Special Economic Zones in International Economic Law: Towards Unilateral Economic Law


 The international economic regime has entered a new phase of reassertion of sovereignty by States. While States continue to show respect for the values of international (economic) law, the institutionalization of these values has devolved from the international (to the regional) to the domestic level of governance. A new form of ‘unilateral economic law’ is thus gaining importance in the development of international and domestic laws and institutions. However, it remains largely understudied. This article discusses the development and proliferation as well as the importance of special economic zones as a new form of unilateral economic law in the overall system of international economic law. This article identifies four types of economic unilateralism: classical unilateralism, embedded unilateralism, sustainability unilateralism, and national security unilateralism. The new special economic zone unilateralism represents a middle ground between the two extremes of unilateral liberalization and aggressive unilateralism. Accordingly, special economic zone unilateralism introduces a new layer in the overall system of international economic law. First, special economic zones embody a new compromise between the State and the market. The State-controlled promotion of trade and investment taking place through special economic zones represents a complex compromise between the liberalization and protection of economic sovereignty. Second, the spatiality of trade and investment promotion through special economic zones is different from that of international economic law. The liberalization of trade and investment does not take place for the whole country but for an isolated jurisdiction within the broader national jurisdiction, while the focus is on the supply side rather than the traditional input factors of production. Overall, the new special economic zone unilateralism provides insights into the future of international economic law as envisaged by States. Special economic zones have been employed by States both as an alternative and as a complement to trade and investment promotion through the instruments of international economic law.


I. INTRODUCTION
International economic law (IEL) is rapidly changing. The relative stagnation of the World Trade Organization (WTO) has led to a multiplicity of regional trade agreements (RTAs) outside of the WTO framework. The new mega-regional agreements (MegaRegs) have now become increasingly relevant in multilateral international trade law. 1 This has only recently led to a productive discussion regarding the reform of the WTO: it took the unilateral action of some governments to start thinking about the institutional reform of the WTO, with a focus on its dispute settlement system enshrined in the Dispute Settlement Understanding. 2 Even though the starting points of the two subdisciplines of IEL are different, international investment law finds itself in a similar situation. International investment law (and arbitration) has been facing a backlash. 3 Given the different historical roots as well as the development of international investment law, the backlash and debates surrounding the reform of the field started taking place earlier; the backlash-related discussion in international investment law has been very productively transformed into a reform debate. 4 The proposals for reform include the establishment of a Multilateral article and the special issue, we conceptualize the relationship between the domestic and the international as different layers of IEL and the role of domestic law as unilateral economic law.
The present article and special issue discuss the development and proliferation of one of the most notable institutions of unilateral economic law: special economic zones (SEZs) and their importance for the international economic system. SEZs are carved out jurisdictions within the overall jurisdiction of a State for the purposes of introducing different laws and regulations that are usually more trade and investment friendly. 12 SEZs are proliferating at an unprecedented pace. 13 The zones coexist with the ordinary domestic legal system and international instruments offered by IEL to attract foreign direct investment (FDI), such as Free Trade Agreements and Bilateral Investment Treaties (BITs). SEZs are a strategy in the competition among States to promote foreign trade and attract foreign investment with the use of domestic law. As a result, they often complicate the choice of forum to do business for foreign companies. SEZ unilateralism creates a complicated relationship between domestic law and IEL and invites a careful consideration of the legal status of SEZs from an IEL viewpoint. 14 The article is structured as follows. Section II analyzes the contemporary devolution process in IEL from the international to the regional and eventually to the domestic level of governance. It then proceeds to elaborate a typology of unilateralism in IEL. Section III analyzes SEZs as unilateral economic law; it discusses the historical development of SEZs and provides a typology of SEZs. This is followed by an analysis of the relationship between the law of SEZs and IEL. Section IV concludes and outlines the special issue.

