K.U. Leuven

L I R G I A D

Leuven Interdisciplinary Research Group on International Agreements and Development

Working Paper No 1 - December 2003

The Role of International Law in Protecting Public

Goods. Regional and Global Challenges

Jan Wouters and Bart De Meester

LIRGIAD, the Leuven Interdisciplinary Research Group on International Agreements and Development, is a joint venture between research groups from four different Faculties and Institutes at the Katholieke Universiteit Leuven: the Institute for International and European Policy (IIEB); the Higher Institute for Labour Studies (HIVA) - Sustainable Development; Development Economics/ Research Group on Food Policy, Transition and Development (OOE); the Working Group for International Economics (OIE); and the Institute for international Law (IIR).

In LIRGIAD, researchers from political sciences, social sciences, law and economics work closely together to examine the growing complexity of international agreements and the interactions they cause between a variety of local, national and international actors in the area of international trade and development.

The working paper series, started in 2003, aims at a broader dissemination of the research of LIRGIAD and of other researchers in the academic community and in society. Reference may be made to these working papers with proper citation of source.

For more information, please visit the website of LIRGIAD on www.lirgiad.be

© LIRGIAD, K.U. Leuven, 2003

IIEB - Institute for International and European Policy

HIVA - Higher Institute for Labour Studies - Sustainable Development

OOE - Development Economics/ Research Group on Food Policy, Transition and Development

IIR - Institute for International Law

OIE– Working Group on International Economics

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The Role of International Law in Protecting Public Goods – Regional and Global Challenges

Jan Wouters* and Bart De Meester**

Ex eo licet stupor noster appareat, quod es sola putamus emi, pro quibus pecuniam solvimus, es gratuita vocamus, pro quibus nos ipsos impendimus.

From this it may show our stupidity; we think that solely the things we give money for, are being paid; and we call it ‘free’, when we pay for it with ourselves.

(Seneca, letters to Lucilius, AD 62)

I. Introduction1 In our increasingly interactive and interdependent world, we are confronted almost daily with issues in international law: think, for instance, of the September 11 attacks and their aftermath, the crises concerning Iraq, Kosovo and East Timor, the transatlantic tensions on the International Criminal Court (ICC), on the Kyoto Protocol on greenhouse gas emissions, or of the recurring trade disputes in the WTO of which the US steel tariffs case is just one recent example. Add to this continual reports about the activities of international organizations, from the UN to the European Union, and it becomes clear that international law is the order of the day. Why is international law needed? Increasingly, problems arise which no single State can deal with and beg for a global answer in order to safeguard a sustainable future for humanity. Actions by people they have never seen and will never see influence people from all over the globe. Globalisation involves a surge of international exchange and interdependence2. By way of example, one could point to the following three forms of interdependence: - human interdependence: according to the World Health Organization, the world's population surpassed 6 billion in June of 1999: more than double the number of people in 1950. The World Bank expects 9 billion people by 2050. Apart from the problems of food and health care that go along with this, there is also an enormous social problem: given that the majority of young people are in Africa and Asia, between now and 2010 we will have to find some way to create more than one billion jobs if we want to avoid unsustainable streams of “economic refugees”;

* Professor of International Law and the Law of International Organizations, Director of the Institute for International Law, K.U.Leuven. ** Scientific Collaborator, Institute for International Law and LIRGIAD (Leuven Interdisciplinary Research Group on International Agreements and Development), K.U.Leuven. 1 This paper was prepared for the UNU-CRIS Conference on Regional Integration and Public Goods, 20-21 November 2003. 2 J. A. SCHOLTE, Globalization. A Critical Introduction (Houndmills, Palgrave, 2000), 16-15.

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- financial and economic interdependence: following the transition by most countries to a market economy, foreign direct investment has reached record levels, business is becoming increasingly transnational and the number of international mergers and takeovers has never been higher. Reports by UNCTAD show that this process has been accompanied not only by a shift of industrial activity to low-wage countries, but also by a sharp increase in income disparity and social exclusion. In addition to this, over the last years, the financial crises in Asia, Russia and Latin America have shown how massive, rapid short-term capital movements can ruin fledgling economies in a very short period of time. Everywhere we hear calls for a new financial system and for a reform of the IMF, but concrete progress in this direction has yet to be made; - environmental interdependence: apart from accelerating urbanization (particularly in the third world), the worsening pollution of rivers, lakes and oceans, and deforestation, the greenhouse effect has been scientifically shown to be a threat to the Earth's ecosystem and to the maintenance of biodiversity. In the coming hundred years, the Earth will grow warmer by at least 3.5°C and the level of the oceans will rise by half a metre. Nothing illustrates the cross-border nature of environmental hazards better than the 50 tonnes of nuclear material that drifted towards Europe from the Chernobyl reactor in 1986. This list could easily be expanded to include problems such as international weapons control (from the 20,000 existing nuclear warheads to the risks of nuclear proliferation and the millions of small arms that are exported to developing countries), public health, refugees, international crime, terrorism, etc. All this is essentially a question of global public goods (hereinafter ‘GPGs’). The world is in dire need of the provision of such global public goods, ranging from international peace, an open system of trade, global justice and a sustainable environment, to financial stability and a lender of last resort. But it is precisely these goods that are insufficiently produced because policy is still formulated primarily at the level of the nation-state and in terms of the nation-state. That there is a need for international rules seems therefore an obvious matter in the light of these challenges. Rather, the question arises whether the current system and rules of international law meet the needs. In other words, how can international law and the law of international organizations be developed in an optimal way, so as to solve these immense problems of collective action? The question is so vast that it cannot be limited to a ‘technical-legal’ approach. When dealing with it, though, one enters a field of tension between the aforementioned needs and certain basic premises of public international law. It is equally important to consider how regional integration can contribute to the sufficient provision of GPGs and keeping global public bads (hereinafter ‘GPBs’) at bay. Since GPGs are an economic concept, this paper will often have to go into the ‘wilds of economic theory’3. In every section, we will first address briefly the economic approach to the issue at hand and thereafter we will focus on legal analysis and findings. After this introduction we will look into the legal aspects of the conceptualisation of GPGs (section II). Secondly, we will address the question why the international community fails to address the problem of GPGs (section III). Finally, we will look at possible solutions by and challenges for international law and regional integration (section IV). 3See Justice Marshall in United States v. Topco Associates, Inc., note 77, Supreme Court of the United States, 1972, 405 U.S. 596, 92 S. Ct. 1126, 31 L. Ed.2d 515.

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II. What are Global Public Goods?

A. Economics Most of today’s countries allocate resources throughout the society by means of markets. The invisible hand guarantees that the self-interest behaviour of individuals leads to optimal distribution of goods when markets function perfectly. However, markets do not perform efficiently with regard to GPGs. This is due to two important differences between public and private goods: non-excludability and non-rivalry4. Private goods are perfectly divisible and can be parcelled out to different individuals. In addition, given a fixed amount of such a good available to the economy, the consumption of one unit of the good by one individual reduces the quantity available to other individuals. The first factor that distinguishes public goods from private goods is that public goods are non-rival. Consumption by one person does not diminish the amount available to others. The second distinguishing factor is the non-excludability of the public good. Once the public good is produced, none can be prevented from consuming it. The costs of excluding non-paying beneficiaries who consume the good are so high that no private profit-maximizing firm is willing to supply the good. Hence the two extremes of the spectrum are pure public goods and pure private goods. Nevertheless, very few goods are purely public or purely private. Inbetween there exist all kinds of goods that vary depending on their degree of non-rivalry and the extent of non-control over exclusion. Club goods are goods that, unlike public goods, are excludable. The ‘club’ can exclude at sufficiently small cost non-members from enjoying the good while the consumption of the club good is non-rival to the members5. These goods can also be called human-made global commons6. An example is the internet: the access provider excludes non-subscribers and charges users upon their consumption in terms of time spent online or volume of traffic. But the use by one consumer does not limit the use by another one. One other particular kind of public7 goods is Commons. Commons are open access resources the property of which is not allocated to individuals but supposedly owned in common8. Commons are not excludable at sufficiently low cost and are in se not rivalrous. Additional consumers of this good may draw up from this excess supply with no extra cost. However, this excess capacity is limited and congestion is reached when the consumption of the good starts to be rival. Congestion arises when an additional unit of the good consumed by one member negatively affects other members’ satisfaction of the public good. An example of these natural global commons is the fish-stock in oceans. Overfishing depletes the world’s

