Sugar and the Making of International Trade Law

This book traces the changing meanings of free trade over the past century through three sugar treaties and their concomitant institutions. The 1902 Brussels Convention is an example of how free trade buttressed the British Empire. The 1937 International Sugar Agreement is a story of how a group of Cubans renegotiated their state’s colonial relationship with the US through free trade doctrine and the League of Nations. And the study of the 1977 International Sugar Agreement maps the world of international trade law through a plethora of institutions such as the ITO, UNCTAD, GATT and international commodity agreements – all against the backdrop of competing Third World agendas. Through a legal study of free trade ideas, interests and institutions, this book highlights how the line between the state and market, domestic and international, and public and private is always a matter of contest. Mich a el Fa k hr i is an assistant professor at the University of Oregon School of Law, where he teaches courses in international economic law, food law and agricultural law. Cover illustration: Reaping Sugar Canes in the West Indies (colour litho), Frank Newbould (1887–1951) / Manchester Art Gallery, UK / The Bridgeman Art Library. Series cover design by Zoe Naylor. Sugar and the Making of International Trade Law 9781107040526 FAKHRI – SUGAR AND THE MAKING OF INTERNATIONAL TRADE LAW PPC C M Y K general editors James Crawford University of Cambridge John S. Bell University of Cambridge Fakhri CAMBRIDGE STUDIES IN INTERNATIONAL AND COMPARATIVE LAW Michael Fakhri CAMBRIDGE STUDIES IN INTERNATIONAL AND COMPARATIVE LAW Sugar and the Making of International Trade Law Sugar and the Making of International Trade Law Michael Fakhri University Printing House, Cambridge CB2 8BS, United Kingdom Cambridge University Press is part of the University of Cambridge. It furthers the University’s mission by disseminating knowledge in the pursuit of education, learning and research at the highest international levels of excellence. www.cambridge.org Information on this title: www.cambridge.org/9781107040526 © Michael Fakhri 2014 This publication is in copyright. Subject to statutory exception and to the provisions of relevant collective licensing agreements, no reproduction of any part may take place without the written permission of Cambridge University Press. First published 2014 Printed in the United Kingdom by Clays, St Ives plc A catalogue record for this publication is available from the British Library Library of Congress Cataloguing in Publication data Fakhri, Michael, author. Sugar and the making of international trade law / Michael Fakhri. pages cm. – (Cambridge studies in international and comparative law; 114) ISBN 978-1-107-04052-6 (hardback) 1. Sugar laws and legislation. 2. Sugar trade. 3. Commercial law. 4. Foreign trade regulation. 5. Law – International unification. I. Title. K3947.S93F35 2014 3820 .456641–dc23 2014014343 ISBN 978-1-107-04052-6 Hardback Cambridge University Press has no responsibility for the persistence or accuracy of URLs for external or third-party internet websites referred to in this publication, and does not guarantee that any content on such websites is, or will remain, accurate or appropriate. Contents Acknowledgements List of abbreviations Table of cases Table of agreements and resolutions Part I 1 2 Prologue 1 International institutions as part of the history of agriculture 3 Histories as context An emphasis on institutions Context as argument Part II 3 page xi xiii xiv xv 10 10 15 The 1902 Brussels Convention and the beginnings of modern trade law 19 Free trade as an imperial project The world’s first modern multilateral trade institution 21 22 A modern institution The curious and anomalous Permanent Commission 22 25 Histories of international trade, international institutions, and public international law Geography of interests 29 32 USA, Cuba, and Brazil Java Rise of the continental European sugar beet British imperialism and free trade colonialism 33 35 36 38 vii viii contents 4 The institutionalization of international trade The 1884–5 sugar crisis Conditions that led to the treaty Sugar production in the British West Indies Imperialism and free trade Shifts in interests and ideas Coalescing of interests Countervailing duties, free trade discourse, and the invention of the international trade institution Institutionalization of free trade colonialism Conclusion: the treaty’s effects The sugar trade Free trade ideas Part III 5 The 1937 ISA, Cuba, and the League of Nations Economic aspects of the League of Nations From Brussels to Havana and Geneva The League of Nations as an international economic institution League historiography Economic conceptions of the League Economic functions of the League Experience of war and rule by experts 6 41 41 43 43 47 50 50 52 59 62 62 65 69 71 71 74 74 76 77 80 Economic doctrines 83 Rapprochement Rationalization Freer trade 83 85 87 Developing a Cuban state and renegotiating American imperialism The intertwining of Cuban and League history Transnational sugar interests and imperial negotiations Cuba’s dependency on sugar Cuba’s dependency on the US The rise of a Cuban state Cuba and the 1920 world sugar crises Competing Cuban Identities Cuba and US tariffs 92 92 95 95 98 101 101 103 105 contents The Chadbourne Agreement 106 The prelude to international sugar rationalization The 1925 sugar crisis The League decides not to get involved The rationalization of the world sugar market 106 108 113 114 The World Monetary and Economic Conference and the Cuban Revolution, 1933 The 1937 International Sugar Conference 119 124 League and sugar diplomacy Business nationalism and Cuban diplomacy The 1937 ISA A Cuban institution Defining the free market Cuban sugar exports The ensuing trade institution Regulating the price of sugar Conclusion Part IV 7 ix The 1977 ISA and the implications of institutionalization The postwar institutional landscape Introduction Revisiting embedded liberalism The common account of embedded liberalism Augmenting understandings of embedded liberalism to include development concerns and institutional diversity The ITO and development concerns The ITO and embedded liberalism continue League doctrines The ITO and embedded liberalism reconfigure League doctrines The fracture of the ITO Embedded liberalism fragments into UNCTAD and the GATT UNCTAD GATT ICAs: rapprochement between