II. NEW UNILATERALISM IN IEL
Trade and investment law have a domestic life that remains largely understudied. 15 The domestic life has led to the development of new legislative and regulatory measures that aim at substituting or complementing IEL. The exhaustiveness and intrusiveness of multilateralism (as well as the 'constitutionalization' of international law) has led to the backlash against legal globalization (and consequently, international trade policy). SEZs represent a strategy of applying domestic law instead of or in parallel with IEL as a way to promote foreign trade and attract foreign investment as well as provide safeguards to foreign investors. 17 This section first discusses the ways in which countries use their domestic laws as an alternative or complement to IEL. It then presents a typology of unilateralism in IEL.
A. From international to regional to domestic? Multilateral negotiations in international trade have long reached a deadlock. International investment law and arbitration have experienced a huge backlash from government and scholars alike. States around the world have been resorting to regional strategies for the promotion of trade and investment. 18 Recently concluded agreements such as the Regional Comprehensive Economic Partnership, 19 the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, 20 and the EU-China Comprehensive Agreement on Investment 21 are a testament to the shift from multilateral negotiations to regional strategies to advance trade and development.
A complementary and sometimes alternative approach to promote trade and investment has been to focus on domestic strategies; States have enacted new domestic legislative frameworks to manage economic globalization, including investment laws, arbitration laws, and new regimes of SEZs. 22 The ways in which countries use their domestic law as an alternative or complement to IEL have been subject to less attention in the relevant scholarship and reform practice. 23 The domestic side of trade, investment, and investor protection and management deserves a closer look, as countries in the North and the South and the West and the East have started rediscovering the power of domestic law for the promotion of trade and investment. 24 International law as developed since the end of World War II (WWII) is historically layered. Four layers of development of international law may be identified that have resulted in a 'legal geology' in international regimes: bilateral, multilateral, constitutional layers of law-making, as well as a regulatory layer. 25 International trade law transitioned in the second half of the 20th century from a bilateral into a multilateral discipline. Multilateralism in international trade is enhanced by the 'single-undertaking' approach of the WTO. 26 Moreover, international trade law has developed a constitutional layer with the constitutionalization of certain principles within the WTO system. 27 A peculiarity of the WTO system is the lack of a regulator as in other international organizations of the economic sphere such as the International Monetary Fund and the World Bank. The WTO operates more as a forum for the adoption of trade agreements among the members rather than as a day-to-day regulator of international trade matters. However, the WTO framework has institutionalized an ex-post regulator: the WTO AB. The WTO AB, a vital component of the dispute resolution system, is vested with great powers as the last decision-maker in the WTO system. 28 The contractual structure of international investment law is different in comparison to other areas of international law, where multilateral treaties and strong law-making and regulatory bodies dominate. While international investment law and arbitration rely on the traditional contractual sources like any other field of international law, international investment law has mostly developed the bilateral layer of the typical geology of international law in the form of BITs. 29 International investment law-mostly of the last quarter of the 20th century-has been bilateral law with countries in the North and West entering into contractual agreements for the protection of investors in the South and East. Despite the extensive trend toward multilateralism in the post-WWII era, the idea of a multilateral investment law has been rejected by the international community repeatedly.
The recent developments in the discipline of IEL thus reveal the following trends: first, a trend of contestation of the IEL subdisciplines. This does not necessarily involve a broader contestation of the values reflected in the relevant subdisciplines-at least in principle; second, a trend to debate the reform of the IEL subdisciplines. Reform discussion revolves around both redesigning existing institutions and developing new international institutions; finally, there is a certain trend toward regionalization both in trade and in investment law. 25

Special Economic Zones in International Economic Law • 235
A brief analysis of the development of IEL reveals the following paradox: the backlash against international trade law is directed against an intensive process of multilateralization and constitutionalization. On the other hand, the backlash against international investment law seems to be directed at insufficient multilateralization. The opposite directions of development of the two regimes have still led to a certain convergence: the over-constitutionalization, on the one side, and the incomplete multilateralization, on the other, have led to the increase in importance of domestic law for the promotion and control of foreign trade and investment.
The focus on multilateral, regional, and bilateral contractualism sometimes does not allow policy reformers and legal scholars alike to look at the actual locus of change and reform in IEL, namely within the States, at the domestic policy level, and through domestic trade and investment laws. 30 Domestic level reform and movements for a new unilateralism in IEL open up opportunities for the comparative study of domestic laws beyond bilateral and multilateral treaties; at the same time, such study may provide insights into whether IEL as envisaged by States will remain truly international. Even contemporary regionalism may be viewed in the same light. RTAs and other forms of Preferential Trade Agreements have been reduced in the policy and theoretical debates among lawyers and economists down to either virtues or vices from the point of view of multilateralism. Some view regionalism as a threat to the integrity of multilateralism and the multilateral trading system-the 'spaghetti bowl effect' . 31 In the eyes of others, regionalism is yet another possibility toward multilateralism-the 'domino effect' . 32 In the current stage of development of IEL, regionalism may be viewed rather as a step toward unilateralism or just another variety of unilateral economic law. 33 The following section discusses a typology of unilateralism in IEL.

B. A typology of unilateralism in IEL
The practice of unilateralism in IEL is as old as modern foreign trade. This article identifies four types of unilateralism in State practice: classical unilateralism, embedded unilateralism, sustainability unilateralism, and national security unilateralism.

Classical unilateralism
International trade law started as a discipline in the form of unilateral liberalization of trade policy by the British Empire. 34 During the first half of the 18th century, trade policy in Britain was predominantly mercantilist. The shift from a mercantilist to liberal trade policy began in 1760, with the rise of Physiocracy in France and the liberal economic ideas of Adam Smith and his successors. 35 Following what is now identified as Classical Trade theory, the British Empire unilaterally opened its borders for international trade during the 18th and 19th centuries.
The most interesting case study of unilateral trade opening was the series of events that led to the repeal of the 'Corn Laws' . The Corn Laws were a set of tariffs and trade restrictions on imported food and grain enforced in the UK between 1815 and 1846. The Corn Laws, an example of British mercantilist trade policies, aimed to keep grain prices high to favor domestic producers. They achieved this by blocking the import of cheap grain, initially by simply forbidding importation below a set price, and later by imposing steep import duties, making it too expensive to import grain from abroad, even when food supplies were short. The Sliding Scale Corn Law was passed in 1828. 36 In 1842, the then Prime Minister Robert Peel introduced a liberal tariff reform that drastically reduced the duties on imported corn and had lifted the ban on imported cattle. He carried, in the following year, the Canadian Corn Bill that admitted Canadian corn at a fixed small duty and then went on to introduce another series of liberal tariff reform. 37 Import duties on raw cotton and wool were abolished. Duties on tropical foodstuffs, meat, and dairy products were greatly reduced. 38

