International Economic Law in the Era of Great Power Rivalry

By: Ming Du

PDF: Great Power Rivalry

It is a common refrain for policymakers, scholars, and journalists to declare that the United States and China are heading toward, or already engaged in, a New Cold War. International legal theory holds that powerful states tend to use international law as an instrument to stabilize their dominance. However, when powerful states see the existing international legal order as severely constraining their policymaking discretion, they may seek to adjust the system to make it more compatible with their own preferences or even replace international law with domestic law. It is therefore unsurprising that the United States has recently announced that there are cracks in the foundations of the international economic order developed after the Second World War and that, to compete with China, it is essential for the United States to build an international economic system fit for contemporary geopolitical realities.

This Article seeks to document the nascent features of international economic law in the era of great power rivalry, explain how such new features have disrupted the conventional wisdom of international economic law, and speculate on their trajectory. It argues that the great power rivalry has a profound impact on both the normative premises and substantive rules of international economic law. The new features of international economic law in the era of great power rivalry include (1) the transformation of the guiding philosophy of international economic law from economic interdependence to economic de-risking; (2) the shift of the style of settlement of international economic disputes from judicialization to “de-judicialization”; (3) the normalization of unilateralism in international economic regulation; (4) the securitization of international economic relationships; (5) the return of industrial policy to redraw the boundary between the government and market; and (6) the death of multilateralism and the rise of value-based regionalism. Moreover, the new features outlined in this Article will not be temporary, but an integral part of international economic law for a long time to come. The future of international economic law is likely to be more fragmented and more embedded in domestic policy goals of the nation-State. However, despite the decline of the international legal framework governing the global economy established over the past seventy years, this Article argues that, both descriptively and normatively, international economic law will still play an important role, albeit much smaller than before, in managing the US–China great power rivalry.