I want to begin the necessary task of nuancing this claim a little, as it seems abundantly clear that, although there may be increasing convergence on a few key slogans (Accountability! Transparency! Participation!), it is equally clear that these do not mean the same thing to all of those rallying around. Rather, their meaning - and, crucially, the ways in which these abstract principles will "cash out" into concrete rules and mechanisms - will varying according to the dominant governance logic driving the claim.

For the sake of argument, I will identify two such broad logics here (there may well be good grounds for disaggregating these further, but they will serve to illustrate my point): a technocratic efficacy logic (which aims at simply securing the most effective way of dealing with a problem) and a justice logic (which posits that certain procedures or mechanisms - foten rights-based - should be observed, regardless of their effect on governance outcomes, for reasons of fairness, etc.). Consider, firstly, the following excerpt from the common position of the EU States for tomorrow's summit:

The new international financial system must be based on principles of accountability and transparency.
- Transparency of financial transactions must be ensured by means of a more comprehensive information system, which no longer omits vast swathes of financial activity from auditable, certifiable accounts.
- Arrangements conducive to excessive risk-taking must be overhauled, particularly debt securitisation procedures and pay policy.
- Both prudential and accounting standards applicable to financial institutions will have to be revised to ensure that they do not contribute to creating speculative bubbles in periods of growth and make the crisis worse at times of economic downturn.
- Standards bodies, in particular in the area of accountancy, will have to be reformed to allow a genuine dialogue with all the parties concerned, in particular prudential authorities.

And compare it to, for example, the following common proposal launched by IFI-watching and debt activist NGOs:

The statement supports the fundamental and far-reaching transformation of the international financial and economic system and a major international conference convened by the UN to review the international financial and monetary architecture, its institutions and its governance, but only if the meeting follows a process that:

- is inclusive and participatory of all governments of the world;
- includes representatives from civil society, citizen's groups, social movements and other stakeholders;
- has a clear timeline and process for regional consultations, particularly with those most affected by the crisis;
- is comprehensive in scope, tackling the full array of issues and institutions;
- is transparent, with proposals and draft outcome documents made publicly available and discussed well in advance of the meeting.

The civil society statement further lists among its goals for the architecture of the new system

- To create a new set of principles in which finance should be aimed at, and linked to, strengthening national and local real economies to meet the requirement of sustainable and equitable development.
- To move away from the market fundamentalism driving the recent past.
- To curb the power of the World Bank, the IMF and the WTO, and to enhance the accountability of global, regional and national economic governance institutions.
- A call for governments to take immediate action to develop a new international regulatory architecture with democratic checks and balances that is aimed at promoting the interests of workers, small-hold farmers, consumers, and the environment and preventing future financial crises, in which the United Nations should play a central role in its development.

Same words (accountability, transparency); really quite different meanings when we dig a little deeper. On the one hand, we have the apparent idea that all we need is "effective" technocratic regulation, and the powerful states more committed to holding financial institutions to account in terms of these standards. On the other, a whole host of substantive concerns - about fairness, sustainability, equity, inclusion, and, indeed, a direct challenge to the technocratic orthodoxy - are presented as absolutely central. Of course, these different logics cash out in various different answers to the recurring "to whom, for what?" questions that invariably (should) accompany discussions of accountability; however, they are by no means exhausted by this. Indeed, it seems arguable that almost all administrative law mechanisms will have qualitative differences in function of the governance logic that was dominant in their establishment. In order to illustrate this, I'll take a brief excursion into the transparency/participation mechanism - very prominent within US administrative law - of the "notice and comment" procedure.

A brief(ish) excursion: competing logics in notice and comment
At the beginning of The Hitchhiker’s Guide to the Galaxy, a group of aliens from the Galactic Hyperspace Planning Council come to Earth, and announce that, in order to encourage the development of the outlying regions of the galaxy, the planet will be destroyed in two minutes’ time to make way for a new hyperspatial express route through the solar system. When the howls of complaint begin from the understandably aghast earthlings, the aliens reply:

There's no point acting all surprised about it. All the planning charts and demolition orders have been on display in your local planning department in Alpha Centauri for fifty of your earth years, so you've had plenty of time to lodge any formal complaint and it's far too late to start making a fuss about it now.

The serious point to take from this vignette is, of course, that, where major development projects involve significant implications for both human rights and substantive justice, the bare elements of a notice-and-comment procedure may simply not be sufficient. Something more is required.