Embedded unilateralism
A different paradigm of unilateralism emerged in the post-WWII era. What John Ruggie termed 'embedded liberalism' was a concept that brings to expression a political economy compromise of the postwar era, whereby the promotion of free trade was accompanied with some leeway given to the States to adopt protectionist measures. 39 While 'embeddedness' and 'liberalism' may be viewed as two antithetical concepts, the broad idea behind embedded liberalism was that the Keynesian welfare state was accepted as an 'assumed normative benchmark' for international trade. 40 Steinberg understands embedded liberalism as a concept that captures the coexistence of both liberal and protectionist elements in the WTO rather than as a concept different 35 See generally Laura LaHaye, 'Mercantilism' , The Library of Economics and Liberty, https://www.econlib. org/library/Enc/Mercantilism.html (accessed 15 October 2020). 36 The sliding scale mechanism of the Sliding Scale Corn Law was a customs mechanism whereby the import duties on corn varied in inverse relation to the level of grain prices on the home market and thus tended to reduce imports to the minimum without provoking famines. On the other hand, when home prices passed a certain threshold, exports of grain were prohibited so as not to reduce the local supplies. Given the fact that the lower limits of import duties were distinctly below the general level of the period before the Corn Laws, this was seen as the first step toward reducing the trade protections on agriculture in England; see Bernard Semmel,  43 Overall, embedded liberalism differs from the orthodox liberal school of thought because of its greater support for the pursuit of certain protectionist national policies. 44 Embedded liberalism therefore leaves more room for States to pursue unilateral measures for the promotion of social policies. This type of embedded unilateralism developed in international investment law under the brand of the 'New International Economic Order' (NIEO). 45 The broader goal was similar; this time asserted by the newly decolonialized countries of the developing world. The NIEO led to the development of Foreign Investment Laws (FILs) that later started proliferating in various countries around the world. FILs may be viewed as a case of embedded unilateralism. 46

Sustainability unilateralism
Unilateralism was given a bad name in the field of international trade law during the 1990s, namely the age of uncontested economic globalization. When value judgments had to be made between trade liberalization and protection of domestic interests, liberalization became the default. International trade law is a multilateral discipline that favors State interaction within the frame of the multilateral institution of the WTO. At the same time, the WTO allows unilateralism to some extent. The exceptions contained in Article XX GATT, for example, are instances of unilateralism in international trade law. The interplay between multilateralism and unilateralism in international trade has been mostly adjudicated in the context of the exceptions for the protection of the environment. 47 The two main cases discussing unilateral environmental measures are the Shrimp-Turtle 48 and Tuna-Dolphin 49 cases. The major issue addressed in these cases is to what extent a country may unilaterally impose measures and standards on environmental protection on foreign countries. The development of the case law shows a gradual transition of the WTO AB and WTO law toward a position of more deference to domestic environmental policies and the acceptance of domestic unilateral environmental measures. 50 This type of unilateralism in international trade was gradually extended to cover other aspects of social policy such as labor and human rights more broadly, 51 as well as has taken a similar shape in international investment law. 52 One may today speak of sustainability unilateralism in IEL.

National security unilateralism
Under the foreign trade policy of the Trump administration, the world witnessed a new era of 'trade wars' . 53 The Trump administration imposed a series of tariff increases visà-vis many of its WTO trade partners without following the processes prescribed in the GATT and elsewhere in the WTO agreements. 54 The justification for this type of unilateralism is the protection of national security interests of the USA. 55  by similar motives as China is developing this strategy, in part, to address potential external threats to its own national security. 57 National security has experienced a meteoric rise from a hypothetical excuse under international law to a widely asserted notion before both investment tribunals and the WTO Dispute Settlement Body. 58 The WTO's first ruling on national security under the exception of Article XXI GATT was rendered in a dispute between Russia and Ukraine in 2019. 59 Despite the relatively rare use of national security exceptions in investment treaties, 60 arbitral tribunals have increasingly discussed the necessity defense under customary international law, for instance, in Ampal-American v Egypt in 2017. 61 However, international disputes are only the tip of the iceberg as many domestic laws have recently been amended to tighten entry rules for foreign investment, as well as expand the grounds for review of Investment Screening Mechanisms and similar foreign investment control procedures. 62 Several foreign takeovers have also been reportedly withdrawn for national security reasons. 63 Overall, national security has been used both in trade and in investment and both domestically and internationally as an exception from the application of the disciplines of IEL.
The preceding analysis sheds light on the fact that various types of unilateralism now constitute a defining feature of contemporary international trade and investment (law). If one were to view economic unilateralism on a liberalization continuum, unilateral liberalization of trade and investment-as in the classical era-stands on the one side, while 'aggressive unilateralism'-as in the case of national security unilateralismstands on the other. 64 The new unilateralism discussed in this article brings to expression the variety of policies that lie in the middle between the two extremes of unilateral liberalization and aggressive unilateralism. Globalization as a descriptive and normative category is now also heavily contested in international law. 65 IEL has been one of the first disciplines where this reaction has been observed both in scholarly debate and in State practice. For example, States have begun withdrawing from international agreements and resorting to regional cooperation strategies. More recently, there has been a rise in the use of domestic legal instruments such as domestic investment laws. 66 The trend toward unilateralizing IEL is broader and is reflected in the simultaneous effort of States to withdraw from international agreements, while at the same time controlling how much, to what extent, and what areas are to become globalized. The unilateral economic law identified in this article means the institutionalization of the values and principles of IEL, such as international trade and investment promotion through National Treatment and Most Favored Nation, using the means of domestic law. SEZs are to be viewed in this light.
Economic deglobalization combined with the proliferation of domestic strategies for the management of the global economy have led to the increasing significance of SEZs and their laws and have added them as a unilateral layer to the overall framework of IEL. These issues will be taken up in the next section that discusses SEZs and traces their development within the broader context of unilateral economic law.