South–North, agriculture–industry, and US–UK 124 126 129 129 131 132 133 135 138 139 141 141 144 144 146 149 155 159 163 165 165 169 170 x contents 8 The 1977 ISA as an exemplar of postwar ICAs Introduction Situating the 1977 ISA within the ideational history of ICAs Postwar trade and development policies International sugar agreements The law and politics of the 1977 ISA Sugar as a global exemplar The free market as constituted by an international institution Buffer stock politics The death of ICAs Conclusion Part V 9 Epilogue Using the past to open up the future of trade law Sources and Bibliography Index 173 173 177 177 183 187 187 191 193 200 205 209 211 215 245 Acknowledgements This book was made possible through the support and friendship of numerous people. I cannot list everyone and I am bound to miss a few names, so it is best to list the networks and institutes through which I have had the most helpful conversations. Over the years I have benefited from people affiliated with the African International Economic Law Network, Annual Junior Faculty Forum for International Law, European Society of International Law, Society of International Economic Law, Toronto Group for the Study of International, Transnational and Comparative Law. I have most benefited from Third World Approaches to International Law (TWAIL) and hope I have been able to give back to this movement. I am extremely grateful for grants from the Wayne Morse Center for Law and Politics, and the Institute for Global Law and Policy at Harvard Law School; each one also provided me with the opportunity to be part of their wonderful communities. I am grateful to the University of Oregon School of Law, under the leadership of Michael Moffitt and Adell Amos, for providing me with the resources and time I needed to finish the book. I was also lucky to have two comrades-in-arms, Ibrahim Gassama and Michelle McKinley, who gave me the moral support I needed on a daily basis. A number of individuals were incredibly kind with their time in regard to specific parts of this book: Antony Anghie, Lorand Bartels, Lara Bovilsky, Ruth Buchanan, Steve Charnovitz, B. S. Chimni, Patricia Clavin, Matt Craven, Andrew Green, Michael Hames-Garcı́a, Hendrik Hartog, Susan Karamanian, David Kennedy, Benedict Kingsbury, Karen Knop, Dino Kritsiotis, Andrew Lang, Doreen Lustig, Risham Majeed, Erez Manela, Manivelle, Mark Mazower, Usha Natarajan, Liliana Obregón, Anne Orford, Sundhya Pahuja, Rose Parfitt, Kal Raustiala, Guy Sinclair, Thomas Skouteris, Fleur Johns and Joseph H. H. Weiler. xi xii acknowledgements Kerry Rittich has read the largest number of versions of this book. I am indebted to her generosity, keen eye, and pressing questions. Many thanks also to Professor James Crawford, Kim Hughes, Finola O’Sullivan, and Richard Woodham at Cambridge University Press. Some of the treaties that I examine in this book, I have studied in a narrower context in “The 1937 International Sugar Agreement: NeoColonial Cuba and Economic Aspects of the League of Nations” (2011), 24 Leiden Journal of International Law 89, and “The Institutionalisation of Free Trade and Empire: A Study of the 1902 Brussels Convention” (2014), 2 London Review of International Law 1. This book would not have been possible without the dedication and kindness of librarians and archivists from Cornell University, League of Nations Archives at the UN Office in Geneva, Redpath Sugar Museum in Toronto (which is excellently curated by Richard Feltoe), Virginia Kelly Karnes Archives and Special Collections Research Center at Purdue University, University of Oregon (especially Kelly Reynolds), and University of Toronto. My thanks to Jason Tashea for his skills in the German language, Sara van Dijck for her skills in the French language, and to Elizabeth Brown and Will Johnson for their editorial assistance. Finally, I owe the greatest debt to Joe Fakhri, Ragheda Fakhri, Mark Fakhri, Omar Naim, Lina Mounzer, the fdz, Domenico Romano, Marianne Romano, and (especially) Lisa Romano, for their love, support, and patience. Abbreviations BET BISD ECLA EEC EFO FAO GATT ICA ICCICA ILO ISA ISI ISO ITO LNTS LON MFN NIEO SCM UNCTAD UNTS WTO basic export tonnage Basic Instruments and Selected Documents United Nations Economic Commission for Latin America European Economic Community Economic and Financial Organization Food and Agriculture Organization General Agreement on Tariffs and Trade International Commodity Agreement Interim Coordinating Committee for International Commodity Arrangements International Labour Organization International Sugar Agreement import substitution industrialization International Sugar Organization International Trade Organization League of Nations Treaty Series Archives of the League of Nations, Library of the League of Nations, Geneva, Switzerland most favored nation New International Economic Order WTO Agreement on Subsidies and Countervailing Measures United Nations Conference on Trade and Development United Nations Treaty Series World Trade Organization xiii Table of cases Lochner v. New York, 198 US 45 (1905) 28n84 Uruguay – Recourse to Article XXIII, Panel Report, adopted November 16, 1962, BISD 11S/95 170n691 EC – Sugar Exports (Australia), Panel Report, European Communities – Refunds on Exports of Sugar, L/4833, adopted November 6, 1979, BISD 26S/290 188n765 EC – Sugar Exports (Brazil), Panel Report, European Communities – Refunds on Exports of Sugar – Complaint by Brazil, L/5011, adopted November 10, 1980, BISD 27S/69 188n765 US – Gasoline, Appellate Body Report, United States – Standards for Reformulated and Conventional Gasoline, WT/DS2/AB/R, adopted May 20, 1996 141n562 US – Shrimp, Panel Report, United States – Import Prohibition of Certain Shrimp and Shrimp Products, WT/DS58/R and Corr.1, adopted November 6, 1998, as modified by Appellate Body Report WT/DS58/AB/R 141n561 US – Gambling, Panel Report, United States – Measures Affecting the Cross-Border Supply of Gambling and Betting Services, WT/DS285/R, adopted April 20, 2005, as modified by Appellate Body Report WT/DS285/AB/R 141n561 Mexico – Taxes on Soft Drinks, Panel Report, Mexico – Tax Measures on Soft Drinks and Other Beverages, WT/DS308/R, adopted March 24, 2006, as modified by Appellate Body Report WT/DS308/AB/R 149n592 Mexico – Taxes on Soft Drinks, Appellate Body Report, Mexico – Tax Measures on Soft Drinks and Other Beverages, WT/DS308/AB/R, adopted March 24, 2006 149n592 xiv Table of agreements and resolutions International