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Internationally binding arbitration does exist and is written into trade agreements regularly, e.g. ISDS. As long as the disputes are small enough to not call
by Eridrus 3y ago
Internationally binding arbitration does exist and is written into trade agreements regularly, e.g. ISDS.
As long as the disputes are small enough to not call into question the entire trade agreement/framework, you can have a backstop that makes this enforceable. The countries that are signatories agree to comply with the decisions so that they remain in good standing wrt the trade agreements.
- credit_guy 3y agoOk, fair enough. But here we are talking about sovereign defaults. They are not small.
- Eridrus 3y agoThey are still relatively small on the scale of all international trade. This article talks about a $44bn debt. And a bankruptcy court does not have to write off debts entirely; it could force new interest rate agreements, fractional haircuts, etc. I think the bigger question is really if people want such a system or not: would the EU be willing to put tariffs on Chinese goods because they were refusing to restructure Argentinian debt? Would China ever sign on to such an agreement? I do not think they would, but the issue is not that such a system is impossible, it is that people have to want it and be willing to stake something larger as collateral (i.e. trade) in the first place.