III. SPECIAL ECONOMIC ZONE AND UNILATERAL ECONOMIC LAW
SEZs represent another strategy adopted by States to apply domestic law instead of or in parallel with international trade and investment law to promote trade and foreign investment and provide safeguards to foreign investors. The difference between this and other strategies of foreign trade and investment promotion is two-fold. First, SEZs are unilaterally established by States, which means that they can be modified at will without having to engage in any bilateral or multilateral negotiations with other States. This also means that the life span of SEZs is exclusively under State control-while the termination and withdrawal of international treaties and concessions are subject to the scrutiny of international rules. Second, SEZs are different from international trade and investment norms because of the carving out of a 'special' jurisdiction for the application of a separate economic regime within the country-hence the term 'special economic zone' . 67 While international treaties require implementation of international rules to the entire national territory, SEZs allow States to test and develop new policies on a smaller scale. While SEZs stress the increasing reliance by States on domestic laws to unilaterally encourage trade and foreign investment, they also form the bedrock of a new layer of IEL. In line with the above discussion, this section of the article explores the evolution and typology of SEZs; it then makes an assessment of SEZs as 65  A. Past, present, and future: SEZs' evolution and types The idea of carving out a piece of land for the purposes of trade promotion goes back to the Roman Empire. 68 The first SEZ in the form of a free trade zone (FTZ) may be said to be the Greek island of Delos from 166 BC until about 69 BC. 69 The model of the civitas libera was developed in the Hellenistic and Roman imperial eras; 'free cities' could coin money, had the power to establish their own laws, and were not required to pay an annual tribute to the Roman Emperor. 70 In the 12th century, the Hanseatic League appeared as a confederation of port cities dominating trade in Northern Europe. They moreover had established trading posts (Kontore) all over Europe that formed part of the trading network but did not belong to the core of the Hansa, including Steelyard in London. 71 They were separate walled communities with their own warehouses, weighing house, chapel, counting houses, as well as residential quarters.
An immediate forerunner of contemporary SEZs were 'treaty ports' . 72 Treaty ports were established through bilateral international treaties initially between the British Empire and the Qing Dynasty on the soil of China. The model of treaty ports expanded both geographically and politically as treaty ports were established outside China, and the model was adopted by all Western powers of the time. 73 Treaty ports were open to foreign trade and enjoyed favorable customs regulations. Moreover, foreigners were allowed to live within the bounds of treaty ports using newly built infrastructure and enjoyed legal extraterritoriality as per the treaties. The last treaty ports of China were abolished at the end of WWII.
In the aftermath of WWII, SEZs in the form of export processing zones (EPZs) were developed to further the then newly developed economic strategy of 'export-led growth' . 74 The first EPZ of the postwar period was developed in Puerto Rico. 75 Some consider Shannon Free Zone in Ireland, which was established in 1959 adjacent to the city airport, as the first economic zone of the contemporary type. 76 SEZs were later used by the Chinese government-using for the first time the term 'special economic zone'-to bring about limited liberalization, as well as other governments in order to achieve multiple economic and social goals. China has been a forerunner in post-WWII economic zone development with the establishment of the Shenzhen SEZ and several other zones that have been created in the last decades. 77 The number of trade and investment zones where the applicable rules were different in comparison to the rest of the country multiplied in the 1980s and continues to rise exponentially in the 21st century. 78 The term 'EPZ' was coined to describe these areas in the 1970s by the United Nations Industrial Development Organization. 79 The term 'SEZ' has been used in China for the zones that have been developed since the 1980s, 80 a term that was later adopted by the World Bank in the FIAS Report. SEZ is now used as a generic term to describe geographic areas that are designated as zones for promotion of trade and attraction of foreign investment. According to a definition by the World Bank, 'SEZs are generally defined as geographically delimited areas administered by a single body, offering certain incentives (generally duty-free importing and streamlined customs procedures, for instance) to businesses which physically locate within the zone' . 81 While SEZs have been around for a long time, they have in their long history undergone different stages, and each stage has had different economic policy meanings and implications. In more recent years, SEZs have seen both an exponential quantitative growth and a qualitative transformation. SEZs have entered a new era of great significance, which has legal and policy implications for IEL. The last five years show a spike in the usage of SEZs, as they have never before experienced such a rapid rate of expansion-namely of approximately 20% 82 -as well as increase in importance for countries' trade and investment policies. Beyond the geographic expansion of SEZs, they have also expanded thematically.
Globalization, a given of the world at the end of the 20th century, became a contested issue after a series of economic, financial, political, and health crises that have plagued the globe over the last 15 years. Particularly, economic globalization has been in decline in the aftermath of the global financial crisis of 2008. The process of recess of economic globalization has been described as 'de-globalization' . 83 Global trade has declined significantly since 2012, and this seems to be a lasting trend. 84 According to United Nations Conference on Trade and Development (UNCTAD), global FDI began its pre-COVID decline since at least 2016. 85 As an immediate consequence of the global pandemic, world FDI flows collapsed in 2020. 86 Under these strong underlying conditions of diminishing supply of capital-while demand remains constant, or maybe even increasing-the marketplace for foreign investment becomes even more competitive, and the need for export-led growth becomes even more imperative. 87 It is thus no coincidence that UNCTAD's World Investment Report 2019 is dedicated to SEZs and their impact on global investment and trade. According to Mukhisa Kituyi, Secretary-General of UNCTAD: It is in this context [described above] that we are seeing explosive growth in the use of special economic zones (SEZs) as key policy instruments for the attraction of investment for industrial development (UNCTAD, WIR, at Foreword).
There are approximately 5400 zones across 147 economies today. 88 More than 1000 zones were created in the last five years, and at least 500 more are in the process of being developed in the next couple of years. 89 Figure 1   There are many different types of SEZs such as FTZs, EPZs, industrial parks, and bonded logistics parks. 91 SEZs may be used for storage, re-export and trans-shipment operations, and/or for manufacturing operations. The different types of zones signal different degrees of willingness to promote foreign investment, as well as openness in areas of economic activity. SEZs can be classified based on the nature of commercial activities undertaken inside the zone: SEZs that are used exclusively for trans-shipment and international trade, which are often referred to as free ports, and SEZs that are used for manufacturing and processing to attract foreign investment, which are usually referred to as EPZs. 92 There is one further reason for the increasing importance of SEZs: the qualitative transformation of SEZs. Under conditions of extreme competition for the scarce resource of capital, the scope of activities captured under SEZs is expanding. This is also why it is commonly believed that SEZs have entered a new stage of development (and sophistication). Beyond the two traditional forms of SEZs, free ports and the EPZs, that historically have been used for trade in products, special zones are nowadays used for the promotion of foreign investment in services, predominantly financial services. Countries in the Gulf Region have truly pioneered this type of zone with the Dubai International Financial Centre (DIFC) that has operated since 2004 and Abu Dhabi Global Market established in 2015, both in the United Arab Emirates, 93 as well as the Qatar Financial Centre (QFC) in the State of Qatar, which has been operating since 2005. These latest developments represent a new benchmark for SEZs that many counties will try to duplicate and foreshadow the further transformation of many SEZs worldwide. For instance, Kazakhstan established the Astana International Financial Centre that was officially launched in 2018 and that is largely inspired from the DIFC and the QFC. This is characteristic of an even broader trend of moving away from trans-shipment and manufacturing toward the creation of free spaces for the flourishing of various economic and social activities. The establishment of China (Shanghai) Pilot FTZ announced this even broader shift in 2015 and is an example for the increasing economic and social importance of SEZs. 94 SEZs are nowadays used as test beds for broader economic as well as social reform.
SEZs are usually fenced-in areas and are traditionally located in or near seaports or airports. They are said to create an 'offshore' jurisdiction on the soil of the countries that establish them. The QFC is one of the rare cases of zones that may be characterized as 'on shore', meaning that QFC registered entities are allowed to operate and offer services everywhere within the borders of the State of Qatar-not exclusively within the geographical borders of the zone. In these geographically and legally circumscribed areas, domestic laws are partly different from the rest of the domestic jurisdiction, with the aim of increasing foreign trade and investment. Laws that may be different are investment and trade laws, tax laws, labor laws, customs laws, and so on. Financial incentives in the form of duty-free import, tax exemptions, and/or tax holidays usually accompany the creation of the zones in order to promote investment in the zone.
The laws are usually not only more investor-friendly but very often also designed to be more familiar to foreign investors, being based on common law principles. In addition, they are also governed by Free Zone Authorities that have broad regulatory and operational powers within the relevant zones.

