Sovereign Rules and the Politics of International Economic Law

Marc Froese

• Publisher: Routledge
• Year: 2018
• Print ISBN: 9780367787073
• eBook ISBN: 9781351115568
• Edition: 1
• Topic: Politics & International Relations
• Subtopic: Politics
• Index: Politics & International Relations

How ought scholars and students to approach the rapidly expanding and highly multidisciplinary study of international economic law? Academics in the field of international political economy used to take for granted that they worked with the overarching concepts of rules and governance, while legal scholars analyzed treaties and doctrines. However, over the past twenty years formerly disparate fields of study have converged in a complex terrain, where academic researchers and governmental policy analysts use a pluralistic set of theoretical and methodological tools to study the ongoing development of international economic law.

This volume argues that the extensive development of international economic law makes it impossible to discuss international political economy and international law as if they were mutually exclusive processes, or even as if they were separate and mutually reinforcing. Rather, we must think of them as a deeply interconnected set of rapidly evolving activities. This is a paradigm shift in which we cease to think about an international system in which politics and law interact, and begin to think about an international system in which politics take place in a legal frame. Froese terms this a shift from politics and law, to the politics of international economic law.

This book does for political economy what others have already done for law – introduces political scientists, economists, and other practitioners of IPE, to the potential of engaging with legal theory and method; it will be of great interest to scholars in a range of areas including IPE, global governance, IR and international law.

1 Introduction

Sovereign rules

• Divergence and convergence

• Defining our terms

• Structure of the argument

A financial crisis rocked the global economy ten years ago. Since the collapse of Lehmann Brothers bank in 2008, national leaders, global publics and academics have focused intensely upon the architecture of the global economy, searching for signs of further systemic instability. Such post-traumatic stress-induced vigilance is not without good reason. After all, the mortgage bubble in the United States, and the financial tsunami it caused, followed hard on years of coordination failures in the global political system. It is not an exaggeration to say that ever since that fateful day in September 2001, the world economy has tried and failed to regain the sunny outlook that epitomized the 1990s.

The Doha Round of trade negotiations at the World Trade Organization (WTO) crawls forward at a glacial pace. The G8/G20 have arisen to fill a leadership gap that seems too large for the Bretton Woods institutions to take on alone; but even here the political payoff of multilateral cooperation seems inadequate to the challenges at hand.¹ On the credit side of the ledger, hundreds of regional trade agreements and thousands of international investment agreements have proliferated—pretenders to the throne perhaps, and none with the scope or vision to act as a template for future multilateral endeavor. On the debit side, we may add the worrisome rise of populist nationalism that has fueled Britain’s exit negotiations with the European Union, not to mention the increasingly inflammatory and xenophobic rhetoric in other countries in North America and Europe.

Scholars of global political economy are particularly engaged with the narrative of systemic weakness because prior warnings of economic instability now bear the halo of prophecy. The pessimism of the dismal science has been proven to be prescient. Dan Drezner attempted to buck this trend by writing a recent book in which he argued that the system worked, by which he meant that our existing financial architecture kept the financial crisis from running away unchecked and wrecking the entire global economy.² This is indeed true as far as the argument holds. I would like to make a more pointed argument that speaks to both the questions of governance effectiveness and systemic stability. I will argue that whether or not the system performed to expectation, the institutional order of global economic regulation is bigger than it has ever been in the history of human attempts at economic control, and this scope and scale bring risks and rewards. Secondarily, political scientists who study political economy are missing a lot of this growth because it takes place in the realm of law, an area of study that is still relatively neglected despite a sustained focus on global governance in the post-Cold War era.