4See P.A. SAMUELSON, “The Pure Theory of Public Expenditure”, 36 The Review of Economics and Statistics (1954), 387-389; See also R. COOTER and T. ULEN, Law and Economics (Reading, Mass., Addison-Wesley, 2000), 42. 5 I. KAUL, I. GRUNBERG and M.A. STERN (eds.), Global Public Goods. International Cooperation in the 21st Century (Oxford, Oxford University Press, 1999), 5. 6 I. KAUL, I. GRUNBERG and M.A. STERN (eds.), o.c., 453. 7 It may be important to notice that commons are not necessarily public. As technology advances, it may be possible to find new and cheaper means for limiting free access to common resources. Hence these commons may shift from public to private goods. E.g. While before it was not feasible to limit people’s access to road infrastructure, it is now possible to put barriers at the access to highways and limit the access to people who pay tolls or visiting fees. Moreover, this may become necessary when congestion occurs: when a too large number of people start to use the highway, the traffic becomes too dense, collisions may happen with traffic jams as a result. 8 See G. HARDIN, “The Tragedy of the Commons”, 27 Ekistics 160 (1969), 168-170.

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fish-stock and threatens endangered species with extinction.“Freedom in the commons brings ruin to all”9. Finally? a third category of GPGs, defined by KAUL, GRUNBERG et al., is global policy outcomes10. These GPGs do not differ on the basis of excludability or rivalry. They differ from the previous categories because they are all GPGs for which a continuous effort is required to ensure that they are supplied. For instance, peace possesses the attributes of non-excludability and non-rivalry but it is up to the international community to provide peace continuously. Unfortunately, these GPGs are better known by their adverse side: global public bads.

B. Legal assessment of GPGs Traditionally, GPGs existed in those areas outside national boundaries, so-called “foreign affairs”, such as outer space and the oceans and seas. There existed already in the past the belief that these goods should be dealt with on a cooperative basis because, even if they seemed unlimited and hence non-rivalrous and non-excludable, unlimited use and conquest of these goods might ultimately prove disastrous. Already in the 17th century there was concern with GPGs. In the late 16th and early 17th centuries, the great voyages of discovery and the resulting sea-borne empires in Europe necessitated internationally accepted rules on rights to use of the ocean. There were already negotiations on freedom of the high seas and on the Grotian principle of mare liberum. Grotius had noted that “sea, since it is incapable of being seized as air, cannot have been attached to the possessions of any particular nation.” Beyond some parts of the seas that should be territorial, there should be recognised the “high seas as a common resource from which none, save pirates, could legitimately be excluded”11. Later on, the Preamble of Outer Space Treaty12 of 1967, stated that “the exploration and use of outer space should be carried on for the benefit of all peoples irrespective of the degree of their economic or scientific development” and that the treaty parties wanted “to contribute to broad international co-operation in the scientific as well as the legal aspects of the exploration and use of outer space for peaceful purposes”. Similarly the Geneva Conventions of 1958 and 1960 concerning the Law of the Seas realised the dangers that the non-exclusivity of the seas held. The parties considered “the development of modern techniques for the exploitation of the living resources of the sea, increasing man's ability to meet the need of the world's expanding population for food, has exposed some of these resources to the danger of being over-exploited” and that “the nature of the problems involved in the conservation of the living resources of the high seas is such that there is a clear necessity that they be solved, whenever possible, on the basis of international co-operation through the concerted action of all the States concerned”13. This all led to the introduction of the concept “Common Heritage of Mankind” (cfr infra).

9 Id. 10 I. KAUL, I. GRUNBERG and M.A. STERN (eds.), o.c., 453. 11 R. COOTER and T. ULEN, o.c., 124-125; See also H. BULL and B. KINGSBURY, Hugo Grotius and International Relations (Oxford, Claredon Press, 1990), xi + 331 p. 12 Treaty on Principles Governing the Activities of States in the Exploration and Use of Outer Space, including the Moon and other Celestial Objects, signed in London, Moscow and Washington, 27 January 1967. 13 Geneva Convention on Fishing and Conservation of the Living Resources of the High Seas, 29 April 1958.

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In these more globalised times, the international community is increasingly dealing with and recognising shared and transboundary GPGs. GPGs are unlimited by national boundaries, but cross over into sub-regional, regional and global spheres14. We are faced with social, political, cultural, environmental etc. problems that affect everyone. It is clear that the invisible hand of the market is not allocating these goods in an optimal way. There is currently an underproduction of GPGs: Concerning health, some 2 billion people lack access to low-cost but essential medicines15. The supposed benefits of privatisation social services (encouraged by the World Bank and The IMF and framed by the GATS) are elusive, with inconclusive evidence on efficiency and quality standards in the private relative to the public sector. Meanwhile, the examples of market failures in private provisioning abound16. In the environment, international action on climate change has been slow, despite over 30 years of growing evidence of the negative impact that our activities have upon the atmosphere17. More examples could be given. At the same time there is an enormous overproduction of GPBs: At this very moment there are 44 wars raging somewhere in the world, mostly internal conflicts, 95 of whose victims are members of the civilian population. The twentieth century left 140 million people dead from international and domestic conflicts. It was the bloodiest century in human history. Environmental pollution is peaking. In the nineties, the yearly expulsion by the industries amounted approximately 120 million kilograms of lead and 2 million kilograms of mercury. We do actually have on average 500 to 1000 times more lead in our blood than our pre-industrial ancestors… GPGs provide an opportunity for getting to grips with these issues of common interest. They highlight the way in which problems overlap and require integrated rather than fragmented solutions18. The Security Council has declared in its Summit Declaration19 of 31 January 1991 that threats to international peace and security can evolve from “…sources of instability in the economic, social, humanitarian and ecological field.” In a modern interpretation of the classic security concept of Article 1 (1) UN Charter, it seems that even environmental problems, social justice, population planning and economic equality are part of the security issue20. Unfortunately until now, despite this declaration, the Security Council has not taken any enforcement measures under Chapter VII to protect other GPGs than international peace and security. On this moment, there seems to be on the basis of the ‘post 9/11 resolutions’ only a consensus to fight international terrorism. Wouldn’t it be possible, without approving the motives and actions of the terrorists, that international terrorism finds ultimately its grounds in the excesses of the globalisation and the international isolation of large parts of the world? Moreover, Law itself is a GPG. Adam Smith recognised the role of government in providing essential goods like a legal system, infrastructures and defence, the provision of which could 14 R. GARDINER and K. LE GOULVEN, “Towards Earth Summit 2002. Sustaining Our Global Public Goods.”, Economic Briefing No. 3 (2001), 1, http://www.earthsummit2002.org/es/issues/GPG/gpg.pdf (12 November 2003). 15 UNDP, “Human Development Report 2001. Making new technologies work for human development”, http://www.undp.org/hdr2001 (12 November 2003). 16 UNDP, Human Development Report 2003. Millennium Development Goals: A compact among nations to end human poverty, 113, http://www.undp.org/hdr2003 (12 November 2003). 17 See S. BARRETT, “Montreal versus Kyoto. International Cooperation and the Global Environment” in I. KAUL, I. GRUNBERG and M.A. STERN (eds.), o.c., 194. 18 EU Focus on Global Public Goods, The EU at the WSSD, 2002, http://europa.eu.int/comm/environment/wssd/publicgoods.pdf. (13 November 2003). 19 UN Doc. S/42111 (1992). 20 J. WOUTERS and C. RYNGAERT, “Naar een sterkere juridische omkadering van de globalisering”, in Parlementaire werkgroep “Globalisering”. Basisrapporten, Parl. St. Kamer, 2002-03, nr. 2330/1, 130.