B. Special economic zones as unilateral acts in IEL
International treaties and custom are not the only means by which States assume international obligations. A strictly unilateral act can also impose a binding obligation on the author State. 95 This principle was recognized by the International Court of Justice in the Nuclear Tests case, 96 in which the Court held: declarations made by way of unilateral acts, concerning legal or factual situations, may have the effect of creating legal obligations […]. An undertaking of this kind, if given publicly, and with an intent to be bound, even though not made within the context of international negotiation, is binding.
Unilateral acts are one of the most contentious issues in contemporary international law, largely because of the difficulty of defining them. Certain scholars have adopted a broad definition, treating any act other than negotiations and treaties as a unilateral act. 97 According to the definition propounded by E. Suy, 98 a unilateral act would contain three precise attributes: first, it would be performed by one subject of law; second, such an act would be autonomous and not dependent on any other act; and finally, the act must not give rise to obligations on third-party States. Therefore, unilateral acts must necessarily be autonomous and independent of any obligation derived from a bilateral or multilateral framework. The International Law Commission has followed the same conceptualization in formulating the Guiding Principles applicable to unilateral acts. 99 This raises the question which actions in practice can be categorized as unilateral acts. According to Dupuy, 100 a unilateral act can include any act by which States declare their views, 'confirm or waive their rights', and 'enact domestic law' . While some scholars have entirely excluded domestic actions from the definition of a unilateral act, 101 such a view has been dismissed as formalistic. 102 It is widely accepted that a unilateral act even if it takes the form of a domestic statute or resolution is an act of international law and can create international obligations for the author State. 103 Unilateral acts are considered to be binding on the author State based on the principle of good faith. 104 Unilateral acts often feature in international investment law and IEL more broadly, when host States offer rights and protections to foreign investors through domestic legislation, to attract foreign investment. 105 According to Reisman and Arsanjani, States are bound by such unilateral acts if they create a legitimate expectation in foreign investors. 106 The characterization of FILs as either unilateral acts creating international obligations or ordinary domestic statutes has consequences for investment arbitration. If FILs are construed as unilateral acts under international law, the respondent can take certain defenses that are not available under a domestic law characterization. Under the unilateral view, compensation may be higher and cost-shifting less likely, and investors might be held to have waived their FIL rights. This also has an effect on investment treaty cases: umbrella clauses under BITs are unlikely to be breached. Both characterizations, whether unilateral or purely domestic, will lead to the same results, but for different reasons. As a result, States do not have any reason to prefer one characterization over the other. The characterization adopted by a tribunal still matters irrespective of the same consequences. Treating FILs as purely domestic instruments allows the State to retain greater control over issues such as interpretation and termination, which international tribunals must then apply more or less faithfully. 107 If FILs are treated as international instruments, a tribunal can take substantial authority over the interpretive process. To avoid such matters, States make their objective clearer in a FIL. To illustrate, certain FILs contain provisions that declare them to be an 'international instrument', 108 whereas certain international instruments declare themselves to be FILs. Hepburn demonstrates that claims under FILs are not merely treaty claims, as several tribunals have suggested, 109 nor contract claims, but have a separate and distinct nature raising unique questions of general international law, particularly the law of State responsibility and unilateral acts. Certain kinds of promises outside the FILs are identified by scholars that could be characterized as unilateral acts. 110 Further, FILs provide guidance to identify other statutes (including laws on nationality, neutrality, and maritime zones) that can be characterized as unilateral acts. These statutes are often substantially similar to FILs-they are specifically applicable to foreign nationals; they contain references to international law principles; they encompass consent to international adjudication and address questions of State responsibility and termination, among other questions, that may arise. 111 While FILs are not yet known to have been invoked before domestic courts, the continuing convulsions of investment treaties may push claimants into fora other than international arbitration, giving domestic courts an opportunity to interpret these rules. Investment protection might appear more mundane, but domestic interpretations of FILs would not necessarily draw any closer parallels with international law than domestic interpretations of human rights treaties. 112 SEZ regimes can be classified as unilateral acts because they are, in essence, a unilateral promise or declaration made by a State. 113 This promise may be enforceable both under the domestic law of the host State or under international law. It is important to remember that even as unilateral acts, SEZs do not give rise to binding obligations toward other States but toward foreign private parties. Therefore, SEZs are not 'international' in the traditional sense but are reflective of the complex and hybrid nature of IEL.
A distinctive feature of SEZs is their narrow territorial scope. By enacting a SEZ framework, States intend to regulate proposed actions within their own territory; these unilateral acts are not intended to have an effect beyond the territory of the host State. In fact, SEZs are parallel regimes with their own investor-friendly laws and regulations and are outside the control of the State's ordinary rules on trade, tax, and investment. As a result, the unilateral acts underlying the SEZ model revolve around absorption and attraction (i.e. the host State creates a new space 'within' its own territory to establish a new law and attract foreign entities) as opposed to projection (i.e. where traditionally unilateral acts have the ambition to create an effect 'beyond' the national territory).
Interestingly, where States have unilaterally modified the existing conditions in a SEZ or closed SEZs, foreign investors have successfully pressed a case of breach of the relevant trade or investment treaties before international tribunals. 114 In similar cases involving unilateral undertakings, tribunals have relied on the principles of 'good faith' and 'legitimate expectations' to find in favor of the investors. 115 In many of such cases, legitimate expectations were found to be created where the State made explicit undertakings through contracts. 116 In a few disputes, it was found that the legitimate expectations were not necessarily created by a contract but through executive assurances made by the State, which were relied upon by the investor while making the investment. 117

