IILJ Working Paper 2013/4 (International Economic Law Series)

An Economic Perspective on As Such/Facial versus As Applied Challenges in the WTO and U.S. Constitutional Systems

Alan O. Sykes

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Suppose that a government governed by some treaty regime enacts a measure that authorizes an official to act contrary to the treaty. Suppose further, however, that no action in violation of the treaty has yet occurred. Should beneficiaries of the treaty obligation be allowed to invoke its dispute resolution process to challenge the measure in advance of such a violation? Or should they be required to wait until a violation has actually occurred? These and related questions raise important issues in the WTO and the U.S. Constitutional systems. This paper employs an economic perspective to address these issues. Among the principal conclusions are that various WTO and U.S. “rules” to govern such matters are foolish from an economic standpoint. Interestingly, however, neither system actually follows its own rules consistently. Adjudicators in both systems have deviated significantly, and many of the reported decisions comport with factors that the economic analysis identifies as important.