This book has two goals. First, it attempts to chart the growth of international economic law (IEL) and analyze its tremendous importance to the study of trade and investment. Second, it shows how the insights of legal scholars may enrich the study of global governance. I suggest that because politics increasingly takes place in a legal frame, we are now studying the politics of international economic law rather than political economy simply stated. The big idea here is that we as political scientists, economists and assorted social scientists have not integrated legal insight into our way of understanding the world to the degree that we ought to. Yet when we do take legal insights on board, they subtly transform our perspectives and allow us to view the world of global economic governance with greater clarity.

There is much debate about the place of law in a globalized terrain of politics and economics. It is clear to everyone, from legal practitioners to policy analysts and citizen activists, that law and politics are deeply interconnected in the space beyond the state. For the most part, how one thinks about that connection is a function of where one stands. Legal scholars, concerned with the creation and application of law, view politics as a force that needs to be tamed through legislative and juridical action. Politics happens when law fails. Policy analysts view rules as a means to political ends, both in terms of a policy agenda, as well as in terms of political compromise. Law is necessary for political success, but it is not always the first step towards an orderly international system. Citizen activists also view politics as a means to an end as they attempt to change rules and practices that they consider harmful to the public good. For all of these actors, politics and law are a means for social progress and reform, but it is not always clear how politics and law fit together.

Politics and law are discrete realms of study with ontological and epistemological distinctions, but they are now closer than ever before because governments are creating global institutional and juridical arenas and thereby shaping the logic of political agency that orders the new world of international economic law. Much like we see in the domestic context, international legal environments are becoming the sites at which governments and private entities wage political battles over process and outcome. Political scientists and scholars of international law have been noting the convergence of their disciplines for a couple decades, at least. However, the linkages between these silos of scholarly activity are still quite often tenuous.

It is generally believed that legal scholars have been more heavily influenced by international relations (IR) research than the other way around.³ My own experience suggests that this is indeed the case, if only for two reasons. First, legal research adds a third dialect of academic language that political economists must learn in addition to the language of economics and political science. Second, law faculties exist as professional schools outside of the faculties that provide a home for the social sciences in most universities, and their practitioners often have at least one foot in professional debates that do not always overlap with the debates in other fields. These academic worlds are just far enough apart that up until recently, lawyers and political economists have not found themselves at the same water cooler.

By examining the politics of international economic law I aim to bring together several threads of research that I think will give a sense of where the political and legal processes underway are likely to lead. The new questions that we need to ask are: How do we think about this new world of legalized governance? What are its strengths and weaknesses? Who rules this brave new future and what are the implications?

Divergence and convergence

Over the past several decades, the politics/law divide has narrowed, even as it remains a persistent feature of global governance research. But it wasn’t always like this.⁴ In the late 19th century, the growth of international law went hand in hand with political economy, and both fields of study were broadly considered to have developed through the march of empire, strategic political compromise, and an emerging consensus about the benefits of commerce for growth and industrial development.⁵ Scholars in both law and political economy (which later became the disciplines of political science and economics) were discussing similar issues and using similar research methods. For the most part both drew method and inspiration from history, philosophy, the diplomatic arts, and the inductive reasoning that was the hallmark of post-Enlightenment public discourse.⁶

The rise of political realism following the First World War put political science and the emerging field of international relations on a different trajectory. Realist theorists, such as E.H. Carr, argued that law, as a force for good, mattered less in international relations than did the eternal struggle over wealth and power, which other scholars would term the balance of power.⁷ Law, realists argued, had failed to stop the senseless tragedy of the First World War. If law was incapable of maintaining peace, where ought scholars to search for this undiscovered country? The answer was found in history. From the Peloponnesian War of Ancient Greece to the Concert of Europe that structured European relations following the Napoleonic Wars, peace was found in the forces that keep war at bay. Where law fails, a careful counterbalancing of interests and material capability maintains an absence of war, which became a rough and ready definition that contains a certain, positivistic, ring of truth.