C. Conceptualizing special economic zones as unilateral economic law
The zones coexist with the ordinary domestic legal system but also with other ways of promoting trade and attracting FDI that are offered by IEL, such as the signing of Free Trade Agreements and BITs. The zones may not only be viewed as unilateral acts in international law; SEZs introduce a new layer in the overall system of IEL. They are Special Economic Zones in International Economic Law • 249 established to promote free trade and investment in a way that comes closer to the liberalization preferences of each and every country that introduces them.
Legal deglobalization does not necessarily suggest a retreat from IEL; it rather suggests its transformation. With the use of this new type of unilateral economic law, countries do not necessarily strictly apply international trade and investment law but rather invite foreign trade and investment by using modified versions of their domestic laws. Employing domestic law, these countries are developing geographical spaces within their territory in which international trade and investment promotion values are at work but remain under the sovereign control of the relevant country. 118 The unilateralism promoted by SEZs is conceptually much closer to what has been described here as classical unilateralism. SEZ unilateralism is still different as unilateral liberalization of trade and investment does not take place for the whole country but for an isolated jurisdiction within the broader national jurisdiction. SEZs thus represent a complex compromise mainly between liberalization and protection of economic sovereignty as well as other structural elements of the interaction between the State and the market. For some countries, SEZ unilateralism is an alternative strategy to liberalization alongside the regular instruments of IEL. For some others, SEZ unilateralism is a complement. This may be exemplified by discussing the different mix between State and the market, as well as the different understanding of spatiality that SEZs are founded on.

