Trade And...Problems, Cost-Benefit Analysis and Subsidiarity

This article seeks to comprehend the conflict between trade values and other values ("trade and...problems"), such as environmental protection, labor rights or free competition, through comparative institutional analysis using cost-benefit analysis: comparative institutional cost-benefit analysis. The goal of this article is to illuminate the institutional choices embedded in this sometimes heated conflict. This article utilizes this comparative institutional cost-benefit analysis methodology to analyze the principal legal devices available to address conflicts between trade values and other values ("tradeoff devices") in the dispute resolution context in the European Union, the GATT/World Trade Organization system and in the United States federal system. These tradeoff devices include anti-discrimination rules, simple means-ends rationality tests, least trade-restrictive alternative tests, proportionality tests, balancing tests and (substantive) cost-benefit analysis. In a zero-transaction cost world, comparative substantive cost-benefit analysis would be the first-best tradeoff device: comparative institutional cost-benefit analysis would select comparative substantive cost-benefit analysis. However, comparative cost-benefit analysis is nowhere in use as a tradeoff device. This paper begins to explain this apparent paradox by suggesting reasons, including theoretical, administrative, distributive and ethical concerns, why this first-best approach is not used in the real world. These reasons are explored in order to evaluate retreats from comparative cost-benefit analysis to the tradeoff devices actually in use. Finally, this article shows that these tradeoff devices implicitly serve as determinants of the allocation of regulatory jurisdiction between the central and component governments: of subsidiarity