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not be handled efficiently through market mechanisms. Without some international legal framework, based on the cooperation of the whole international community, there will be no equitable and adequate provision of the essential GPGs the world is in dire need of.

III. Why does the international community fail to provide GPGs adequately?

A. Economics As said before, market forces do not manage to allocate public goods efficiently. Due to its characteristics of non-excludability, a public good cannot be parcelled out, priced and sold, as it would be the case for any privately owned good. While for private goods individuals reveal their preference by buying units of the private good on the market, this is not possible for public goods. Public goods are indivisible and thus the market does not reveal the optimal level of supply. The market failure of the mismatched provision of the GPG shares many commonalities with the well-known game design of the prisoner’s dilemma. The prisoner’s dilemma helps explain the behaviour of an individual’s pursuit of his utility in a Pareto21 sub-optimal equilibrium, from which all participants to a game would increase their well-being if better coordination were implemented22. An efficient allocation of GPGs is not sustainable by a decentralised or anarchic international system (cfr. Infra). The pursuit of self-interest by each individual country results in a collectively unsatisfying outcome. Nation-states, individually maximising their national utility, get locked into non-cooperative paths that undermine the provision of the public good. Moreover, since there is no control over the exclusion of GPGs, countries find it convenient to avoid contribution. It is difficult to exclude non-paying beneficiaries and hence countries hope to benefit at no cost themselves from the payment of others. This phenomenon is called free riding. A free rider contributes less than his true marginal value derived from a public good. If everyone contributes up to his marginal value of the public good, there would be no free riding and the provision of the public good would be optimal. How could a solution to this sub-optimal situation be found? According to the famous Coase theorem23, “when transaction costs are zero, an efficient use of resources results from private bargaining, regardless of the legal assignment of property rights”. Cooperation between countries would lead to an optimal outcome and there would be no need for international regulations. Nevertheless this theorem confronts a lot of problems when applying to the international community. First of all, the theorem supposes that transaction costs are zero or sufficiently low. Transaction costs are the costs of exchange. This involves the costs of locating a bargaining partner, the costs of striking the bargain and finally the costs of enforcing the bargain. In case of negotiating the use and provision of GPGs these costs are extremely high. More partners means higher costs. In a world of approximately 190 countries striking a bargain that pleases all may prove very difficult24. Striking a bargain also involves

21 A particular situation is said to be Pareto efficient if it is impossible to change it so as to make at least one person better off without making another person worse off. 22 R. COOTER and T. ULEN, o.c., 34. 23 The theorem is discussed in R. H. COASE, “The Problem of Social Cost”, 3 Journal of Law and Economics 1 (1960). 24 This is also a problem with the basic prisoner’s dilemma concept. The prisoner’s dilemma is common as a game between two players. Therefore it might be difficult to extrapolate the model on the international level. See

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reliable information on the nature of the GPG or GPB. Moreover, the distribution of benefits and costs from collective action must be identified. However, acquiring and elaborating information is costly and ultimately economic agents will always bear some kind of uncertainty because eliminating it would be prohibitively expensive. It is clear that the sole reliance on natural bargaining by countries is not sufficient to achieve an optimal outcome. In that case, there is an important role for law. Law should lower the transaction costs and hence ‘lubricate’ bargaining. One important way for the law to do this is by defining simple and clear property rights. The normative Coase theorem states that“law should be structured so as to remove the impediments to private agreements”25. The allocation of property rights to all the earth’s resources may be one way to lower transaction costs. Nevertheless this allocation of rights has its limits. Having sole jurisdiction to a piece of a sea is of no help if the fish within it disperse evenly or if pollution that enters the sea mixes uniformly26. Moreover, the desirable outcome promised by the Coase theorem requires more than a full specification of property rights; it also requires enforcement by a third party. This brings us to the main problem of the international legal order: Third party enforcement of contracts (treaties) is not countenanced by the international system.

B. Legal assessment Since individual countries are pursuing only their own individual interests, the blatant result is that the provision of GPGs is undermined and that there is an overprovision of GPBs. GPGs are global in their scope, but policy-making remains largely national. This is called the jurisdiction gap. There is a “discrepancy between the global boundaries of today’s major policy concerns and the essentially national boundaries of policy-making. 27” States do rarely introduce a sufficient and well-elaborated international dimension to their public policies and make insufficient funds available for international cooperation. Often policy-makers are too concerned with getting re-elected and only try to maximise short-term utility. A pure voluntaristic approach to problems of GPGs is eventually detrimental to all people in the world and also to generations to come. International environmental law may serve as an example. This is a booming area: in the last fourty years alone, hundreds of multilateral and bilateral treaties for the protection of the environment have been signed. Yet in spite of all the solemn declarations from Stockholm to Rio to Johannesburg, international environmental law is still limited to sets of separate rules: a disparate collection of sectoral rules, ranging from pollution of the sea and responsibility for nuclear risks to the capping of greenhouse gas emissions in the Kyoto protocol of December 1997. The lack of signing by major polluters like the United States and also Russia sending mixed signals indicates the short-term policies of policymakers and makes clear that countries rather free ride on the efforts in pollution-reduction done by other countries. Thus there is a lack of incentive for anyone to act positively, but rather to wait in hope for others to take the initiative. The nature of the public good must be well understood before nations are prepared to act. As it is said above, acquiring and elaborating information is costly. In the international scene, the value of many GPGs is characterised by a high degree of uncertainty. The value of scientific

S. BARRETT, “International Cooperation and the International Commons”, 10 Duke Environmental Law & Policy Forum 131 (1999), 134. 25 R. COOTER and T. ULEN, o.c., 93. 26 S. BARRETT, l.c., 136; See also C.D. STONE, “What to do About Biodiversity: Property Rights, Public Goods and the Earth’s Biological Riches”, 68 South California Law Review 577 (1995). 27 I. KAUL, I. GRUNBERG and M.A. STERN, o.c., 450.

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data is often contested because it cannot give 100% certainty on the value of a GPG or the threat caused by a GPB. The fact that the United States has challenged before the World Trade Organisation (WTO) the EU regulation which banned, based on health concerns, the sale of hormone-treated beef within the EU, forms a clear illustration of the fact that countries may differ on the value of scientific evidence28 and hence act differently. There is often also uncertainty surrounding the behaviour of other countries with respect to collective action. It is argued that the problem of free riding rises not only because free riders cannot be excluded from consuming the public good, but also because they are simply unnoticeable to other members29. In small groups, it is easier for parties to monitor reciprocally. This is much more difficult on the global level. Methods of information collection on the international level are a balancing-exercise on the thin line between what is possible and what is a too large infringement of states’ sovereignty (cfr. Infra). One source of information for an international organisation to monitor the application of a treaty is reporting by its members on a regular or periodical basis. The International Labour Organisation (ILO) was the first international organisation with an elaborated system of reporting (1919). Today reporting is common in almost every international organisation. When the reporting obligation is not provided for in a treaty, in some cases this is required in a resolution of the international organisation30. Reporting is especially common in case of human rights, disarmament, environment, international trade and monetary policy31. While this reporting might provide international organisations with value information, often there are important shortcomings. Reporting by states is often very irregularly. Up to 80% of the parties to human rights treaties reports too late32. Moreover, the organisations collecting the reports often have a large backlog in reading and evaluating the reports. The most obvious shortcoming of reporting, however, is the lack of self-critique of the treaty parties. Therefore, sometimes international organisations collect information actively themselves. Several international organisations empower their organs to collect information on the way governments fulfil their obligations. This can even go further and there might be established an inspection commission to collect information in the countries themselves33. Because of the delicate character of these inspections, these commissions do normally get only a limited mandate. The use of fact-finding commissions is often heavily contested34. 28 See European Communities – Measures concerning meat and meat products (Hormones), Report of the Appellate Body, AB-1997-4, WT/DS26/AB/R, WT/DS48/AB/R. 29 See M. OLSON, The Logic of Collective Action: Public Goods and the Theory of Groups (Cambridge, Mass., Harvard University Press, 1965), x + 176 p. 30 H.G. SCHERMERS and N.M. BLOKKER, International Institutional Law, (Den Haag/ London/ Boston, Kluwer Law International, 1995), 871. 31 In case of the WTO there exists the Trade Policy Review Body (Annex 3 to the WTO Agreement). Each member has to report regularly on the trade policy and –practice. The members of the IMF have to report the IMF immediately on exchange rate agreements. (art. IV (1) IMF statute). According to art. III (1) of the Chemical Weapons Convention (1993), the parties to the convention have to provide information on their chemical weapons within 30 days after their accession to the organisation. 32 In case of the Treaty on the Elimination of Discrimination on the Basis of Race, 124 of the 151 member states reported too late, in case of the International Convention on Civil and Political Rights, 97 of the 138 members reported too late, in case of the Treaty on the Elimination of Discrimination Against Women, this was 134 of the 162… See Ph. SANDS and P. KLEIN, Bowett’s Law of International Institutions, (London, Sweet and Maxwell, 2001), 318. 33 The European Committee on the Prevention of Torture and Inhuman or Humiliating Treatment or Punishment performs inspections on all places where people are taken away their freedom by the public authorities, on the territory of states that are member to the convention. 34 Ph. SANDS and P. KLEIN, o.c., 320. This is certainly due to the danger of dissemating confidential information, collected by the commission, to other countries.