Convention Relative to Bounties on Sugar, Brussels, March 5, 1902, 191 Parry 56, Foreign Relations 80, Cd 1535 6n12, 22, 23, 25, 26, 27n80, 28, 29, 60, 61, 62 Protocol Relative to the Accession of Switzerland to the International Convention Concerning the Regime of Sugars of March 5, 1902, June 26, 1906, 202 Parry 79, Cd 3301 62n216 Protocol Respecting the Accession of Russia to the Sugar Convention on March 5, 1902 and the Additional Act of August 28, 1907 (December 19, 1907) 206 Parry 56, British Treaty Series 12 (1908), Cd 3968 27n83 International Convention for the Abolition of Import and Export Prohibitions and Restrictions, Geneva, November 8, 1927, 97 LNTS 391 75n260, 141n564 Statements by Thomas L. Chadbourne and Dr. Viriato Gutiérrez Valladon, regarding a conference and verbal agreement of representatives of the sugar industry of Cuba and the United States, “Chadbourne Committee Meeting,” Weekly Statistical Sugar Trade Journal (August 28, 1930) 427 115n442 Chadbourne Agreement, reprinted in “The Brussels Sugar Convention of 1931” (1931), 33 International Sugar Journal 391 72n249, 116n450, 116n452, 133n537–541 International Agreement Regarding the Regulation of the Production and Marketing of Sugar, London, May 6, 1937, International Sugar Conference (Geneva: League of Nations, 1937), p. 7; also reprinted in International Labour Office, Intergovernmental Commodity Control Agreements (Montreal: International Labour Organization, 1943), p. 26 6n13, 117n457–59, 122n486–488, 131n530, 131n532, 133n544, 133n545, 134n546–549, 135, 136, 137n555–556 xv xvi table of agreements and resolutions Non-political Functions and Activities of the League of Nations, ESC Res. 12(I), UN ESCOR, 1st Sess. (1946) 133 152n605 United Nations Economic and Social Council, Interim Co-ordinating Committee for International Commodity Arrangements, March 28, 1947, Res. 30 (IV) 164n662 General Agreement on Tariffs and Trade 1947, October 30, 1947, GATT Doc LT/UR/A-1A/1/GATT/2, 55 UNTS 187 28n85, 56n195, 98, 169, 170n689–690, 206n849–850 International Trade Organization Charter, Final Act and Related Documents of the United Nations Conference on Trade and Employment, March 24, 1948, E/Conf.2/78 142n565, 157n630–633, 158n636–638, 159n640, 160n641, 172n705–707, 173, 213n856 International Sugar Agreement for the Regulation of the Production and Marketing of Sugar, 1953, London, October 16, 1953, 258 UNTS 153 183n741, 184n750, 185, 191 International Sugar Agreement, 1958, London, December 1, 1958, 385 UNTS 137 183n742, 184n751, 185, 191 GATT, Declaration on Promotion of the Trade of Less-developed Countries, November 30, 1961, BISD 10S/26 169n687 United Nations General Assembly, International Trade as the Primary Instrument for Economic Development, December 19, 1961, Res. 1707 (XVI) 165n667 United Nations General Assembly, United Nations Development Decade, December 19, 1961, Res. 1710 (XVI) 165n667 United Nations General Assembly, Permanent Sovereignty over Natural Resources, December 14, 1962, Res. 1803 (XVII) 177n720 GATT, Meeting of Ministers, Measures for the Expansion of Trade of Developing Countries as a Means of Furthering their Economic Development, Conclusions Adopted on May 21, 1963 on Item I of the Agenda, MIN (63)7, BISD 12S/36 169n687 United Nations General Assembly, United Nations Conference on Trade and Development, November 11, 1963, Res. 1897 (XVIII) 165n668 United Nations General Assembly, Establishment of the United Nations Conference on Trade and Development as an Organ of the General Assembly, December 30, 1964, Res. 1995 (XIX) 165n669 International Sugar Agreement, New York, December 3, 1968, 654 UNTS 3 183n742, 184n751, 185, 186, 189n768, 191 International Sugar Agreement, Geneva, October 13, 1973, 906 UNTS 69 184n745 table of agreements and resolutions xvii United Nations General Assembly, Declaration for the Establishment of a New International Economic Order, May 1, 1974, Res. 3201 (S-VII); United Nations General Assembly, Programme for Action on the Establishment of a New International Economic Order, May 1, 1974, Res. 3202 (S-VI) 166n675 United Nations Conference on Trade and Development, Integrated Programme for Commodities, May 5, 1976, Res. 93 (IV) 167n676 International Sugar Agreement 1977, New York, October 28, 1977, 1064 UNTS 219 6n14, 182n735, 184n744, 184n751, 185, 187n760–764, 191n777, 198n805 International Dairy Agreement, Geneva, April 6, 1979, GATT Doc. MTN/ DP/8 174n712 International Dairy Agreement, Marrakesh, April 15, 1994, Agreement Establishing the World Trade Organization, Annex 4C, 1867 UNTS 410 174n712 part i Prologue The power of the book . . . lies in its ability to make the familiar strange – so that the reader sees it in a new light. Cayley, “Ideas: Markets and Society. Part Three – Socialism and Freedom” 1 International institutions as part of the history of agriculture One cannot discuss international trade law and policy without some reference to the World Trade Organization (WTO). Even with the proliferation of bilateral and regional trade agreements, the multilateral institution remains a principal component of international trade law. How is it, then, that the idea of multilateral institutions came about and became an important practice and arrangement? The answer lies in an account of agriculture. The history of agriculture begins approximately 12,000 years ago in the Neolithic era. Agriculture has been central to many moments of human social transformation, playing a role (though not always one of causation) during profound innovations in law, social relations, political economy, and religion.1 Against the backdrop of the long history of agriculture, we can examine international institutions, which are first created in the late nineteenth century, as a relatively novel phenomenon. Around 1400 ce, people around the world developed a number of modes of (mainly agricultural) production.2 Some places were organized through a tributary mode in which a famer or herdsman was granted access to land and resources, and in return they paid a tribute to a political or military ruler. Others were kin-based, in which the social organization of working and producing was structured around different ideas of consanguinity, marriage, and affinity. Other people organized themselves through capitalism, which was a mode in which 1 2 Toynbee, Industrial Revolution; Weber, Roman Agrarian History; Friedmann and McMichael, “Agriculture and the State System”; Cauvin, Birth of the Gods; Mazoyer and Roudart, History of World Agriculture. Wolf provides an elucidating definition of modes of production: “a specific, historically occurring set of social relations through which labor is deployed to wrest energy from nature by means of tools, skills, organization, and knowledge.” Wolf, Europe, p. 75. 