Regulators' Mindsets, Ingroup Favoritism, and the National Treatment Obligation in World Trade Organization Law

Moshe Hirsch

doi:10.1017/glj.2022.27

Regulators' Mindsets, Ingroup Favoritism, and the National Treatment Obligation in World Trade Organization Law

Moshe Hirsch^*

^*Corresponding author for this work

Research output: Contribution to journal › Article › peer-review

Abstract

Decision-making processes leading to governmental measures affecting international trade involve socio-cognitive processes, biases, and sociocultural factors. The legal prohibition of discrimination against imported products constitutes a fundamental principle of World Trade Organization (WTO) law, but discrimination against foreign products is widespread. This study explores the contribution of social cognitive and sociological literatures to international trade scholarship concerning the “national treatment” obligation. Ingroup favoritism bias, related cognitive biases, such as confirmation bias, and sociocultural processes, such as “loyalty norms”, facilitate and support discrimination against foreign products. One of the most contested issues regarding the interpretation of GATT Article III concerns the role of regulators' intention in establishing a violation of this provision. The approach undertaken by the WTO Appellate Body is characterized by a preference for the “objective” test of regulators' intention (focusing on intention revealed in the regulatory measure itself), and a reluctance to take into account regulators' “subjective” intentions, discerned from regulators' statements and a variety of other sources. In contrast to the WTO Appellate Body's approach, this contribution suggests that once presented with credible evidence regarding key-role regulators' intentions, manifested in both the regulatory measure itself and in a variety of other items of evidence, it is desirable that WTO tribunals assign adequate probative weight to such intentions. In addition, where it is credibly proven that ingroup favoritism norms prevail in the key role regulator's social environment, it is advisable to grant some probative weight to such social norms. Assigning a probative weight to regulators' subjective intentions and relevant norms is justified by the significant influence of intentions and norms on the prospects of discriminatory behavior. The article highlights three principal types of regulators' mindsets: mindful, mindless, and bias-resisting. Mindful regulators deliberately intend to restrict internal sale of foreign goods through discriminatory measures. Mindless regulators do not aim to discriminate against imported goods, and the disparate impact influences of their regulations are relegated to the background. Bias-resisting regulators intend to grant equal treatment to domestic and imported products and resist ingroup biases.

Original language	American English
Pages (from-to)	298-313
Number of pages	16
Journal	German Law Journal
Volume	23
Issue number	3
DOIs	https://doi.org/10.1017/glj.2022.27
State	Published - 10 Apr 2022

Bibliographical note

Funding Information:
Maria Von Hofmannsthal Chair in International Law and Co-Director of the International Law Forum, Faculty of Law and Department of International Relations, Hebrew University of Jerusalem. This article was first presented at the Workshop on “Behavioral Approaches to International Law”, which was organized as part of the project HRNUDGE funded by the ERC (Grant Agreement 803981, PI Veronika Fikfak) and as part of the ‘Afterlife of Cases’ project funded by the Leids Universiteits Fonds/Dr HA van Beuningen Fonds ( www.luf.nl ) (PI Daniel Peat). I am grateful to the participants in these workshops for their valuable comments. I am particularly indebted to Anne van Aaken, Jonathan Kolie, Harlan Grant Cohen, and Sungjoon Cho who provided detailed and helpful comments on earlier versions of this article.

Publisher Copyright:
© The Author(s), 2022. Published by Cambridge University Press on behalf of the German Law Journal. This is an Open Access article, distributed under the terms of the Creative Commons Attribution licence (https://creativecommons.org/licenses/by/4.0/), which permits unrestricted re-use, distribution, and reproduction in any medium, provided the original work is properly cited

Keywords

International law
World Trade Organization
behavioral economics
cognitive sociology
international economic law
international human rights law
national treatment
social cognition
social psychology

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10.1017/glj.2022.27

Cite this

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title = "Regulators' Mindsets, Ingroup Favoritism, and the National Treatment Obligation in World Trade Organization Law",

abstract = "Decision-making processes leading to governmental measures affecting international trade involve socio-cognitive processes, biases, and sociocultural factors. The legal prohibition of discrimination against imported products constitutes a fundamental principle of World Trade Organization (WTO) law, but discrimination against foreign products is widespread. This study explores the contribution of social cognitive and sociological literatures to international trade scholarship concerning the “national treatment” obligation. Ingroup favoritism bias, related cognitive biases, such as confirmation bias, and sociocultural processes, such as “loyalty norms”, facilitate and support discrimination against foreign products. One of the most contested issues regarding the interpretation of GATT Article III concerns the role of regulators' intention in establishing a violation of this provision. The approach undertaken by the WTO Appellate Body is characterized by a preference for the “objective” test of regulators' intention (focusing on intention revealed in the regulatory measure itself), and a reluctance to take into account regulators' “subjective” intentions, discerned from regulators' statements and a variety of other sources. In contrast to the WTO Appellate Body's approach, this contribution suggests that once presented with credible evidence regarding key-role regulators' intentions, manifested in both the regulatory measure itself and in a variety of other items of evidence, it is desirable that WTO tribunals assign adequate probative weight to such intentions. In addition, where it is credibly proven that ingroup favoritism norms prevail in the key role regulator's social environment, it is advisable to grant some probative weight to such social norms. Assigning a probative weight to regulators' subjective intentions and relevant norms is justified by the significant influence of intentions and norms on the prospects of discriminatory behavior. The article highlights three principal types of regulators' mindsets: mindful, mindless, and bias-resisting. Mindful regulators deliberately intend to restrict internal sale of foreign goods through discriminatory measures. Mindless regulators do not aim to discriminate against imported goods, and the disparate impact influences of their regulations are relegated to the background. Bias-resisting regulators intend to grant equal treatment to domestic and imported products and resist ingroup biases.",