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Linked to the problem of inaccurate information is the fact that in designing the policies on international level, governments often do not take into account the concerns and problems of other stakeholders. This can be called the participation gap. “All major actors should contribute to the production and consumption of public goods, and to setting priorities among various kinds of public goods. […] If this requirement is not met, the publicness of public goods will stay a potentiality, not a reality35.” GPGs do not only concern governments. They also affect the people, civil society and business. The Cotonou agreement between the European Union and the African, Caribbean and Pacific group of developing nations (ACP) takes this multi-stakeholder principle into account when setting out the guidelines to draft developing policies36. Even when only looking at governments, it seems that not all governments get equally involved. Too often developing countries are excluded from intergovernmental decision-making. Agreements on which GPGs should be given priority are political choices in which the maximum involvement of all those affected is crucial37. This also means that equal provision of GPGs to all countries and all people is essential. A more equal distribution of outcome has important repercussions on the capability of the global system to deliver much needed GPGs. Equity for a group implies the achievement of rules and guiding principles of social organisation (justice) that pay proportional attention to everyone’s interests, concerns and liberties. Therefore justice is rooted in equity and it is the basis for social cohesion38 Social cohesion makes collective action easier. It helps to build a commitment to legal rules in international agreements and it also gives countries the means to finance the provision of GPGs. This explains also the critique on the Coase theorem. While Coasean contracts should manage to allocate GPGs effectively, they do not account for the distribution of rents within the contractual relationship39. Needless to say that equal provision of democracy, peace, health, human rights or other GPGs is not the case in today’s world. As has been explained above, the provision of GPGs depends mainly upon the collective action of nation-states. Nation states can be seen as rational selfish agents that might have reciprocally conflicting interests. Nation-states that are individually focusing on their self-interest on a short-term basis fail to achieve the optimal allocation of the public goods. This non-cooperation leads to the inefficient, non-cooperative outcome of the prisoner’s dilemma. While the Coase theorem might suggest that negotiations by states on the international level lead to optimal allocation of GPGs, it is clear that because of the high transaction costs in the international field this bargaining will not effectively take place. Therefore the normative Coase theorem indicates that an international legal framework might be needed to lower these transaction costs and ensure the emergence of an international community that is able to allocate GPGs and avoid GPBs in an optimal way. Nevertheless states can hardly be forced to enter into negotiations. The paradigm of state sovereignty: the sovereign equality of states, enshrined in art. 2 (1) of the Charter of the United Nations, has, until now, given international law a horizontal and decentralized 35 I. KAUL, I. GRUNBERG and M. A. STERN, o.c., xxix. 36 See inter alia Article 15 (3), 17 (3) and 20 of the Partnership Agreement between the members of the African, Caribbean and Pacific Group of States of the one part, and the European Community and its Member States, of the other part, signed in Cotonou, Benin on 23 June 2000. 37 EU Focus on Global Public Goods, The EU at the WSSD, 2002, http://europa.eu.int/comm/environment/wssd/publicgoods.pdf. (13 November 2003). 38 A. SEN, “Global Justice. Beyond International Equity”, in I. KAUL, I. GRUNBERG and M. A. STERN, o.c., 116. SEN refers to John Rawls’ notion of “justice as fairness“. 39 See R. COOTER, “The Cost of Coase”, 11 Journal of Legal Studies 1 (1982).

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character. There exists no world legislator (the UN General Assembly can, generally speaking, only make legally non-binding resolutions), since the states themselves, according to the Westphalian model, form the highest world authority and are therefore both legislators and addressees of international rules simultaneously. Countries cannot be forced to enter the agreements. An efficient outcome of bargaining is not sustainable by this decentralized or anarchic international system40. Since participation in an international treaty is voluntary, agreements that seek to sustain cooperation must also be self-enforcing41. There is no world police force; i.e. there is no central system for maintaining and enforcing the law (the powers of the UN Security Council, provided by chapter VII of the UN Charter, however important they may be, are nevertheless subject to considerable legal and political limitations). This indicates immediately the problem with the normative Coase theorem: Even if states manage to allocate property rights to all GPGs, this also requires enforcement by a third party. Because of this concept of sovereignty and hence the lack of a world police force, free riding may still take place within the agreement. Of course, nothing prevents countries from negotiating an agreement in which rights are allocated. And actually countries do often strike agreements. The century we are looking back on has been the century in which international law and the law of international organizations flourished: in the framework of the League of Nations, and then the UN, we have succeeded in codifying, consolidating and developing international law in numerous multilateral treaties ranging from human rights and maritime law to international labour, trade and environmental norms. Never before had the world witnessed such an extensive network of international organizations (Belgium alone is a member of more than 70). Never before did states make such intensive use of treaties for arranging their mutual concerns: more than 40,000 are registered at the UN. The twentieth century was the century of human rights, with as a milestone and a continuing “common standard of achievement” the Universal Declaration of Human Rights, which celebrated its fiftieth anniversary in December 1998. For the peoples in Western Europe, it was the century of European integration: fifty years ago a mere dream, the economic and political unification of Europe has meanwhile been so successful that since January 1, 1999 it has resulted in a single European currency, the Euro. It was the century of decolonization and the recognition of peoples’ right to self-determination, which saw the number of UN members increase to 191 (Switzerland and East Timor recently joined). The harder problem is nevertheless figuring out how to ensure full participation in these agreements effecting an allocation of these GPGs and how to enforce this allocation. International organisations should be designed in such a way that participation is encouraged and sustained and non-compliance can be deterred. Lack of collective action has created the failure to develop and implement policies to ensure the adequate provision of GPGs. This being said, states may have other forceful motives to participate in treaties and comply with them. A strong incentive is often that they are worried about their reputation42. A damaged reputation resulting from non-participation or from non-compliance can make it difficult for the state concerned to enter into certain future agreements. Another motive for states to become party to an agreement may be that they would in any event be happy to comply with the agreed

40 T. SANDLER, Global Challenges: An approach to Environmental, Political and Economic Problems (Cambridge/New York, Cambridge University Press, 1997), 132-143. 41 S. BARRETT, l.c., 131. 42 S. BARRETT, l.c., 139.

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rules unilaterally or that compliance does not raise any problems.43 It has been noted, for example, that recent environmental treaties tend to codify Pareto efficient outcomes and, as such, do not represent much in the way of cooperative gains. It has been observed that “the majority of Helsinki Protocol signers had either met or were well on or were well on their way to meeting the treaty’s mandated 30% reduction of emissions from 1980 levels by the time of adoption (8 July 1985); and, on average, two-thirds of the mandated reduction had been achieved prior to the treaty being framed.”44 Therefore, there is need for international agreements that are able to ensure participation and compliance and eventually enhance the optimal allocation of GPGs. Though sovereignty might have an important function insofar as it orders international relations and gives them security, and insofar as it clarifies the rights and responsibilities of states, the problems sketched out make it clear that this concept is in urgent need of reconsideration in the beginning of the twentieth century.