Building upon key concepts such as state sovereignty, anarchy, and the Westphalian system, political scientists constructed a compelling realist argument about the weakness of law and the primacy of national interests in the creation of a world in which war has not been eliminated, but it has been controlled and shaped for rational ends. To make matters worse, legal scholars saw international law’s crowning achievement, the League of Nations, stillborn, and rather than directly challenge the peace-as-absence-of-war thesis, they turned inward in the interwar period, looking for the theoretical and diplomatic insights that would allow the fragile order a greater chance at success.⁸

Following the Second World War, the intellectual divergence continued as political scientists looked to state power to maintain global stability. Law schools began to develop the academic and technical experts who built the global economy, but spent less time thinking theoretically about the place of law in a global political environment. Political scientists and legal scholars spoke to each other less and their scholarly paths, which used to converge to a certain extent around research methods, began to diverge. Political science embraced the positivist turn that was also favored by economics departments. Then in the late 1980s, with the fall of the Berlin Wall, some legal scholars began to engage with political science, particularly with international relations theory.⁹ At the same time other legal scholars became engaged with economic theory, and the neorealism of political science and the rationalism of economics met in a flowering of legal scholarship that brought empiricism and political realism into the study of law.¹⁰

Slaughter charted the beginnings of a renewed relationship between law and political science by suggesting that Kenneth Abbott’s 1989 article urging international law scholars to consider regime theory was the beginning of the cross-fertilization of international relations and international law.¹¹ For law, international relations offers parsimonious causal theories that bring a much-needed empirical dimension to legal research. For international relations, law offers rational explanations for why states cooperate that go beyond the realist paradigm and thicken the analysis of institutional behavior that was relatively new when Slaughter wrote. She suggested a joint discipline that would attempt to explain state behavior after the institutional turn in international relations.

Nearly two decades on, this has not occurred in any sort of sustained way, but law’s interest in political science and economics was reciprocated. Particularly in political science, where a new and growing body of literature has developed with the aim of showing what international relations research can offer the study of law.¹² Interestingly, global political economy, which is becoming one of the foremost subfields in IR has been less engaged with law than have scholars of security, humanitarianism, and development. By this I mean that even though legal scholars have incorporated many insights from political science and economics, we don’t have much going in the other direction; we have relatively few books and articles that attempt to show what international law scholarship adds to the study of global political economy. Even so, as legal ideas filter through international relations, global political economy has begun to pay attention. In this corner of the social sciences, interest in the relationship between politics, economics, and law has begun to pay dividends in a slowly emerging political economy of law.¹³

Defining our terms

In a study that crosses disciplinary boundaries and draws extensively upon a multidisciplinary approach to theory and method, it is perhaps wise to define some basic concepts. I will begin with a very brief overview of the definitions that I draw from international political economy and international economic law. Then I will say a few words about two significant concepts that underpin this study—the politics of law and sovereign rules.

International political economy

International political economy (IPE) is a discipline that defies easy definition. Lake has called it a “maturing interdiscipline,” because since the 1970s it has predominantly combined the study of economics and political science.¹⁴ Other scholars unwilling to narrow the scholarly world in this way, suggest that international political economy belongs to a long-standing and ecumenical social scientific tradition that attempts to come to grips, both theoretically and methodologically, with the connection between state and market.¹⁵ Seen in this light, global political economy encompasses a broad number of traditions, including law, sociology, and even literary studies.

Even so, a brief and contextual definition is required. Economics studies the way that humans satisfy wants and needs. Political science examines the way that humans organize their governance. Political economy studies the intersection of economic activity and governmental organization, or to problematize th...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Dedication
• Table of Contents
• List of illustrations
• Acknowledgements
• Abbreviations
• 1. Introduction: Sovereign rules
• 2. The politics of international economic law
• 3. Legal theory as analytic lens
• 4. Legal development at the WTO
• 5. Regionalism and the centralization of trade governance
• 6. Legal development without multilateral coordination
• 7. Creating international economic law beyond the state
• 8. Conclusion: Political futures and the changing terrain of international economic law
• Index