In many ways, the Aarhus Convention, with its explicitly provides us with an illustration of what a human rights driven administrative procedure might look like in such a case. Consider, for example, Article 5(1)(c), which deals with the collection and dissemination of environmental information. It states that

In the event of any imminent threat to human health or the environment, whether caused by human activities or due to natural causes, all information which could enable the public to take measures to prevent or mitigate harm arising from the threat and is held by a public authority is disseminated immediately and without delay to members of the public who may be affected.

Article 5(8) provides that

Each Party shall develop mechanisms with a view to ensuring that sufficient product information is made available to the public in a manner which enables consumers to make informed environmental choices.

Lastly, Article 7(2), which deals with public participation in decisions on specific activities, provides that

The public concerned shall be informed, either by public notice or individually as appropriate, early in an environmental decision-making procedure, and in an adequate, timely and effective manner, inter alia, of:
(a) The proposed activity and the application on which a decision will be taken;
(b) The nature of possible decisions or the draft decision;
(c) The public authority responsible for making the decision;
(d) The envisaged procedure…

These provisions give us some useful insights into what a notice-and-comment procedure intended to further or respect human rights might resemble. Crucially, the obligation to provide notice is framed as a positive obligation to disseminate, rather than merely publish (a proposition further bolstered by the requirement in Article 7(2) that the public be informed in an effective manner); moreover, Article 5(8) suggests that not only should steps be taken to ensure that potentially affected members of the public receive such information, but also that it is imparted to them in terms that they can understand. Given the overwhelmingly technical nature of much global regulatory governance, it is difficult to overstate the importance of this last point; without it, even stringent positive dissemination obligations are often likely to prove utterly ineffective.

By way of comparison, consider the notice-and-comment procedure initiated by the Basel Banking Committee in its preparation of the Basel II regulations. In order to take advantage of this procedure, concerned members of the public simply had to go to the Committee’s website – which is, I suspect, for the average citizen a fairly exact functional equivalent of the planning department in Alpha Centauri – and read, digest and reflect on a set of documents totaling a “mind-numbing” five hundred and forty-one pages of highly technical and complex banking and financial regulations.

It seems fairly clear, given the foregoing, that it is not a justice logic that has driven the establishment of notice-and-comment procedures within the Basel framework; rather, it is that of technocratic efficacy – designed, in particular, to head of increasing dissatisfaction with the main targets of the regulation (banks and banking regulators) with the previous arrangements under the 1988 accord. Of course, whether or not the Basel regulatory processes actually requires a human rights-driven administrative law framework is debatable; many feel that this is a prime example of a field in which technocratic processes should be allowed full reign, although some authors have suggested that more effort to engage with the general public and developing countries could improve the process (and, of course, whether the establishment of this notice-and-comment procedure did in fact lead to a gain in terms of the technocratic efficacy of banking regulations seems, given the current situation, at best an open question).

The important lesson to draw from this context, however, is how the meanings of transparency and participation differ depending upon the basic normative logic that is driving them, and how this change is embodied in the obligation to give “notice” intended to embody them. It is also worth noting that, were steps to be taken to introduce a human rights element by imposing a positive obligation to disseminate the relevant information in a generally digestible form, this would almost inevitably involve a loss in terms of technocratic efficacy – the very base upon which the administrative law mechanism was founded in the first place. Thus, not only do the different logics lead to different administrative law mechanisms, the they are also - often - mutually incommensurable.

The point is not to suggest that one logic is necessarily "better" than another in all contexts; simply to emphasise that, even if I am correct in my claim that we are witnessing the emergence of a culture of administrative law within global governance as part of a regulatory common sense, this common sense itself - the field of GAL - must be the subject of a whole set of different and complex distinctions and classifications. Not all of those currently rallying around the slogans of accountability and transparency in the reform of the global financial infrastructure are on the same side; often, indeed, it is quite the opposite.

Not much hope, then, despite the noise, for significant GAL-related developments at this conference, although "something must be done" at some point, and one suspects the eventual "something" will have some elements of (likely technocratic efficacy-driven) GAL incorporated within it. Of course, by this time tomorrow, I might have been proved wrong...

Tuesday, November 11, 2008

Obama on international law: Anything for GAL?

