Thursday, February 02, 2006

Victories for Free Trade (and for International Law?)

Over at Opinio Juris, Julian Ku has a post lauding the decisions by the US to comply with two WTO decisions by scrapping cotton subsidies and by repealing the Byrd Amendment, which "transferred dumping duties on foreign companies to their domestic competitors." Julian ends by claiming that the decisions "demonstrate that yes, the U.S. does sometimes comply with international tribunal decisions, as long as there is political will to do so."

There is no doubt that these decisions are victories for free trade, but I am not as convinced that they represent the advance of international law. One must be careful to distinguish between cooperation under law and coordination of interests. While the WTO does have enforcement powers, it is an organization that represents coordination of interests, rather than real compulsion. That is, the member states believe that free trade is in their long-term, over-all national interest. However, free trade in particular is often hijacked and held hostage by collective action problems. This is why protectionism is able to remain such a powerful force, despite the glaring and massive economic inefficiencies it produces. The US would prefer to comply with the dictates of free trade but often finds it difficult to do so due to reasons of domestic politics. The WTO serves, in essence, as a "hands-tying" organization that binds the US to a course of action. When domestic politics gets in the way of free trade, the US can point to the WTO and argue that there is no choice but to comply.

Institutions can, of course, have meaningful political effects. In particular, by coordinating actions, decreasing information asymmetries, and permitting states to bind their hands and avoid collective action problems. But that's not quite the same thing as arguing that they represent real, hard international law. Law requires that states are prohibited from doing things that they would prefer to do and that they will be punished if they do those things. Most institutions do not operate this way. Rather, they help states cooperate to get what they all want anyway. International legal institutions that do not operate this way more often than not do not work (the NPT, the IAEA). Note this also explains why obtaining membership in the WTO (a trade organization with very difficult accession rules) is more difficult than in the NPT (any nation can sign): the member states of the WTO must be exceedingly careful not to let a fox in the henhouse.

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