IV. The Way Forward

A. Economics Economic analysis may suggest some improvements in the international system so as to create more effective international instruments that can ensure Pareto efficient allocation of GPGs. We indicated above how the normative Coase theorem recognises the difficulties of striking bargains on the international level because of the high transaction costs (asymmetric information, large number of actors to agree with…). The normative theorem points to law as the instrument to remove the impediments for cooperation. “Some transaction costs are endogenous to the legal system in the sense that legal rules can lower them.”45 Law should be designed to prevent coercive threats and to eliminate the destructiveness of disagreement46. One way to enhance cooperation is resource allocation through property law. By allocating property rights to the party who values them the most, the law makes exchange of rights unnecessary and thus saves the cost of transaction47. Moreover this avoids the tragedy of the commons, a situation in which unowned and unmanaged common resources are available to all, with the consequence that entrants crowd onto these resources, overusing them and underinvesting in their maintenance and improvement48. Non-control over exclusion acts as a sort of perverse incentive for nations to rush to grasp a slide of the pie before it is completely exhausted by others. Once countries realise the necessity to protect a global common they might mandate an international organisation to find the most suitable arrangements to achieve a sustainable use of the common. International organisations then work on the definition of

43 See G.W. DOWNS and others, “Is the good news about compliance good news about cooperation?”, 50 International Organization 379 (1996), 380 and 383. 44 D.G. ARCE and T. SANDLER, “Transnational public goods: strategies and institutions”, 17 European Journal of Political Economy 493 (2001), 494. 45 R. COOTER and T. ULEN, o.c., 93. 46 This is called the normative Hobbes theorem. If there is only disagreement in society, there will be chaos in society. Thomas Hobbes (17th century) thought that people would seldom be rational enough to agree, even if there were no serious impediments to bargaining (homo homini lupus). Their natural cupidity would lead them to quarrel unless a third, stronger party forced them to agree. This idea is explained at length in R. COOTER, “The cost of Coase”, 11 Journal of Legal Studies 1 (1982). 47 R. COOTER and T. ULEN, o.c., 94. 48 C.M. ROSE, “The Several Futures of Property: Of Cyberspace and Folk Tales, Emission Trades and Ecosystems”, 83 Minnesota Law Review 129 (1998), 129.

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property rights over the commons. However, these arrangements can vary greatly and range from tradable permits to quotas to complete bans. It can even be possible that property rights are simply transferred to future generations (cfr. The Antarctic). Present generations should be encouraged to weigh the impact of their action on future generations49. Nevertheless, this allocation of property rights and the compliance to agreements supposes an enforcing third party. This is especially difficult on the international level because of the concept of sovereignty (cfr. supra). Nation-states have proved mostly50 unwilling to cede sovereignty. Therefore international agreements should be self-enforcing. It is important that possible enforcement sanctions in an agreement are credible enough. If punishment is credible, unilateral deviation can be deterred and there will eventually never be a sanction. The extreme form of non-compliance is non-participation or abandoning the agreement. Because of their sovereignty countries can decide autonomously whether to become a party or not. If one can make non-participation the worst thing to do for a country, compliance will follow because these require less heavy sanctions than deterrence of non-participation. Less heavy sanctions are more credible and therefore more effective51. One way to make compliance more likely is to ensure that in the interactions between the countries within the framework of the agreement, there is no last round. Mostly countries choose to comply with each obligation they agreed upon in each interaction (round), because they will probably meet again in another interaction (round). They know they might be punished in the next round by the other parties or, if this is the case, by the international organisation linked to the agreement. However, if they know they are in the last negotiation round, they might prefer not to comply and reap the benefits of free riding, because they will not be punished any more in the next round since there will be none!52 Therefore it might be preferable to negotiate agreements for an unlimited amount of time, aimed on confidence building, which is the case for the EU Treaty and the EC Treaty53. Another solution to enhance cooperation because transaction costs will be lower, is to reduce the number of parties that have to agree. The higher the number of participants in negotiations, the more difficult it will be to strike a deal that is acceptable to everyone. In an international community with more than 190 countries this is extremely difficult. Moreover since it is increasingly recognised that also other stakeholders should be involved in the negotiation process on the allocation of GPGs. This makes cooperation almost impossible. It also multiplies the difficulties of monitoring of the agreements and identifying free riders. A redefinition or regrouping of actors can reduce the number of parties and hence reduce transaction costs54.

49 KAUL, GRUNBERG and STERN suggest the establishment of a Global Trusteeship Council. See I. KAUL, I. GRUNBERG and M. A. STERN, o.c., 482. 50 The European Community being an important exception. 51 S. BARRETT, l.c., 140. 52 This is called the tit-for-tat strategy. See R. AXELROD, The Evolution of Cooperation, (New York, Basic Books, 1984), 54 and T. SANDLER, Collective Action; theory and applications (Michigan, University of Michigan Press, 1992), 83. 53 There is also currently no exit option in the EU treaty. This might change when the new European Constitution is adopted. 54 See W. LOEHR and T. SANDLER, “On the public character of goods” in W. LOEHR and T. SANDLER (eds.), Public Goods and Public Policy, (Sage Publications, 1978).

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B. Legal solutions Allocating property rights in order to ensure easy negotiations and cooperation on the use and maintenance of GPGs has been a way to protect the Antarctic55, the oceans56, the moon57 and outer space58. These treaties often refer to the concept “common heritage of mankind”. The property right on these GPGs is not allocated to a certain country or a certain group of people. It is taking into account the rights of all people, unlimited in space, but also in time. This concept does also take into account the claims of future generations. International law is at the turn of the 21st century responsible to secure the future of humanity as a whole. Therefore article 137 UN Law of the Sea Treaty stated that “(n)o State shall claim or exercise sovereignty or sovereign rights over any part of the Area or its resources, nor shall any State or natural or juridical person appropriate any part thereof. No such claim or exercise of sovereignty or sovereign rights nor such appropriation shall be recognized” and that “(a)ll rights in the resources of the Area are vested in mankind as a whole, on whose behalf the Authority shall act. These resources are not subject to alienation.” In case of the Antarctic treaty the claims of states on the Antarctic were frozen. In this context, we should make a distinction between two relevant concepts of international law. The Grotian principle of mare liberum resulted in the concept of res communis. These goods are characterised by their freedom of exploitation. They belong to all and, in principle, no limits are set on their use. A new concept emerged in 1967 when Ambassador Pardo from Malta pleaded in the UN General Assembly for an exploitation of the deep seabed resources in the general interest under supervision of an international body59. This led to the emergence of the concept common heritage of mankind. Both res communis and common heritage of mankind have in common that goods in one of these categories are not under the sovereignty of any state and that national appropriation is not possible. Nevertheless, the two concepts differ sharply on a number of points. Res communis is aimed at making it for all countries possible to use the goods. This means that there should be freedom of access, exploration and exploitation for all states. States have to avoid obstructing the use of res communis by other states. States have the right to appropriate the products of exploration/exploitation of the res communis. An example of a res communis is the high seas. In contrast, the concept of common heritage of mankind is rather aimed at preservation of the goods. For this kind of public goods, a governing mechanism will regulate the access, exploration and exploitation. States will only have rights on the products of exploitation in accordance with the treaties. These treaties mostly use criteria of equity to divide the gains of exploitation. Two GPGs are recognised in international agreements as common heritage of mankind, namely the deep seabed and the moon and its natural resources.

55 Antarctic Treaty, signed in Washington, 1 December 1959. 56 United Nations Convention on the Law of the Sea, opened for signature in New York, 10 December 1982 (hereinafter ‘UN Law of the Sea Treaty’). 57 Agreement governing the activities of states on the moon and other celestial objects, opened for signature in New York, 18 December 1979. 58 Treaty on Principles Governing the Activities of States in the Exploration and Use of Outer Space, including the Moon and other Celestial Objects, signed in London, Moscow and Washington, 27 January 1967. 59 International Seabed Authority, see article 82 UN Law of the Sea Treaty.