3 4 part i prologue one group – capitalists – controlled and restricted the means and tools of production. Those people who produced goods through work – laborers – had to sell their time for money in order to gain access to the very goods that they produced and all their other needs.3 Capitalism’s principal goal was to indefinitely accumulate and employ labor, land, and money – capital – in order to accumulate and generate more capital. By 1760, the invention of the steam engine sped up transportation and mechanized production of agricultural products. Legal innovations in agricultural land expanded industry’s geographic scope and compressed rates of production. Due to new enclosure laws, wealthy men (property transactions were a gendered affair) were now able to buy what was formerly common land. Since more land was now available to be bought and sold, wealthy people were more willing to devote resources to improve the land’s fecundity, since they could now reap all the financial benefits from their investment. As a result, farms increased in size and productivity.4 The territorial expansion of private property law’s purview also meant that small farmers and herdsmen lost their right of pasturage and were forced to sell their time and labor to landlords. Yet the most fundamental transformation that occurred at the end of the eighteenth century was the interlacing of capitalism with industrialization in Western Europe. In the past, merchants bought and sold goods for the everyday use of different social classes. Industrial production always had its own historical relationship with commerce and mostly served the needs of merchants. Thus, industry mostly produced what was socially needed. Now commerce began to serve industry. Merchants began trading in the elements of industry. They saw profit in meeting industrialists’ growing demand for long-term investments in machinery, raw materials, and infrastructure (and learned to share their distaste for risk).5 By the late nineteenth century, British technology and know-how behind agricultural industrialization began to spread to other parts of the world. With the spread of industrialization, capitalism followed. People, goods, and wealth were now travelling around the world at unprecedented speeds and were being bought and sold on a global scale. This was also when the British Empire was at the height of its 3 5 Ibid., pp. 73–100. 4 Toynbee, Industrial Revolution, pp. 62–3. Polanyi, Great Transformation, pp. 74–5. international institutions 5 power and territorial scope. Imperialism was driven by the dynamic of territorial expansion. As such, it needed new modes of governance to rule on a global scale. By mode of governance, I mean a specific, historically occurring set of social relations through which authority is deployed to direct a certain group’s activities by means of violence, organization, and knowledge. International law was one of the many new modes of governance forged out of empire.6 The publication of the first international law journal, the Revue de droit international et de législation comparée, in 1868, and the creation of the Institut de droit international in 1873, marked the moment that international law became the profession that we recognize today. It shifted from being the musings of “professors and philosophers, [as well as] diplomats with an inclination to reflect on the procedure of their craft,” to becoming the practice of lawyers.7 International institutions were another mode that emerged from the same context of capitalism and imperialism. Today, international law and institutions are deeply intertwined and we now describe international institutions as lawmakers unto themselves.8 But the history of international institutions does not arise from the optimistic, humanist imagination of the men of 1868 and 1873. Rather, it is a history told in more functionalist and pragmatic terms.9 The history of international trade institutions is predominantly drawn from the practice of diplomats, politicians, civil servants, capitalists, and economists. Only recently, with the creation of the WTO in 1994, have lawyers become important protagonists.10 This is not to say that there was no theory of law informing the work of these nonlawyers over the past century in how they designed and negotiated international trade institutions. But it is because most of the people were not lawyers that today’s trade law has not focused on this history. To determine how international law, international institutions, capitalism, and imperialism are configured and interact is to follow a moving target, since they constantly change over time. I therefore focus on a single, everyday agricultural commodity – sugar – to explain the relationship amongst these histories. I use sugar “as a kind of trace 6 8 9 10 7 Anghie, Imperialism. Koskenniemi, Gentle Civilizer, pp. 17, 41. Alvarez, International Organizations as Law-makers. Kennedy, “The Move to Institutions.” Hudec, “GATT Legal System”; Weiler, “The Rule of Lawyers.” 6 part i prologue element, tracking the direction of change,”11 in order to outline the complex intersections of old and new ideas, interests and institutions. I investigate three sugar treaties and their concomitant institutions: the 1902 Brussels Convention,12 the 1937 International Sugar Agreement (ISA),13 and the 1977 ISA.14 I examine the text, structure, and preparatory work of the trade treaties within the political context and economic discourse of the time, juxtaposed against the international social history of certain sugar-producing countries. I do so in order to investigate what it means to organize trade through a multilateral institution and discern how institutionalization involves the prioritizing, marginalizing, and exclusion of certain ideas and interests.15 We will see that the 1902 Brussels Convention was intended to buttress the British Empire by supporting colonial sugar plantations and to secure the Crown’s control over the West Indies. The economic purpose was to stabilize the price of sugar in order to attract private investment to the sugar-harvesting industry in the West Indies. The 1937 ISA was an attempt by