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Rostam Neuwirth

Abstract

Trade fragmentation is particularly found in the prevailing conception of international trade law, as being a discipline of public international law, on one hand with nation states as the sole actors of public international law, and, on the other hand, a discipline of private international commercial law with private persons and companies as the central actors. However, important changes to the international business and trading environment, often caused by an unprecedented pace of technological innovation, have occurred which threaten to render this perception not only obsolete but inapt to cope with the most imminent challenges to the regulation of international trade. For instance, as restrictions to trade at state borders are being removed by way of multilateral trade negotiations, increasingly non-tariff barriers in the form of domestic regulation are being erected. Paradoxically, state regulation is not the only source of new restrictions to trade capable of fragmenting the global market. These trade restrictions can also have their origin in the actions of private parties. This fragmentation and its inherent dangers is well exemplified in the so-called 'Digital Versatile Disc Regional Coding System (DVD-RCS)'which, for the purpose of the distribution of films on DVDs, divides the world in several different geographical regions to the effect that a movie on a DVD from one region can only be watched on the respective hardware (i.e. a computer or a DVD player) manufactured in the same region. Prima facie, the DVD-RCS appears to stand in stark contrast to the letter and the spirit of the law governing international trade established under the WTO system and to openly constitute a so-called "unnecessary obstacle to international trade." The reasons behind the adoption of the DVD-RCS are discussed and its possible incompatibility with the rules contained in the agreements established under the WTO examined in this article.

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