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The deep seabed (‘the Area’60) starts outside the 200 miles exclusive economic zone. Within the exclusive economic zone the resources are reserved for the coastal states. This concept was needed to preserve the interests of developing countries facing the technological competences of developed countries to extract resources and fish the fish stocks near their coasts61. While the UN Law of the Sea Treaty identifies the Area and its resources as common heritage of mankind62, this is not done for the high seas itself. Therefore the high seas are managed by the principle ‘freedom of high seas’63. This means that the high seas are res communis. Freedom of the high seas holds inter alia the freedom of maritime transport, freedom to install submarine cables and pipelines and the freedom of fishery. Hence, whereas the concept of common heritage of mankind aims to preserve GPGs for present and future generations, the concept of res communis stresses the rights for all to use these GPGs. One can ask oneself whether the premise that res communis holds rights for all also implies that there are also obligations for all. However this may, be, unlimited use of the GPGs can prove detrimental to all. Therefore, the danger of exhaustion of fish stocks in the oceans led states to negotiate agreements on ‘straddling fish stocks’64. A form of trusteeship over GPGs, like is the case with the deep sea bed, can help to preserve GPGs. Such a trusteeship should be a body that acts on behalf of all nations. The nature of the responsibilities involved makes it appropriate that this body be an organ of the United Nations. The Commisison on Global Governance proposed that the Trusteeship Council, now free of its original responsibilities, could be given the mandate of exercising trusteeship over the global commons65. Its functions would include the administration of environmental treaties in such fields as climate change, biodiversity, outer space and the law of the sea. It might seem that the concept of common heritage of mankind is a good solution to shield GPGs from overuse and congestion and to take into account the interests of future generations. Nevertheless, the concept is heavily contested. While states in 1967 might have agreed to categorise the outer space as province of all mankind66, in 1979 the moon and its resources as common heritage of mankind67 and in 1982 might have agreed on the categorisation of the Area as common heritage of mankind68, these positions are increasingly questioned today. Technological developments and changes in political interests make it possible and desirable for some states to appropriate parts of outer space, the moon and/or the deep sea bed. For instance, the principle of demilitarisation69 set out in article IV of the Outer Space treaty and article 3 of the Moon treaty might conflict with the United States’ ambitions to install an anti-ballistic missiles (ABM) space shield.

60 The Area is the seabed and ocean floor and subsoil thereof. (Article 1 UN Law of the Sea Treaty). 61 The territorial sea is limited to 12 sea miles from the coast. (Article 3 UN Law of the Sea Treaty). 62 Article 136 UN Law of the Sea Treaty. 63 Article 87 UN Law of the Sea Treaty. 64 The United Nations Agreement for the Implementation of the Provisions of the United Nations Convention on the Law of the Sea of 10 December 1982 relating to the Conservation and Management of Straddling Fish Stocks and Highly Migratory Fish Stocks, opened for signing in New York, 4 December 1995, in force from 11 December 2001. 65 Commission on Global Governance, Our Global Neighborhood, (Oxford, Oxford University Press, 1995), 252. 66 Article I Outer Space Treaty. 67 Article 11 Moon treaty. 68 Article 136 UN Law of the Sea Treaty. 69 See W. STOCKER, Das Prinzip des Common Heritage of Mankind als Ausdruck des Staatengemeinschaftsinteresses im Völkerrecht (Zürich, Schulthess Polygraphischer Verlag, 1993), 146.

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Could it also be possible to allocate property rights to intangible GPGs like peace or justice…? This would mean that the property right of peace, security or well-being would be explicitly allocated in a treaty. This could be done by giving this right explicitly to the people. In that case citizens will have the inalienable right to live in peace, be free of want, and enjoy their own culture… vis à vis the government (of their own country but also of other countries). The counterpart of a right is an obligation. Hence governments would have the obligation to ensure these rights (GPGs) for all people around the globe and people should have the right to compel this GPG from governments. Moreover, these obligations should not only rest on governments. It is recognised that governments are only one source of threats to human rights and that government action alone is often not sufficient to protect many human rights. “This means that all citizens, as individuals and as members of different private groups and associations, should accept the obligation to recognize and help protect the rights of others.” 70 Unfortunately, the international community still has to go a long way to realise this equal distribution of GPGs for all people. The short-term policy making of many governments does not give us much hope. While it is true that some countries may reap greater profits in the short term by intensively fishing the oceans, extracting minerals from the soil, cutting tropic hardwood, denying fundamental human rights to parts of their population…, in the long term this will eventually backfire. This fact was already acknowledged by the Security Council in the Summit Declaration Summit Declaration71 of 31 January 1991. Threats to international peace and security can indeed evolve from “…sources of instability in the economic, social, humanitarian and ecological field.” The resulting global public bads should be tackled with in a way that addresses their root causes. For instance, solving the problems of a large influx of migrants with a migration stop will not solve the problem in the long term if there is no focus on the reasons why people leave their birthplace and travel hundreds of kilometres to start a new life. The same can be said about the fighting against terrorism. As it is said previously, would a real eradication of terrorism, again without approving terrorists’ actions, not mean that the reasons why people are willing to blow themselves up should be dealt with?72 If governments fail to develop a long term policy, this will be detrimental to all, present and certainly future generations. Indeed, it is not true that normative considerations and a desire to “look out for” future generations play no part at all in the decision-making of governments. The key is to “make it close”73 so governments will be willing to forego the short-term benefits. They should introduce an international dimension in their public policies. The international interest should become the national interest74. Therefore it is crucial to stress the importance of the national legal order being linked to the international legal order. National and regional governments and their administrations have to learn to make a meaningful contribution to the provision of GPGs. This requires a greater internalization of the cross-border aspects of national and regional policy, which should inevitably lead to departmental reorganizations and a new approach to diplomatic functions. In this cooperation on the allocation of GPGs, there should also be a new approach to the involvement of all stakeholders. For centuries, international law has been monopolized by states considered as subjects of law. According to the manuals, only states possess the so-called 70 Commission on Global Governance, o.c., 56. 71 UN Doc. S/42111 (1992). 72 T.L. FRIEDMAN, “War on terrorism suffered a blow in Cancún”, New York Times, 26 September 2003. 73 C. GULATI, “The “tragedy of the commons” in plant genetic resources: The need for a new international regime centered around an international biotechnology patent office”, 4 Yale Human Rights and Development Law Journal 63 (2001), 85. 74 K. ANNAN, “Two concepts of sovereignty”, The Economist, 18 September 1999.

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primary legal personality in international law. International organizations, NGOs, individuals and companies are only assigned a derivative legal personality under international law, in the sense that their status as bearer of rights and duties depends on acceptance by the states. One of the essential lessons which can be drawn from the explosive growth and success of EU law during the last four decades seems to be that, if one is to provide a transnational legal order with dynamism and legitimacy, one must go over the heads of governments and engage the people directly, making citizens and companies into bearers of rights and duties. This was the EC Court of Justice's brilliant insight in the Van Gend & Loos75 and Costa v ENEL76 cases. International law must involve actors other than national governments in its formation and functioning. De facto, this has already been going on for some time. For a long time, NGOs have played a significant role in drafting international conventions, and their contribution to the creation of recent documents such as the Kyoto protocol, the statute of the International Criminal Court and the Ottawa Treaty has been crucial. In addition, NGOs have been vital in following up and complying with international norms and in raising the public's awareness of these issues. Their role ranges from fact-finding about grave infringements of human rights and international humanitarian law, transmitting these facts to the relevant international authorities, to intervening themselves in legal cases, such as happened in the Pinochet case. It seems desirable to involve NGOs still more closely in the formation and functioning of international law, while at the same time working to ensure they assume their responsibilities as representative and legitimate organizations. This will help to close the participation gap. The United Nations would probably be the most appropriate forum for this: the UN's Economic and Social Council possesses a great deal of know-how in the area of cooperation with NGOs. UN Secretary General Kofi Annan seems determined to tighten the links between the UN and NGOs; at the same time, he has pleaded strongly for a partnership between the UN and international business in the area of human rights, working conditions and the environment. This meanwhile led to the so-called ‘Global Compact’77. It is likewise of fundamental importance to engage civil society itself, of which the NGOs are ultimately the advocates, in a structural way in the functioning of international organisations. In this regard it is an interesting, though perhaps not practically attainable, suggestion to establish a new tripartite structure in which business and civil society would be systematically represented alongside governments in international organizations and forums78. The International Labour Organization has already proven that tripartite structures can work effectively. By introducing such a tripartite structure into, say, the UN General Assembly, this body would for the first time truly represent in the words of the Charter's preamble “the peoples of the United Nations” and not just their governments. Bringing civil society in could diminish the “agency problem” in international organizations and increase their legitimacy and moral authority. Once again, this can only occur when strict supervision of the representativity and legitimacy of the non-governmental actors is in place. Multi-stakeholder participation is a complex process that needs a careful design, and must be based on agreed ground rules such as transparency, accountability, equity, flexibility and ownership to ensure decision-making for GPGs functions effectively79. This should not hide the fact that states remain the most important actors to allocate GPGs. Nevertheless, the debate on globalisation seems to reveal that the power of states is declining. However it is indicated that the state itself is not disappearing, but that it is disaggregating into various competent institutions. “The disaggregate state, as opposed to the mythical unitary 75 E.C.J. 5 February 1963, Van Gend & Loos, 26/62, Jur., 1963, (1) 22-23. 76 E.C.J. 12 July 1964, Costa, 6/64, Jur., 1964, (1199) 1218-1219. 77 www.unglobalcompact.org 78 I. KAUL, I. GRUNBERG and M.A., STERN, o.c., 480. 79 R. GARDINER and K. LE GOULVEN, o.c., 5.

