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_________________________________________________________________________________ page i Unpacking Policy Space in International Trade Law: The Auto Industry in Brazil and the United States Ada Bogliolo Piancastelli de Siqueira Submitted in partial fulfillment of the requirements of the degree of Doctor of Juridical Science (SJD) at the Georgetown University Law Center 2019 Dissertation supervisor: Professor Alvaro Santos _________________________________________________________________________________ page ii Abstract This thesis aims to deconstruct the notion of policy space in international trade law. It presents the idea of “unpacking policy space” to suggest that policy space is not merely a concept relating to what room for policy is available under the law. Rather, it demonstrates that this commonly used concept overlooks important regulatory influences that define countries ability to regulate. The dissertation makes two main claims. First, it claims that policy space for industrial and developmental policies extends beyond WTO law and depends not only on international rules; but rather, on systems of domestic and transnational rules and regulations. Second, it argues that by analyzing how different domestic structures lead to different regulatory preferences and possibilities, this analysis provides an insight into how similar transnational and international rules translate differently into different countries. It presents four case studies that assess how the existing regulatory frameworks shaped policies for the automotive industry in Brazil and the United States. The case studies analyze the legal architecture and meaning of industrial policies developed by Brazil and by the United States in the years during the establishment of the WTO (1993-1999) and, subsequently, in the financial crisis period (2007 – 2013). The thesis reveals how day-to-day background operations within the international trade system result in a pre-selected range of ideological, political and economic choices within a much broader universe of possibilities even before the engagement of governments and other international actors. In doing so, it fills a gap in the literature that has traditionally focused on the relationship between national economic policies and international rules to understand regulatory constraints and policy space in the trading regime. It contributes to the literature by suggesting that regulatory options vary according to the level of regulation for each specific sector as well as in relation to countries’ domestic structures and institutions. It deconstructs the supposed institutional neutrality embedded in the notion of policy space by providing a realist analysis of background norms and legal processes in the global economy. In doing so, this thesis aims to expose ideological biases within the notion of policy space and explain the distributional outcomes that derive from it. Keywords: International Trade Law, Policy Space, Automotive Industry, Brazil, United States _________________________________________________________________________________ page iii For Lexi, For her wisdom and her guidance. Because she always understood. _________________________________________________________________________________ page iv Acknowledgements The path toward this dissertation has been circuitous. Its completion is thanks in large part to the special people who challenged, supported, and pushed me along the way. I owe this dissertation to the generous guidance, patient and wise mentorship and enduring trust of my supervisor Professor Alvaro Santos, who steered me through the long road of a doctorate degree. His support and feedback contributed greatly to the final product of my research. I am profoundly grateful to my three committee members Jennifer Hilmann, Professor Andrew Lang and Professor Michelle Ratton Badin Sanchez who were mentors throughout my SJD candidacy. I thank you for bringing a depth of knowledge to my work that few could match. Your support and feedback contributed greatly to the final product of my research. I could not have succeeded in this endeavor without the guidance of our SJD Program Director, Professor Alexa Freeman. I tremendously appreciate her support throughout my candidacy. I cannot thank her enough for the years of SJD workshops, colloquiums, collaboratives that pushed this research forward. I also would like to thank my colleagues in the SJD cohort for their friendship, stimulation, and guidance. Special thanks to my inspiring colleagues Alexandra Phelan and Julia Cadaval, for the enduring friendship, emotional and intellectual support. I would also not have been able to complete this SJD without the unwavering support, intellectual guidance, and sisterly love of my dear colleague, Edit Frenyo. Thank you for being a source of strength for me in the SJD and in life. I benefitted greatly from participating in the conferences and workshop of Harvard’s Institute of Global Law and Policy, which allowed me to become a part of a vibrant network of scholars from around the world. Engaging with David Kennedy on research structure and critical legal scholarship. Thanks are also due to the Brazilian Research Council (CNPq) for the financial support I have received during the course of my candidacy, under process number 249135/2012-4. Sweet memories to all my faraway family in Brazil, without whose financial and emotional support I would have not been able to complete this thesis. Mom, and dad, thank you for doing everything to support, encourage, love and see me through this process. _________________________________________________________________________________ page v TABLE OF CONTENTS Page INTRODUCTION.................................................................................................................... 1 I. CHAPTER 1: UNPACKING POLICY SPACE ...................................................... 9 A. A MULTI-LAYERED ANALYSIS OF POLICY SPACE ........................... 9 1. Domestic Restrictions to Economic Policy Space ............................ 10 2. Corporate Strategies and Global Value Chains .............................. 12 3. International Standards and Regulations ........................................ 16 B. DISTRIBUTIVE PERSPECTIVES ON POLICY SPACE........................ 19 1. Policy Space and the Dynamic of Differences ................................. 22 2. Institutional Preferences and Global Distributive Consequences . 27 a. The ITO and the GATT Negotiations: Policy Space as an Anglo Bargain .................................................................................... 28 b. 1950s and 1960s: Policy Space as Non-Reciprocity ............... 36 c. The 1970s and 1980s: Institutional Experimentation as Policy Space ........................................................................................ 42 3. Depoliticization of Trade Law and the Role of Experts ................. 46 a. Legal definition of economic concepts ..................................... 47 b. The Role of Experts .................................................................. 54 c. Destabilizing the Narratives of Trade Expertise ..................... 57 C. Concluding Remarks ..................................................................................... 62 II. CHAPTER 2: POLICY SPACE AND THE AUTO INDUSTRY AFTER THE ESTABLISHMENT OF THE WTO ........................................................................ 63 A. The Case of Brazil .......................................................................................... 63 1. The 1995 New Auto Regime .............................................................. 66 2. International Rules ............................................................................ 72 a. The Mercosur Effect ................................................................. 72 b. The New Auto Regime at the WTO .......................................... 75 _________________________________________________________________________________ page vi i. Defining ‘critical situation’ in the Balance-of- Payments ...................................................................... 76 ii. Renegotiating the Limits and Scope of the New Auto Regime.......................................................................... 81 3. Domestic Rules ................................................................................... 84 a. Brazil’s Dual Value Added Tax and Federal Autonomy ......... 85 b. Brazilian Fiscal Wars .............................................................. 88 4. Global Value Chains and Corporate Governance .......................... 94 a. Producer Relationships and Distributional Power within GVCs ........................................................................................ 95 b. The Geographical Organization of GVCs ............................. 100 5. Informal Regulations and Standards ............................................. 102 a. Car Emission Standards ........................................................ 102 b. Fuel Efficiency Standards ...................................................... 106 6. Case Study Conclusions on Brazil .................................................. 108 B. The Case of the United States ..................................................................... 109 1. International Rules .......................................................................... 113 a. NAFTA: Creating a Regional Industry .................................. 113 b. US – Automobiles: CAFE Standards, Gas Guzzler

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