From Opinio Juris, we have this link to President-elect Obama's answers to a set of questions on his attitudes towards public international law, posed as part of an ASIL survey during the primary campaign. There's a lot of interesting stuff, ranging from the role of international law in US foreign policy, through trade and climate change to the law relating to the use of force and pre-emption. As might be expected given the timing of the survey, there is nothing particularly surprising in any of the responses (although there is the tantalising inclusion of a very cautious "maybe" to becoming a party to the International Criminal Court); from a GAL perspective, perhaps the only really noteworthy thing is the apparent willingness to leave behind the exceptionalism of the Bush years and re-engage with multilateral and global governance regimes. Here's a taste:

What priorities or goals would you establish for the development of existing or new international legal regimes?

The next president will have to prioritize restoring our traditions of adherence to international legal regimes and norms. When I am President, America will reject torture without exception. America is the country that stood against that kind of behavior, and we will do so again...

What would be your administration's international trade policy?

I would ensure that trade agreements include strong and enforceable labor and environmental standards. Companies operating overseas must not gain a competitive advantage by exploiting workers or the environment. But merely adding words to the core of our trade agreements is not enough. We must enforce our agreements through the World Trade Organization and other existing mechanisms..

What would be your strategy for shoring up the Nuclear Non-Proliferation regime and regulation of other weapons of mass destruction?

[amongst a number of other points, quoting from a Bill that he introduced...] it will be U.S. policy "(1) to strongly support the objectives of the Nuclear Non-Proliferation Treaty; (2) to strongly support all appropriate measures to strengthen the Treaty and to attain its objectives; and (3) to pursue a comprehensive and balanced approach to strengthen the global nuclear nonproliferation system in advance of and during the 2010 Nuclear Non-Proliferation Treaty Review Conference to realize a more robust and effective global nuclear nonproliferation system for the 21st century".

What policies would you have toward global climate change regulation?

As president, I will enact a cap on our country's greenhouses gases with a goal of an 80 percent reduction by 2050 - the level scientists warn us we must get to in order to limit the most damaging impacts of climate change. Getting our own house in order is the vital first step in assuring we can get the rest of the world's major polluters - like China, which just passed us as the world's largest emitter - to agree to binding caps.

Plenty of global administration then; for the global administrative law, we'll have to wait and see...

New website: IFIWatchnet

... Well, perhaps not exactly new, but the website IFIWatchnet is certainly of great interest from a GAL perspective; never more so than now, of course, when the financial crisis seems to have generated significant momentum for major change within the major international financial institutions. Here's what they have to say about themselves:

IFIwatchnet is a groundbreaking initiative in international NGO networking, currently in its sixth year of operation. It connects organisations worldwide which are monitoring international financial institutions (IFIs) such as the World Bank, the IMF, and regional development banks. Formed in response to a call by civil society groups to maximise the effectiveness of their communications and networking efforts, it is rapidly developing into a key tool for ever increasing degrees of collaboration between IFIwatching groups at national, regional and international levels. With nearly 60 organisations from 35 different countries in every region of the world, it has huge potential to increase the ability of civil society to make global governance institutions accountable to the people they serve.

Once again, this website demonstrates the extent to which the application of an administrative law sensibility to the institutions of global governance is rapidly coming to form part of the "common sense" of global civil society. I'll be blogging on these - potentially hugely significant - developments from a GAL perspective later in the week; in the meantime, have a poke around the IFIwatchnet site - there's a lot of great stuff on there...

Monday, November 10, 2008

Max Planck Institute project on International Institutions published

The Max Planck Institute for Comparative Public Law and International Law has just published the results of a major research project on The Exercise of Public Authority by International Institutions in the excellent, free online resource, the German Law Journal (full text of all articles available here). A table of contents is available here. Here's a brief overview:

Two articles set out the general approach adopted within the Project, which aims at a combination of global administrative law, constitutionalist discourse and international institutional law. The fifteen thematic studies cover a broad range of international governance mechanisms, including hard and soft forms of regulation, some familiar and others less so Seven cross-cutting analyses take stock of the developments and aim at advancing international legal doctrine. These papers will also be published as a book, together with additional papers and comments by international scholars.

I'll be reading these articles with great interest, and highly recommend that anyone interested in the field of global administrative law do the same. I will post some reflections here - particularly from a GAL perspective - later this week. However, it is readily evident from the outset that the fact that this Project has been brought to such a successful conclusion - both in the German Law Journal special issue, and the forthcoming book - is a major achievement, both for the scholars involved at the MPI and elsewhere, and in terms of the ongoing - and rapid - development of global administrative law more generally. Congratulations to all involved!