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state, is thus hydra-headed, represented and governed by multiple institutions in complex interaction with one another abroad as well as at home”80. SLAUGHTER sees the emergence of government networks as a new form for transgovernmental regulatory cooperation. Through government networks states can regulate an increasingly global economy and ensure optimal allocation of GPGs. All this does not solve the fundamental problem of the lack of an effective enforcement mechanism on the international level. Countries may agree on the best treaties possible, allocate GPGs in an optimal way and take into account the interests of all stakeholders; this will be of no use if the international community cannot assure compliance to these agreements. Economic theory has suggested some solutions by making agreements self-enforcing by establishing credibility in the possible sanctions and by agreeing for an unlimited amount of time. From a legal perspective, we should assess possible enforcement mechanisms and maybe ultimately a reconsideration of the concept of sovereignty is necessary. Enforcement mechanisms range from peer review over reporting up to real sanctions. Because of the concept of sovereignty, the introduction of enforcement mechanisms is always a difficult matter. Supervision on states and sovereignty of the states seem to be mutually exclusive. Supervision supposes a higher power, while sovereignty holds the suprema potestas itself. States are most often not willing to give up their own power on behalf of international regulations81. One ‘soft’ enforcement mechanism is peer review. An international organisation is mostly based on one or more treaties, in which each contracting party accepts obligations vis à vis the other parties. Obligations vis à vis the organisation are immediately obligations vis à vis the other parties. Therefore it is common that parties to an agreement control each other in a political way. This control mechanism is called peer review. This mechanism more than often lacks effectivity. Governments of states will rarely condemn the infringements by other states because ‘those who live in glass houses should not throw stones’. Each country has most likely some parts of the agreement that it does not respect completely and pointing at other countries’ infringements might create a backlash of condemnations. A recent example of such a mechanism is the African Peer Review Mechanism. This is one of the major parts of the New Partnership for Africa’s Development (NEPAD)82. Nevertheless, until now, this mechanism has not proven very effective83. The above-mentioned information gathering by way of reporting to an international organisation is another mechanism to monitor and ensure compliance. We have already described this mechanism before and indicated the fact that lack of regular reporting, the backlog in reading the reports and the lack of self-critique by states makes it often an ineffective mechanism. Reporting with fixed intervals would make it possible to compare the different reports of the state. Nevertheless one should avoid an overkill of information. Even reporting on an annual basis may be too much, if the monitoring body does not dispose of sufficient funds to examine thoroughly the submitted reports84. A harmonisation of the lay-out

80 A. SLAUGHTER, “Governing the Global Economy through Government Networks”, in M. BYERS, The role of law in International Politics (Oxford, Oxford University Press, 2000), 178. 81 J. WOUTERS and C. RYNGAERT, l.c., 111. 82 http://www.nepad.org. 83 No African leader condemned the obvious election fraud in Zimbabwe, attempts to infringe the Constitution in Malawi, Namibia and Zambia, nor the fact that the famine in Southern Africa is partly due to government mismanagement. 84 In case of the ILO, reporting on ratified treaties is mandatory only every two or four years.

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(e.g. the use of standardised forms and questionnaires) makes the processing and comparison of the data much easier85. Sometimes agreements establish mechanisms in order to inform states about the national legislation of other states. This is a useful mechanism to make cooperation between states much easier86. It is also unnecessary that the information is researched by an organ in which all countries that are party to the agreement are represented. Such a plenary organ lacks the time to do such monitoring. A specialised secretariat could assess the information and then formulate recommendations to a plenary organ that makes decisions on this basis87. In case of fact-finding by a commission, we have already indicated the fact that this is often seen as a too large infringement of the sovereignty of the state where an on-site inspection will take place. On-site inspections are potentially very effective but these inspections require utmost impartiality. Monitoring by individuals can also play an important role in the enforcement of international rules. No other actor is more alert than an individual whose personal interests are at stake. This, again, runs counter to the classic idea that states are the sole actors of international law. It may be possible that individuals bring petitions before an international organisation in order to draw attention on certain infringements of treaties. This can even go further when a right of complaint is given to each individual. This is the case for the European Human Rights Court where each individual, each non-governmental organisation or each group of persons can bring a complaint if they claim to be a victim of an infringement by a member state of a provision of the European Convention on the Protection of Human Rights and Fundamental Freedoms88. The international community does, generally speaking, not like to impose sanctions on states, even when they are available. Surely, states might react to these sanctions by reducing their support to the agreements or even choose to abandon the agreements. A sanction can only be imposed if sufficient proof on the non-compliance is available. Sometimes, the process of imposing a sanction may end in the mere constatation of non-compliance. This is often already experienced as a sanction. If the fact of non-compliance is made sufficiently public, the position of the infringing government will suffer both internally and on the international level. As it is already said above, states are concerned about their reputation. If the proof of non-compliance is established, sanctions can be imposed. One domain where there is a tendency to provide international law with greater effectiveness and compulsion is the domain of international trade law. Since its establishment in 1995, the World Trade Organization has built a framework in which trade disputes are no longer resolved by applying the law of the jungle, but rather in respect for the law as it has been developed and applied by the WTO's quasi-judicial organs. The habit of taking justice into one's own hands that until very recently dominated international trade relations has given way to a rules-based system. This juridification is a significant step in the elaboration of an international legal order based on constitutional principles. To the extent that world trade law is advancing and discussions are being held at the WTO level, as part of the Doha Development Agenda agreed at the Ministerial Conference of November 2001 in Doha, about international harmonization of technical and professional norms, and about international competition rules, we are gradually evolving towards a global common market based on

85 See for instance for the ILO: UN Doc. E/4144. 86 In case of the Agreement on Technical Barriers on Trade, one of the agreements in the framework of the WTO, it is mandatory for states to set up national inquiry points that provide information on the technical standards that are applicable to domestic and imported products. This makes it easier for governments to know where harmonisation of regulations is necessary. 87 See for a description of the Committee of Experts on the Application of Conventions and Recommendations: H.G. SCHERMERS and N.M. BLOKKER, o.c., 875. 88 Article 34 of the European Convention on the Protection of Human Rights and Fundamental Freedoms.

