Treaties, Custom, Iteration, and Public Choice

The basic question asked in this paper can be simply stated. Assume that, in attempting to effect international legal cooperation, a national government consciously chooses between using treaties and using customary law as the form in which to embody its cooperative efforts. Which form of international law should we expect it to choose? I analyze this question using two approaches that may be termed rational choice methodologies since they assume that the relevant decisionmakers rationally pursue known goals. The first approach, which I call the iterative perspective, focuses on the efforts of a rational, public-minded government to minimize the transaction costs of international cooperation. The iterative perspective implies that nation-states will choose to effect international legal cooperation through treaties. The second approach, which I call the public choice approach, examines the choices of self-interested governmental subunits. The public choice perspective predicts that national leaders will choose customary international law to effect international legal cooperation. With these divergent theoretical predictions in mind, I move to reality and argue that treaties rather than customary laws have been the favored embodiment of international legal cooperation, at least since World War II. I conclude that the evidence is thus more consistent with the iterative perspective than with the public choice approach

The Customary International Law Game

Structural realists in political science and some rationalist legal scholars argue that customary international law cannot affect state behavior: that it is “epiphenomenal.” This article develops a game theoretic model of a multilateral prisoner’s dilemma in the customary international law context that shows that it is plausible that states would comply with customary international law under certain circumstances. Our model shows that these circumstances relate to: (i) the relative value of cooperation versus defection, (ii) the number of states effectively involved, (iii) the extent to which increasing the number of states involved increases the value of cooperation or the detriments of defection, including whether the particular issue has characteristics of a commons problem, a public good, or a network good, (iv) the information available to the states involved regarding compliance and defection, (v) the relative patience of states in valuing the benefits of long-term cooperation compared to short-term defection, (vi) the expected duration of interaction, (vii) the frequency of interaction, and (viii) whether there are also bilateral relationships or other multilateral relationships between the involved states. This model shows that customary international law is plausible in the sense that it may well affect state behavior where certain conditions are met. It shows what types of contexts, including malleable institutional features, may affect the ability of states to produce and comply with customary international law. This article identifies a number of empirical strategies that may be used to test the model

The Optimal Design of Trade Policy Flexibility in the WTO

This paper is a contribution to the literature on rational design of trade agreements. The World Trade Organization (WTO) is an incomplete contract among sovereign states. Incomplete contracts contain gaps. Ex post, contractual gaps may leave gains from trade unrealized; they may create 'regret' in signatories once unanticipated contingencies or sudden protectionist backlashes have occurred. Trade policy flexibility mechanisms, such as the 'safeguards clause' under Art. XIX GATT, are geared towards seizing ex post regret by allowing parties affected by a protectionist shock to partially and temporarily withdraw from previously made trade liberalization concessions - given that they compensate the victim(s) of such backtracking behavior. This paper examines the somewhat understudied issue of optimal trade policy flexibility design in the WTO: In particular, we analyze whether ex post escape should be organized by means of a unilateral opt-out clause (a 'liability rule' of escape), or a bilateral renegotiation provision (a 'property rule' of escape). Modeling the WTO as a fully non-contingent tariff liberalization contract with contingencies (or 'states of nature') asymmetrically revealed, we find that a liability rule backed by expectation remedies payable to the affected victim Pareto-dominates both a renegotiation clause, as well as any other remedy arrangement connected to a liability rule. Only the remedial design of liability-cum-expectation damages yields the desirable incentives to liberalize ex ante, and to default ex post and therewith is able to replicate the outcomes of the hypothetical contracting ideal of the complete contingent contract

Treaties, Custom, Iteration, and Public Choice

The basic question asked in this paper can be simply stated. Assume that, in attempting to effect international legal cooperation, a national government consciously chooses between using treaties and using customary law as the form in which to embody its cooperative efforts. Which form of international law should we expect it to choose? I analyze this question using two approaches that may be termed rational choice methodologies since they assume that the relevant decisionmakers rationally pursue known goals. The first approach, which I call the iterative perspective, focuses on the efforts of a rational, public-minded government to minimize the transaction costs of international cooperation. The iterative perspective implies that nation-states will choose to effect international legal cooperation through treaties. The second approach, which I call the public choice approach, examines the choices of self-interested governmental subunits. The public choice perspective predicts that national leaders will choose customary international law to effect international legal cooperation. With these divergent theoretical predictions in mind, I move to reality and argue that treaties rather than customary laws have been the favored embodiment of international legal cooperation, at least since World War II. I conclude that the evidence is thus more consistent with the iterative perspective than with the public choice approach