the Cuban elite to renegotiate their neocolonial relationship with the US. It was also part of plans by Cuban businessmen and North American financiers to develop the island economically. The 1977 ISA was part of the Third World’s demand to redress imperial patterns of global poverty. Former colonies were now newly independent states, but still economically dependent on former imperial masters. International lawyers had little to say about the first two sugar treaties and institutions; it was not until the last sugar treaty that they began to put sugar treaties, and commodity agreements in general, in their sights. Sugar has always been central to industry and empire, and has transformed global economic history.16 Slave-driven sugar mills of the seventeenth century were one of the earliest factories.17 But the history 11 12 13 14 15 16 17 Grew, “Food and Global History,” pp. 1, 6. International Convention Relative to Bounties on Sugar, Brussels, March 5, 1902, 191 Parry 56, 1902 Foreign Relations 80, Cd 1535. International Agreement Regarding the Regulation of the Production and Marketing of Sugar, London, May 6, 1937, League of Nations, International Sugar Conference, p. 7; also reprinted in International Labour Office, Commodity Control, p. 26. International Sugar Agreement, 1977, New York, October 28, 1977, 1064 UNTS 219. For an analysis of how contemporary international regimes affect the international political economy of sugar, see Richardson, Sugar. Higman, “The Sugar Revolution.” Pomeranz and Topic, World that Trade Created, p. 225. international institutions 7 of sugar predates these modern developments. It is a history that witnesses the transformation of an unassuming plant into a global commodity. For most of its existence, sugar in the human diet was a luxury that came in the form of sucrose extracted from sugar cane.18 Only in the nineteenth century did sugar beet become a competitor to sugar cane. And only starting in the 1970s did sucrose start losing out to highfructose corn syrup and artificial sweeteners that dominate the contemporary industrialized diet.19 What began as a grass native to Southeast Asia, was picked up in Persia by Arab traders. They were the first to introduce sugar to the European palate, as the Umayyad Empire expanded into Europe through Spain and Sicily during the seventh and eighth centuries ce.20 Later, crusaders established sugar cane plantations in the Levant and Mesopotamia, and brought news of what was considered an exotic spice from the Orient. European nobility then started to incorporate sugar as a luxurious additive, elevating the flavor of food and forming part of the stock for apothecaries.21 By 1440, sugar began replacing honey in the diet of European nobility.22 Braudel notes that in 1544 there was a German saying, Zucker verderbt keine Speis (“sugar spoils no dish”).23 Sugar first came to the so-called New World on Columbus’s second voyage in 1493.24 This set the foundation for centuries of African slave labor sustaining sugar cane plantations in the Americas.25 By the seventeenth century, the French and British had acquired a voracious appetite for coffee, tea, and cocoa; because of this hot beverage revolution, sugar was no longer a luxury item and become an everyday good.26 The British were one of the first nations to move away from a starch-rich diet towards a sugar-rich diet. By the end of the eighteenth century, sugar was a staple in Britain, as many cups of sweet tea were incorporated 18 19 20 21 22 24 25 26 I am referencing sucrose throughout this study when I discuss “sugar” unless otherwise noted. Pollan, The Omnivore’s Dilemma, pp. 102–3. For general histories of sugar, see Deerr, History of Sugar; Toussaint-Samat, History of Food, pp. 552–63. Geerligs, Sugar Industry, p. 5; Fernández-Armesto, Thousand Tables, p. 81. Galloway, Sugar, pp. 1–10. 23 Braudel, Civilization and Capitalism, p. 191. Sugar was part of the “Columbian Exchange,” which involved the movement of a large variety of plants, animals, foods, human populations, communicable diseases, and ideas between the Eastern and Western hemispheres after 1492, greatly affecting ecological conditions. See Crosby, Columbian Exchange. Mintz, Sweetness and Power, p. 32. Clarence-Smith, “Global Consumption of Hot Beverages.” 8 part i prologue into the diets of workers, providing a “calorie-laden stimulant that warms the body and blunts the pangs of hunger.”27 Mintz notes that this change in diet coincided with the Industrial Revolution, exemplifying one sort of modernization. According to Mintz, however, it is not entirely clear whether the Industrial Revolution caused the dietary transformation, or if Britons’ taste for sweetness facilitated fundamental industrial and social changes in British society.28 Sugar is central to the colonial history of the formation of many states and territories, such as Hawaii, Louisiana, Puerto Rico, Brazil, Cuba, Haiti, Indonesia, India, Taiwan, and the Philippines.29 Some suggest that the desire for sugar was a driving force of imperial expansion.30 Others propose that imperial expansion reduced the price of sugar, enabling popular consumption.31 Regardless, sugar (along with coffee, tea, and cocoa) played an important part in the expansion of the British and other European empires. Sugar may very well have been central to the history of modern trade law because the nature of sugar production lends itself to competing transnational interests. Sugar cane harvested from the fields must be processed into raw sugar. The mill that processes cane into raw sugar must be close to the fields to ensure that the cane does not spoil. One mill would be a center of power fed by multiple peripheral sugar cane fields. As such, mill owners often constituted a sugar elite within their own country, with ties to international capital, or were owned by foreign investors. People could eat moist, raw sugar, but the demand was highest for white, refined sugar. Refining was also where much of sugar’s economic value was added. Most refineries were located in industrialized countries. One refinery might source its raw sugar from different points around the world. Thus, there was also a global pattern of an industrialized center drawing sugar from mills in the periphery. All this created a relationship of dependence and disparity of power between sugar growers and sugar refiners. As I will soon discuss further, international trade institutions emerged when the geography of world sugar production changed with the rise of the sugar beet. Cane sugar’s course began in warm climates and traversed through Europe as a luxury export, a slave-produced staple and a colonial good. Early cane-processing technology was 27 29 30 Mintz, Sweetness and Power, pp. 45, 80. 