State and market
SEZs operate based on a relatively different economic paradigm in comparison to what is assumed by IEL. IEL assumes the market as the driving force of liberalization, whereby the State holds the backseat. 119 This is already brought to expression in the structure of international trade and investment agreements. In the WTO context, the principles of Most Favored Nation and National Treatment are framed as the rules, and State intervention for the protection of the environment and so on are expressed as the exceptions to the rules of the various WTO agreements. 120 In BITs, the same principles are established as substantive standards of protection, while derogations are again allowed under exceptions such as the defense of necessity under customary international law, 121  State Responsibility of the ILC, 122 and the 'essential security' exception clauses under BITs. 123 On the other side, SEZs rely on proactive government intervention. 124 SEZs are almost invariably governed by very powerful government entities, usually referred to as Free Zone Authorities, which are separate from ordinary domestic agencies. 125 These may have different degrees of independence from the central and local governments and enjoy different degrees of power reaching from construction and operation to regulation in the SEZ.
The prevalence of the market and the retreat of government in IEL assume an ideology that may be described as capitalist or liberal. This is not of course an ideology that all members of the WTO would necessarily subscribe to. 126 The interplay between the State and the market is even more complex in the case of the SEZs. SEZs have historically been created for a variety of reasons and in countries with very different political systems, 127 as well as stages of economic development. 128 According to some accounts, economic zones are universal concepts that spread independent of geography and ideology. 129 The USA developed foreign trade zones during the interwar period at the same time as the Smoot-Hawley Tariff Act was introduced; China developed its own SEZs in the 1980s; the Gulf States have adopted the concept, given it new forms and expanded it to all spheres of the economy; North Korea and Iran have their own long history of SEZ; 130 the UK is now also considering introducing SEZs to boost trade in the post-Brexit era. 131 SEZs represent a new (unilateral) compromise between the State and the market. While SEZs may be viewed as promoters of trade and investment liberalization, they only allow this within the confines of a limited jurisdiction and under the strict supervision of powerful government agencies for a given period of time. 132 States have the right of life and death over SEZs. SEZs remain under the full control of States that can decide unilaterally to put an end to them when they do not work well-or when they work too well. 133

Space
Public international law has been developed as the law of the coordination of sovereign States and the protection of their coordinated existence. 134 The field of international trade law follows this understanding of Westphalian international law as it regulates the coexistence of States; the classical understanding is updated as the coordinated coexistence takes place in the frame of an intergovernmental organization, the WTO. International investment law deviates from the original understanding of international law by providing access for individuals to international institutions in the form of international investment tribunals. Still, the applicable law and procedural law for these institutions are based on an international treaty usually in the form of a BIT. The basis for these two areas of IEL is thus State consent-as is the foundation for the whole of international law. 135 IEL relies thus on the division of the world into sovereign States that engage with each other at the international level by signing international economic treaties. While promoting globalization through liberalization as was shown above, IEL relies on the traditional separation of the world into sovereign States.
SEZs still contribute toward economic globalization. SEZs have been brought to life by sovereign States to address barriers to trade and promote foreign investment. 136 They are a cause and an effect of the increase in world trade and investment. 137 The spatiality of trade and investment promotion through SEZs is different than that of IEL. The SEZ model both converges and diverges from the Westphalian model of a spatial world order. It converges in that it relies on the sovereign powers of the State for the 130  promotion of trade and investment-rather than the model of economic globalization as this was developed in the course of the 20th century. Yet, it assumes a different type of spatiality.
The creation of SEZs relies on the sovereign power of the State. The State is instrumental in setting the objective and influencing the macro, meso, and micro layers of investment climate through its policies. It chooses the site, develops infrastructure within the zone, offers a package of incentives, and develops the legal framework of SEZs. 138 India, for example, enacted the SEZ Act in 2005 through which the very existence of an SEZ is governed by the State. Section 5f of the Indian SEZ Act provides that 'the maintenance of sovereignty and integrity of India and security of the State' shall guide the notification of areas as SEZs. 139 Also, in China, SEZs are established by the State, while the government can decide to add more cities to the list of SEZs, as was showcased by the decision of the government to add 14 more cities to the list in 1986. 140 In the meantime, the success of SEZs is determined by the ability of the State to adapt to the changing economic realities. 141 There are seldom any restrictions placed on the kind of economic activities that can be pursued in the SEZs-from manufacturing to services to primary agricultural production; however, this leeway is provided as long as the activity assures export revenues. State insertions are largely due to the recognition that border SEZs provide important means for national economies to be favorably inserted into the emerging subregional and global economy but that very insertion can fragment economies and societies and create alternative foci of political legitimacy. 142 The rationale behind the growing rate at which SEZs are being established is that they are a by-product of State sovereignty. This suggests that SEZs converge with the Westphalian model of a spatial world order.
On the other side, SEZs are 'specially tailored spatial instruments' . 143 They have an 'enclavistic nature' 144 in their EPZ form and operate as 'corporate enclaves' in their more contemporary revivals. 145 Movements of products between an FTZ and domestic tariff areas constitute movements between two countries. 146 The same applies to the offering of services out of the SEZ to the ordinary jurisdiction of the State. 147 Moreover, SEZ laws only apply within the borders of the SEZ. 148 The State is thus not taken as a unity for the purposes of trade and investment but as fragmented into multiple internal pieces. This changes the original paradigm of international law, and thus IEL, and creates uncertainties for the purposes of the treatment of SEZs from an IEL perspective.
The economic focus of SEZs is also to some extent different in comparison to IEL, as it is not focused on the factors of production that IEL has traditionally focused on, namely labor and capital, but on land. One of the major objectives of SEZs is to provide an infrastructure for the facilitation of trade and investment. During the Doha Round for Development, concerns were raised about the supply-side constraints to trade, particularly by developing countries. Supply-side constraints such as poor infrastructure have been considered as impediments to international trade as well as an obstacle to the implementation of the WTO commitments by WTO members. 149 According to the Hong Kong Ministerial Declaration: Aid for Trade should aim to help developing countries, particularly LDCs, to build the supply-side capacity and trade-related infrastructure that they need to assist them to implement and benefit from WTO Agreements and more broadly to expand their trade. 150 This has remained largely aspirational at the international level, and national governments have taken up the role of covering this gap. The alternative route that has been followed by developing countries, emerging economies, as well as more mature markets is to develop high-quality infrastructure in the enclosed space of the SEZs. Given that this enclosed type of infrastructure development is relatively inexpensive to build and develop, SEZs have been generally successful in the developing world. For emerging markets, SEZs have presented themselves as actual alternatives to international treaties.