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principles and the rule of law. In this framework of the WTO raises the question whether trade sanctions could be used to deter non-participation and non-compliance. For instance, suppose that in a certain country goods are produced by children in harrowing working conditions, thus violating the fundamental prohibition of child labour. Would it in that case be possible to impose high tariffs on the goods originating from this country and hence forcing it to do something about these violations of fundamental human rights? Trade sanctions are certainly an effective way to hit the country in its most important interests. While this might, at first sight, seem an attractive option, a few remarks need to be made89. First of all these sanctions will be a violation of the most favoured nation (MFN) principle, embedded in article I of the General Agreement on Tariffs and Trade (GATT). The state imposing the trade sanction, in the form of a higher tariff, is clearly discriminating the country in view when comparing to the trade conditions given to other trading partners. There is still a complex and lively discussion going on about the desirableness to make an exception to this MFN principle for the protection of certain GPGs90. Trade sanctions are also often harming as well the country that imposes them because the products from the country in view will be sold in the country at a higher price, to the disadvantage of the consumers. This is certainly the case when the sanctions are imposed for long periods of time. If so, the sanctions will not be credible enough to ensure deterrence. Nevertheless, trade sanctions are certainly a useful and powerful instrument. Applying them in a well-balanced way may help to allocate GPGs in an optimal way. More fundamentally, there should be a reconsideration of the concept of sovereignty. If states hold on to an absolute concept of sovereignty, provision of GPGs will always depend on the voluntarism of the sovereign states. The construction of a world legal order effectively capable of providing global public goods requires a fundamental re-assessment of the basic concepts of international law and the international institutional architecture, or rather the variegated patchwork of international organizations and programmes. The appearance of a number of fundamental norms can make international law more than simply a collection of voluntarily agreed upon rules that regulate the coexistence or cooperation among states. These norms include, first of all, the rules of ius cogens, i.e., peremptory norms of general international law. Ius cogens is confirmed as a source of law in articles 53 and 64 of the 1969 Vienna Convention on the Law of Treaties: treaties that conflict with a norm of ius cogens are void. Admittedly, there is a great deal of discussion surrounding the outlines and principles of this concept. Yet it is generally accepted that the prohibition of genocide, torture, aggression, illegitimate use of violence, race discrimination, slavery, piracy, as well as a people's right to self-determination all fall under this heading. What is unique about ius cogens is that it transcends the individual sovereignty of states, and therefore also transcends the consensualistic conception of the sources of international law. Secondly, more and more, the status of fundamental norm, even of constitution for the international community, is assigned to the UN Charter, which as a universal treaty creates obligations even for non-members. It is submitted that human rights treaties that are ratified by the majority of states also belong to this category of fundamental norms, and so does the core body of social rights enumerated by the International Labour Organization's Declaration of Fundamental Principles and Rights at Work of June, 1998. It is our conviction that ultimately this series of fundamental norms will also include the principles of democracy and the rule of law as standards for good governance. It is nowadays increasingly recognized that the principles of democracy and the rule of law form, together with fundamental rights, an integral triptych.

89 See S. BARRETT, l.c., 143. 90 Article XX GATT provides already some exceptions, inter alia in order to protect human, animal or plant life and health… However there is not yet an exception for many other GPGs like human rights.

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Regional integration can be an important driving force behind the optimal allocation of GPGs. First of all, the principle of subsidiaritycalls for dealing with problems at the lowest possible level unless convincing reason exists for assigning them to higher levels. Public goods often have a regional impact rather than a global one. Think about a river that runs through a particular region and through the territories of several states. Hence provision of regional public goods has to be pursued at the regional level except if there is a strong reason to pursue it globally. This principle is primordial in the European Union decision-making91. It is a compromise between the sovereignty of the member states and the need for effective decision-making on a centralised, regional level. The same concept could be transferred to the global level. If the provision of a public good involves a limited number of countries due to geographical proximity or mutual interests, this should be dealt with in a regional grouping. If the public good concerns the whole international community, it should be dealt with by all actors in the international field. Often certain regional areas have similar interests in the provision of a public good on the global level. The countries in this area can form a regional negotiating block that starts negotiating on the global level with other regional groupings. As we have said above, the larger the group, the likelier will be the insurgence of collective failures. A redefining of the participants from ‘individual states’ to ‘regional negotiating blocks’ will reduce the number of players that have to agree and hence the transaction costs. Countries in the same region know each other better and have more in common which can help to reduce problems of mobilising collective action among actors with diverse interests. Neighbours interact more frequently, allowing reciprocity to flourish92. Hence this will make negotiating a lot easier. The recent developments at the WTO ministerial conference in Cancún show how grouping together similar interests may help to create more balanced negotiating processes. Regional integration can help to concentrate similar interests into one negotiating position. It does not only make agreeing easier, it also makes monitoring compliance to the provisions of the agreement more efficient. The important role of regional integration is recognised in article XXIV GATT. This article allows free trade areas and customs unions to be established, even though these are in fact a violation of article I GATT (most favoured nation principle). The WTO thinks regional trade agreements allow “groups of countries to negotiate rules and commitments that go beyond what was possible at the time multilaterally.93” These regional organisations should be drawn into multilateral frameworks of cooperation. Global institutions like the UN could review their procedures to offer increasing participation to regional bodies. This might create an incentive for them to strengthen their internal cohesion, and give an impulse to commitment to the global frameworks. However, all this means that states will have to be willing to surrender a part of their sovereignty to this regional negotiation body. It is also possible that regional organisations, as they grow stronger, might turn into conflicting blocs obstructing global governance. Regional organisations are spread unevenly and in different gradations across the world and this may raise fears of exclusion94. Countries that are not included into a regional trading block might be left marginalized in the international community. This is recognised in the resolution of the European Parliament on the fifth

91 Article 5 EC Treaty: “[…] In areas which do not fall within its exclusive competence, the Community shall take action, in accordance with the principle of subsidiarity, only if and insofar as the objectives of the proposed action cannot be sufficiently achieved by the Member States and can therefore, by reason of the scale or effects of the proposed action, be better achieved by the Community. […]” 92 S. BARRETT, l.c., 134. 93 WTO, Regionalism, Friends or Rivals?, http://www.wto.org/english/thewto_e/whatis_e/tif_e/bey1_e.htm. 94 Commission on Global Governance, o.c., 288.

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ministerial conference of the WTO in Cancún95. The European Parliament stressed the importance of multilateralism in order to leave no countries excluded. Contribution to the development of, and compliance with, a world legal order is an important task for regional multi-state associations such as the European Union in Europe. It is gratifying that the EU speaks more and more with a single voice in the international arena, from negotiation of environmental treaties to the establishment of the International Criminal Court. This should be the case more and more in the future. The EU should also become more and more aware of its global responsibilities. Its eminent duty is to stimulate multilateralism and dialogue between the various actors of the international community and to promote human rights, democracy, rule of law, good governance and a fair international trading system in order to contribute to a peaceful and sustainable international community.

V. Conclusion This paper has tried to address the role of international law in providing global public goods. We have seen that economic theory defines GPGs as non-rival and non-excludable. International law addresses the specific nature of public goods when regulating the use of oceans, the Antarctic, celestial objects, human rights, international peace and security etc. The lack of excludability and rivalry of these goods leads to non-optimal outcomes. GPGs are inefficiently allocated and are better known by their adverse side: global public bads. Because individual countries are only pursuing their own short-term interests, often free riding on the efforts of other countries, cooperation on dealing with GPGs within the international field is often very weak. This is also due to shortcomings in information gathering and a lack of participation by other stakeholders. Besides, agreeing on allocation is of no use if this cannot be enforced because of states convulsively holding on to their sovereignty. Lowering transaction costs by allocating property rights on GPGs may be a way to enhance cooperation on the international level. This allocation should not only take into account the interests of present generations but also those of future ones. This can be done through a broader application of the concept of common heritage of mankind by and installing a sort of international trusteeship body. It also presupposes an internalisation of the international interest by individual governments in order to develop long term policies. Transaction costs can also be lowered by redefining the actors that have to agree with each other. Therefore regional integration is an important factor to enhance international cooperation, on the condition that no countries are left marginalized. This redefining can also help to allow all stakeholders to influence allocation of GPGs. Besides making sanctions more credible, a fundamental rethinking of the concept of sovereignty would help to ensure compliance to agreements.

95 Para. 4 Resolution of the European Parliament of the fifth ministerial conference of the WTO in Cancún of 25 September 2003.

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