28 Ibid., p. 14. Abbott, Sugar, pp. 270–310; Wolf, Europe, pp. 333–6. Fernández-Armesto, Thousand Tables, p. 181. 31 Galloway, Sugar, pp. 1–10. international institutions 9 principally steam-powered, whereas sugar was first extracted from beetroot during the late eighteenth to early nineteenth century in Prussia, through chemical and mechanical innovations, directly from harvest to refinement. Soon after, beet sugar entered into the quotidian diet in Europe and beetroot spread across the colder soils of Europe and North America. 2 Histories as context An emphasis on institutions Before delving into the history of sugar and trade law, I will briefly consider some of the theoretical understandings that informed my research and explain how I structured this book. Each sugar treaty is addressed in a separate part. Each part is comprised of two chapters. The first chapter of each part outlines the broader institutional context in which I situate the treaty. Thus, the 1902 Brussels Convention is about the British Empire. The 1937 ISA is about the League of Nations and US-Cuban imperial relationships. And the 1977 ISA is about how the world of international trade law was constituted by a plethora of institutions, such as the International Trade Organization (ITO), United Nations Conference on Trade and Development (UNCTAD), the General Agreement on Tariffs and Trade (GATT), and international commodity agreements (ICAs) – all against the backdrop of Third World politics. These contextual chapters of each part serve as historiographies. The purpose is to bring different bodies of knowledge into conversation with one another. I have drawn from other disciplines and literatures, and interpreted them in order to understand how and why multilateral trade institutions came about. The second chapter of each part focuses on the specific sugar treaty. More importantly, however, the contextual chapters are also an argument as to why I think certain institutions provide the best insight into the meaning of free trade. Each sugar institution has been informed by a conception of free trade. But what free trade means is not predetermined and simply formalized in the text of the treaty. Rather, free trade is defined through the struggles, arguments, and compromises that lead to the creation and operation of an institution; 10 histories as context 11 in turn, each institution redefines the meaning of free trade. Indeed, “the task of international lawyers is to think about how concepts move across time and space. The past, in other words, may be a source of present obligations.”32 The history of trade law is most often an account of the GATT and WTO. The story is often told and there is no reason to repeat it here.33 For its first decade, the GATT was thought by many to be a small club of rich, industrialized countries.34 Recently, there has been a re-emphasis on the role of developing countries, from the beginning of GATT negotiations to the end of the Uruguay Round in 1994.35 Yet the history of modern trade law remains narrow in space and time. First, on temporality: even those histories that take a perspective of international trade law before the Second World War do so from the perspective of the GATT by noting the history of GATT doctrines in previous centuries. In this way, the GATT acts as the historical centerpoint for modern international trade law in that international trade agreements and doctrines are either pre-GATT or post-GATT. A GATTcentric account has obscured the fact that modern trade law has its origins at the end of the nineteenth century within the context of imperialism – a context most relevant to developing countries. Second, on spatiality: this version of trade law has done away with appreciating the role of multilateral trade institutions such as UNCTAD and ICAs in the regulation of international trade for several decades. Shifting the historical and institutional context of international trade law opens up free trade to a wider array of understandings. In the most general terms, free trade is the idea that international trade should be free from state intervention. Since this has framed trade law and policy for more than a century, the central issue that people have debated has been what constitutes unwanted state intervention. Questions that soon follow are: What constitutes the state and the market? Where is the line between the state and market? When is state action characterized as 32 33 34 35 Orford, “Past as Law or History?, pp. 97, 99. See, e.g., Jackson, World Trading System, pp. 31–78; Odell and Eichengreen, “The United States, the ITO, and the WTO”; Weiss, “Havana to Marrakesh,” p. 155; Zeiler, Free Trade; Gallagher, WTO: 1995–2005; Irwin, Mavroidis, and Sykes, GATT. Hudec, International Trade Law, pp. 11–12. See, e.g., Ismail, “Developing Countries in GATT”; Wilkinson and Scott, “Developing Country Participation in the GATT.” 12 part i prologue necessary to support the market as opposed to an unwarranted intervention? When are exceptions justified? These questions assume that there is a demarcation between the political and the economic. This assumption is a unique and key characteristic of capitalism. It is also inherently a political act, which means that how the two spheres are separated determines who gets to decide so-called economic matters. The separation reconfigures power and authority in such a way that makes it more difficult to determine how people make choices (as well as coerce and resist) in the market. The result is that capitalists’ decisions regarding production levels, which profoundly affect workers’ lives, are treated as “economic.” As such, they are not as easily subject to political scrutiny or social contestation. From another perspective, the political options available to workers are reduced because the assumption is that they are at the mercy of the impersonal forces of the market, with little hope for the significant redistribution of wealth and power. The problem, therefore, with separating the political from the economic, is that it most often privileges capitalists’ interests over labor’s interests.36 Each sugar treaty has drawn and redrawn the line between the supposedly