IV. CONCLUSION AND OUTLINE OF THE SPECIAL ISSUE
SEZs constitute a novel mechanism for promoting trade and attracting FDI and are comparable to IEL institutions. Recently, a quantitative as well as qualitative transformation of SEZs has been taking place. This is a reaction to the economic, political, and legal deglobalization trend. Legal deglobalization does not necessarily suggest a retreat from IEL; as we are trying to showcase with this special issue, it rather suggests its transformation. Both the quantitative and qualitative development of SEZs warrant a re-assessment of IEL, especially as the current global trade and investment scenario suggests unilateral IEL is here to stay. Let us close by comparing unilateral IEL to a muscle that is called to further augment (in scope and forms): SEZs will innervate the muscle and make it (as well as unilateral law more broadly) a potential line of fracture in IEL that this issue will be the first to comprehensively investigate using a robust conceptual framework. Overall, SEZ unilateralism presents itself as an alternative or complementary approach to trade and investment promotion in addition to the instruments of IEL. While some countries choose to pursue a trade and investment strategy exclusively based on the use of SEZs, other countries continue adopting (multilateral, regional, or bilateral) trade and investment treaties in addition to developing SEZs.
The various interplays among these diverse jurisdictions with international (economic) law raise very important and novel questions that remain unresolved. The focus of this special issue is on the relationship between SEZs and IEL by looking into the nature of the coexistence between the new jurisdictions and IEL broadly defined, as well as dispute resolution in the zones. 151 The first part of the special issue is dedicated to 'SEZs' Evolution and Purpose: Diversifying Economic Unilateralism', with contributions discussing the origins of the SEZs as well as their historical development and transformation. The second part is entitled 'The Internal Life of SEZ Unilateralism: Rights, Obligations, Adjudication' and addresses issues of internal organization, rights, and obligations of investors, as well as issues of dispute resolution. The third part on 'SEZs and the WTO: Between Conflict and Convergence' is dedicated to the complex interplay between the law of SEZs and International Trade Law. The fourth part is on 'SEZ Unilateralism in the Face of RTAs, IIAs and International Taxation: Between Conflict and Convergence' and opens up the scope of the special issue to the sometimes harmonious, sometimes discordant relationship between SEZs and other areas of IEL such as RTAs, international investment agreements (IIAs), and soft tax law instruments.
Douglas Zhihua Zeng in the article entitled 'The Past, Present and Future of Special Economic Zones and Their Impact' presents the ways in which SEZs have evolved from 'enclaves' toward the model of an 'Economic Zone 5.0', which are built on emerging digital technologies and are well-integrated within their urban environment. The author shows that despite the worldwide proliferation of SEZs, their impact on the national economy is not necessarily always clear. Zeng continues by discussing the key elements making an SEZ successful, including strategic location, integration of zone strategy with an overall national development strategy, understanding the market and leveraging comparative advantages, and, most importantly, making sure that zones are really 'special' in terms of a business-friendly environment-especially a sound legal and regulatory framework in the position to cope with external shocks such as the COVID-19 pandemic.
151 Instead of case studies of individual zones, all articles rely on a wide range of countries and experiences in SEZ design and implementation and their comparison, with the aim of covering a variety of jurisdictions. The special issue covers a very large variety of diverse SEZs in Africa, the Americas, Central Asia, East Asia, with a focus on China, as well as the Middle East, which-in addition to being the home of an historically large number of zones-have witnessed the emergence of the latest generation of SEZs. and the EU Code of Conduct for Business Taxation with the practice of corporate tax incentives in SEZs. The article reviews empirical evidence from Latin American and Caribbean jurisdictions to demonstrate that the emerging international taxation regime has begun to exercise some influence on SEZs. In this connection, SEZ unilateralism in corporate taxation is slowly receding, while it can be expected that SEZs will increasingly become subject to international tax law restrictions.