keywords = "International law, World Trade Organization, behavioral economics, cognitive sociology, international economic law, international human rights law, national treatment, social cognition, social psychology",

author = "Moshe Hirsch",

note = "Funding Information: Maria Von Hofmannsthal Chair in International Law and Co-Director of the International Law Forum, Faculty of Law and Department of International Relations, Hebrew University of Jerusalem. This article was first presented at the Workshop on “Behavioral Approaches to International Law”, which was organized as part of the project HRNUDGE funded by the ERC (Grant Agreement 803981, PI Veronika Fikfak) and as part of the {\textquoteleft}Afterlife of Cases{\textquoteright} project funded by the Leids Universiteits Fonds/Dr HA van Beuningen Fonds ( www.luf.nl ) (PI Daniel Peat). I am grateful to the participants in these workshops for their valuable comments. I am particularly indebted to Anne van Aaken, Jonathan Kolie, Harlan Grant Cohen, and Sungjoon Cho who provided detailed and helpful comments on earlier versions of this article. Publisher Copyright: {\textcopyright} The Author(s), 2022. Published by Cambridge University Press on behalf of the German Law Journal. This is an Open Access article, distributed under the terms of the Creative Commons Attribution licence (https://creativecommons.org/licenses/by/4.0/), which permits unrestricted re-use, distribution, and reproduction in any medium, provided the original work is properly cited",

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N2 - Decision-making processes leading to governmental measures affecting international trade involve socio-cognitive processes, biases, and sociocultural factors. The legal prohibition of discrimination against imported products constitutes a fundamental principle of World Trade Organization (WTO) law, but discrimination against foreign products is widespread. This study explores the contribution of social cognitive and sociological literatures to international trade scholarship concerning the “national treatment” obligation. Ingroup favoritism bias, related cognitive biases, such as confirmation bias, and sociocultural processes, such as “loyalty norms”, facilitate and support discrimination against foreign products. One of the most contested issues regarding the interpretation of GATT Article III concerns the role of regulators' intention in establishing a violation of this provision. The approach undertaken by the WTO Appellate Body is characterized by a preference for the “objective” test of regulators' intention (focusing on intention revealed in the regulatory measure itself), and a reluctance to take into account regulators' “subjective” intentions, discerned from regulators' statements and a variety of other sources. In contrast to the WTO Appellate Body's approach, this contribution suggests that once presented with credible evidence regarding key-role regulators' intentions, manifested in both the regulatory measure itself and in a variety of other items of evidence, it is desirable that WTO tribunals assign adequate probative weight to such intentions. In addition, where it is credibly proven that ingroup favoritism norms prevail in the key role regulator's social environment, it is advisable to grant some probative weight to such social norms. Assigning a probative weight to regulators' subjective intentions and relevant norms is justified by the significant influence of intentions and norms on the prospects of discriminatory behavior. The article highlights three principal types of regulators' mindsets: mindful, mindless, and bias-resisting. Mindful regulators deliberately intend to restrict internal sale of foreign goods through discriminatory measures. Mindless regulators do not aim to discriminate against imported goods, and the disparate impact influences of their regulations are relegated to the background. Bias-resisting regulators intend to grant equal treatment to domestic and imported products and resist ingroup biases.

AB - Decision-making processes leading to governmental measures affecting international trade involve socio-cognitive processes, biases, and sociocultural factors. The legal prohibition of discrimination against imported products constitutes a fundamental principle of World Trade Organization (WTO) law, but discrimination against foreign products is widespread. This study explores the contribution of social cognitive and sociological literatures to international trade scholarship concerning the “national treatment” obligation. Ingroup favoritism bias, related cognitive biases, such as confirmation bias, and sociocultural processes, such as “loyalty norms”, facilitate and support discrimination against foreign products. One of the most contested issues regarding the interpretation of GATT Article III concerns the role of regulators' intention in establishing a violation of this provision. The approach undertaken by the WTO Appellate Body is characterized by a preference for the “objective” test of regulators' intention (focusing on intention revealed in the regulatory measure itself), and a reluctance to take into account regulators' “subjective” intentions, discerned from regulators' statements and a variety of other sources. In contrast to the WTO Appellate Body's approach, this contribution suggests that once presented with credible evidence regarding key-role regulators' intentions, manifested in both the regulatory measure itself and in a variety of other items of evidence, it is desirable that WTO tribunals assign adequate probative weight to such intentions. In addition, where it is credibly proven that ingroup favoritism norms prevail in the key role regulator's social environment, it is advisable to grant some probative weight to such social norms. Assigning a probative weight to regulators' subjective intentions and relevant norms is justified by the significant influence of intentions and norms on the prospects of discriminatory behavior. The article highlights three principal types of regulators' mindsets: mindful, mindless, and bias-resisting. Mindful regulators deliberately intend to restrict internal sale of foreign goods through discriminatory measures. Mindless regulators do not aim to discriminate against imported goods, and the disparate impact influences of their regulations are relegated to the background. Bias-resisting regulators intend to grant equal treatment to domestic and imported products and resist ingroup biases.

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KW - World Trade Organization

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KW - international human rights law

KW - national treatment

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KW - social psychology

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SN - 2071-8322

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JO - German Law Journal

JF - German Law Journal

IS - 3

ER -

Regulators' Mindsets, Ingroup Favoritism, and the National Treatment Obligation in World Trade Organization Law

Abstract

Bibliographical note

Keywords

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