political, public state and the economic, private market quite differently. Moreover, because these treaties were about the buying and selling of goods across borders, this raised the question of where to construct the line between international and domestic – which was always a matter of negotiation. While sugar allows us to track patterns of capitalism and imperialism, tracing the legal concepts that informed the treaties of the time allows us to understand how these tensions between state and market were understood and contested. The work of Karl Polanyi provides some guidance in this regard. In The Great Transformation, Polanyi set out to understand what caused the political and economic crisis that led to the Great Depression and the Second World War.37 What makes Polanyi so attractive to read while studying international institutions is that he provides a way of understanding different scales of governance. Inherent in his work is a 36 37 Polanyi, Great Transformation, pp. 71, 51–55; Wood, “Separation.” Polanyi, Great Transformation. On the benefits and limits of using Polanyi, especially in regard to the Third World, see Fakhri, “Law.” This chapter is by no means intended to be a definitive reading of Polanyi. While there are disagreements over how to read Polanyi, what I found helpful are the terms of those debates. histories as context 13 transnational sensibility that allows us to navigate the local, national, regional, imperial, international, and global.38 Polanyi’s first thesis was that historically markets were “submerged” in social relationships and as such can be considered as enmeshed or embedded in society.39 This meant that social needs dictated markets’ function and purpose. People acted not to safeguard their individual interest in material goods, but to safeguard their social standing, social claims, and social assets.40 Polanyi was reacting against a theory that assumed that the market was and is separate from society. He was responding to the premise that “instead of economy being embedded in social relations, social relations are embedded in the economic system.”41 Polanyi warned, however, that this theory of a “market society” – which assumed that the political and economic spheres were in fact separate – was a stark utopia that had violent consequences.42 Evoking William Blake, he pointed to how the destructive nature of markets was most apparent (and acute) during the Industrial Revolution in England, when new technologies radically improved the tools of production, while at the same time drastically disrupting common people’s lives through “satanic mills.”43 He was concerned that whenever market forces determined how people interacted with each other, they eroded the structures that enabled people to realize social principles such as reciprocity, redistribution, and householding (producing for one’s own use).44 In his later work, Polanyi stated that the economy “is embedded and enmeshed in institutions, economic and noneconomic,” and described the economy as an “instituted process.”45 By “economy,” he meant the interchange of humanity and the “natural and social environment, in so far as this results in supplying him with the means of material want and satisfaction.”46 “Process” was meant to suggest motion – that is, movement in location (through means of production or transportation) or appropriation (through the regulation and administration of goods).47 Institutionalization of the economy was that which vested the economic process with unity and stability. It also provided structure and definite function in society, thereby adding significance to history, and focused “interest on values, motives and policy.”48 38 39 42 46 Block, “New Understanding”; Ebner, “Polanyi Problem.” Polanyi, Great Transformation, pp. 45–6. 40 Ibid., pp. 43–55. 41 Ibid., p. 57. Ibid., p. 3. 43 Ibid., pp. 33–42. 44 Ibid., pp. 51–5. 45 Polanyi, “Economy.” Ibid., pp. 243, 250. 47 Ibid., p. 248. 48 Ibid., pp. 249–50. 14 part i prologue Polanyi never explicitly defined what he meant by institution (which he used interchangeably with “system”). Generally, he considered institutions as the social instruments that translate interests into politics. One could extract from his writing that what Polanyi may have meant by an institution was the “established centers, regular meetings, common functionaries, or compulsory code of behavior.” Institutions were made up of various laws made effective by customary practice.49 This leads to Polanyi’s second thesis, regarding the “double movement” created by the market. According to Polanyi, certain social actors benefit the most from the buying and selling of commodities. Driven by a desire to obtain as much profit as possible, their interest is to try to create a market society by transforming as many items and endeavors as possible into a commodity. Time and time again, these actors – merchants, financiers, landowners, and the like – successfully push the market to become the principal institution structuring economic life (as opposed to redistributive or reciprocative institutions). This first move causes the market to have a destructive social effect, by unleashing poverty, dislocation, and hardship. Other social actors, in turn, organize their political power and respond with a countermovement, demanding and creating laws and institutions in order to ameliorate the ensuing social disruption. To Polanyi, a market society remains in tension between the (market) move and (social) countermove. Such a conception of change requires social actors to act based on their interests. Polanyi provides a dynamic sense of how to determine interests and class, which formed when “not the economic but the social interests of different cross sections of the population were threatened by the market, persons belonging to various economic strata unconsciously joined forces to meet the danger.”50 Class is a historically contingent concept, and determining interests is neither obvious nor economically determined. Groups and individuals coalesce depending on the political and economic conditions of their time in an effort to protect themselves from social hardship and calamity. It was from these interests being put into operation that institutions were formed. Notably, laws and institutions not only reflected certain interests, but they also had the effect of changing people’s perception of their social 49 50 Polanyi, Great Transformation, pp. 8, 262. Ibid., pp. 155–6. Cf. Rasulov, “‘Nameless