Thread by @hhesterm

This is a level-playing field thread. You might not realise it at first. So bear with me.
It starts of with the notion of “efficient breach”. It’s a notion from contract law and law and economics that has taken on a whole new life of its own (thread)

The idea of efficient breach is clever. Say you have a contract between B & C, C is supposed to build something. If C doesn’t do it, C has to pay 1 million pounds. A bit later C gets a great opportunity to build a house for D. C’s profits would be 2 million. What should C do? /2

Well simple. Break the contract with C. Take the 1 million penalty hit. Do your business with D instead. That’s an “efficient breach”. You went through all the consequences and it turns out breaking the contract makes economic sense /3

That notion has been transposed to WTO law. What’s the consequence of breaking WTO law? At the very end you might end up facing countermeasures (usually: higher tariffs). Just to give an example... /4

Say you are blocking entry of a product, you don’t have a reason for it under WTO law. The exporting country complains. The dispute goes through dispute settlement etc. And in the end the exporting country puts tariffs on your alcoholic beverage exports /5

The normal way to conceptualise this is “you were breaking your obligations. And here’s the consequence, sanctions”. But efficient breach conceptualises this differently. /6

Under that concept WTO law has a built-in flexibility: you can always decide to disrespect a rule and accept the countermeasure instead. /7

Cue a long debate: are WTO obligations really obligations? Is the option of non-respect+accepting countermeasure a built-in option or are you actually still obliged to comply with your WTO obligations even though you‘ve sort of exhausted the consequences of breach. /8

That debate is largely academic. I do, of course, come down on “it’s still an obligation” - because you can construe everything according to efficient breach. “Murder is not really banned, it’s just that you have to accept life in jail as a consequence”. An odd way to put it. /9

But that’s in the nature of legal norms. You have an obligation. And the statement what happens if you don’t comply. /10

Are you still there?

OK. For the two people still reading on /11

The latest twist of the level-playing-field debate makes me think of the “efficient breach” debate. You can conceptualise a level-playing-field obligation in either of two ways. /12

Either you say:
”THIS IS YOUR OBLIGATION. Don’t comply. Here’s the sanction.”
Or you say:
”Do whatever you want. But if you do X you’ll also have to accept this consequence.” /13

Two ways to conceptualise the same thing.

And suddenly it might actually matter. In our heads.
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