A Response to Douglas W Arner and Ross P Buckley by Rolf H Weber
[Rolf H Weber is a Professor for Civil, Commercial and European Law at the University of Zurich Law School and a visiting Professor at the University of Hong Kong]
The contribution of Professor Douglas W Arner and Professor Ross P Buckley is an important piece to the lively debate about the (new) architecture of the global financial system. The exposé is very thoughtful and enlightening, giving a historical outline of the attempts of regulators to prevent financial crises, with special focus on architectural aspects to be derived from experiences made between 1944–98 and 1998–2008. Still, I would like to offer two observations related to often underestimated aspects which could widen the scope of discussions for further considerations and debates.
Firstly, the regulation of international trade within the WTO framework has shown that a ‘hard law’ approach encompasses substantial merits even if not much progress in the further liberalisation of trade rules has been made during the last decade. As correctly stated by Arner and Buckley (at 39), tensions between developed countries and developing countries (mainly the BRIC countries) have indeed increased. Notwithstanding this observation, however, it should not be overlooked that two ongoing advantages of the given WTO framework remain of importance: (i) The international trade regime being based on multilateral agreements (‘hard law’) can be enforced and incorporates a dispute resolution mechanism which puts substantial preventive pressure on countries inducing them to comply with the WTO rules. The respective incentives are not to be underestimated since even financial sanctions (compensation schemes) can be a consequence of non-compliance. This dispute resolution mechanism is quite unique in the international arena and should be taken as an example which could eventually also be applied in other segments of the economy, in particular in the financial markets. Obviously, such a move would require a ‘hardening’ of many ‘soft law’ rules governing financial markets. (ii) The importance of building stronger links between financial markets and international trade is also evidenced by the fact that the co-operation between international financial institutions (ie the IMF, World Bank, Bank of International Settlements) on the one hand and the WTO on the other hand has materially increased; the risk that their respective policies contradict each other, which was still eminent some 10 to 15 years ago, seems to have become relatively remote.
Secondly, as shortly stressed by Arner and Buckley (at 51), issues relating to development and climate change are inextricably linked to financial matters. Even if the Asian financial crisis (1998–99) was more a problem of sustainable growth than the most recent financial crisis (2007–08), the main international financial institutions (IMF, World Bank) should devote more attention to becoming effective lenders, thereby improving the economic positions of the developing countries. Finding financial means that would provide sufficient resources for achieving global access to financial and other markets can appear to be a daunting task. But leveraging and mobilizing the instruments at disposal requires a focused and strong international consensus that is not always present. Nevertheless, it is paramount to spur the current international debate since there is a need for increased financing resources supporting sustainable and environmentally sensitive growth that can only be met with more engaged international cooperation in this field.