Rapture’.” histories as context 15 reality.51 Thus, institutions also had the effect of influencing what interests in the future came together as a common social class. Polanyi did not only look at interests, but also accounted for how ideas themselves shaped what social actors considered possible choices. Polanyi took stock of how European policy-makers believed in liberal market policies and theories of laissez-faire as creed.52 So, for example, during the major currency fluctuations in the 1920s, “belief in the gold standard was the faith of the age.”53 Herein lay the paradox that could only be explained by how influential the theory of the time was. Most policy-makers believed that currencies should be stabilized by any means necessary, especially since a stable currency was sought to ensure the flow of foreign trade. All foreign policies were directed towards stabilizing currencies in service of the gold standard. Nonetheless, to ensure a stable currency, they had to enact laws and policies that in effect restricted trade and foreign payments. Governments sacrificed their economies by reducing trade and closing markets in order to ensure a stable currency. To Polanyi, these sorts of economic dogmas were what created a sense of an automatic march to the Great War. He had been deeply horrified by how surreptitiously the world found itself in conflict, and sought to understand how decisions that were intended to avoid global political and economic crisis actually contributed to triggering war and depression. Context as argument Polanyi suggested that the market was embedded in social structures, yet he never provided a definition of society. Not surprising, then, that the word “embedded” has now become a term of art with different meanings and uses.54 But Polanyi’s lack of definition of society is not necessarily an analytical shortcoming.55 I suggest that defining what is “society” is part of the effort involved in the double movement. It is the ideational and political struggle over defining society that shapes the market and respective institutions. From a researcher’s perspective, this means that determining the appropriate institutional context is not self-evident. An argument 51 54 55 Polanyi, Great Transformation, pp. 77–85. 52 Ibid., pp. 135–62. 53 Ibid., p. 25. Beckert, “Embeddedness”; Dale, Polanyi, pp. 188–206; Buğra and Agartan, Reading Karl Polanyi, pp. 4–5. Burawoy, “Sociological Marxism.” 16 part i prologue regarding which institutions matter reveals one’s own intuitions about what constitutes society. By arguing that the 1902 Brussels Convention, 1937 ISA, and 1977 ISA were some of international trade law’s most defining multilateral institutions, I am suggesting that trade law is about constantly redefining capitalism and imperialism, and negotiating between agriculture and industry. A propensity for the GATT most likely arises from a partiality for manufactured products alongside an assumption that capitalism is inevitable and imperialism was historically extraneous to trade law. Reading Polanyi makes me think that while social actors struggle to determine how institutions will configure the market’s role in society, they look to law as a central object of contestation. Indeed, Polanyi’s imagery of a market as always enmeshed within institutions aligns with the work of legal realists such as Robert Hale and Morris Cohen.56 Polanyi, like Hale and Cohen, argued against the notion that the idea of the market and interventionism are mutually exclusive terms: For as long as [the system of a self-regulating market] is not established, economic liberals must and will unhesitatingly call for the intervention of the state in order to establish it, and once established, in order to maintain it. The economic liberal can, therefore, without inconsistency call upon the state to use the force of law.57 In reading Polanyi, Hale, and Cohen, we can think of markets as institutions in and of themselves, constantly interacting with other social institutions. There is no separation between law and the market, or state and the market. Rather, the law and the state are constitutive of the market. Like Polanyi, legal realists argued that “a free market system could not be distinguished in a significant sense from a regulatory system.”58 In The Great Transformation, laws (which constitute institutions) were created to establish and re-establish the market’s role as the primary institution structuring society. Laws were also created as a pushback dynamic of the double movement to compensate for the market’s destructive effect. Moreover, laws and institutions reflected a compromise or uneasy tension between market actors and other social actors. Law is not simply characterized as representing the interests of the 56 57 Hale, “Coercion”; Cohen, “Property”; Cohen “Basis of Contract.” See Rittich, Recharacterizing Restructuring, pp. 127–52. Polanyi, Great Transformation, p. 149. 58 Singer, “Legal Realism Now,” 482. histories as context 17 ruling class; rather, it exemplifies the mix of societal interests and structures. Society’s laws and institutions therefore contain within them the conflict and tension of competing social interests. This complexity means that law can represent the interests of social actors who benefit from the primacy of the market, or social actors reacting against the transformative nature of the market, or a compromise amongst a number of social actors. With this sort of analysis, law is the terrain of conflict and negotiation for both aspects of the double movement – law structures the market and is also part of the countermovement against attempts to create a market society.59 Recall that according to Polanyi, prevailing ideas and institutions determine what choices are possible. For example, once the international gold standard was institutionalized, the idea was further legitimized and prevailed over all domestic and international economic policy. What actual decisions are then taken leads to the creation of new institutions. In turn, those new institutions condition how future social actors understand their interests and how policy-makers understand what changes may be possible. Institutions provide the authority to certain ideas, thereby providing social actors with the repertoire of tools to make choices.60 As such, to argue over the appropriate institutional context is a debate over what choices are possible. 59 Dale, Polanyi, pp. 201–2. 60 David, “Institutions.”