Explaining Flexibility in International Institutions Flashcards
Flexibility
-Institutional rules and procedures that accommodate exogenous shocks and changing circumstances
-Adaptive: allows members to respond to unanticipated shocks while preserving existing institutional arrangements
-Transformative: built-in arrangements to transform institutions over time; sunset provisions
Domestic Uncertainty
-Escape clauses are an efficient equilibrium under domestic uncertainty
-Caused by price/supply shifts intensifying international competition, changes in production technology, changes in political institutions, changes in political cleavages
-Flexibility as a tool to deal with these changes
Cost of Escape Clauses
-For escape clauses to be useful and efficient they must impose some kind of cost on their use
-Safeguards measures in the WTO
-no compensation
-appeals to exception (safeguard measures may only be applied after investigation by authorities)
-Don’t provide compensation because it would empower protectionist groups
-Abuse of compensation would undermine the credibility of the system
Democracies vs. Autocracies
-Domestic institutions affect how much flexibility countries can garner from international cooperation
-International flexibility for democracies > international flexibility for autocracies
-Flexibility is a function of uncertainty domestically, states must provide evidence of difficulties to cooperate
-Democracies are more transparent –> easier to see if they really face difficulties
Demand for Flexibility
-As agreements become deeper, they require more flexibility
-Adjustment and distributional costs are increased
-Groups bearing these costs demand protection
-Flexibility is a form of protection, reduces some of the costs
Flexibility and Cooperation
-Including escape clauses makes initial agreements easier to reach
-Does flexibility ease cooperation?
-Answered using anti-dumping law
Anti-Dumping Laws as Flexibility
Two stage model
1. Domestic level
-Anti-dumping laws as a form of flexibility
-Costly to establish
2. International level
-Anti-dumping laws –> more and deeper cooperation
-To meet standards set for anti-dumping a country must:
1. conduct a domestic review
2. conclude that imports are sold at “less than normal value”
3. imports are causing “material injury” to domestic producers
-Passing anti-dumping laws has nontrivial costs
-Bureaucratic cost of anti-dumping agency
-Investment to pay consultants and lawyers
-Not every country can afford anti-dumping laws
-A country with domestic anti-dumping mechanisms is more likely to join GATT/WTO
-Having an anti-dumping mechanism allows countries to agree to lower tariffs when joining GATT/WTO
Forum Shopping
-Dispute Settlement Mechanisms are present in WTO and PTAs
-Complaints can either be filed regionally, multilaterally, or not at all
-Complainants strategically discriminate among overlapping memberships
-Mexico challenged a safeguard measure against the US in NAFTA because they did not want to set a precedent
-Could use the illegal safeguard in the future against another country, did not want the precedent to be used against them
-US challenged Canadian measures on periodicals through the WTO because they wanted to set a precedent for other countries too
-US periodical market is not regulated so they did not fear multilateral precedent because there was no protectionist demand in the US
What Explains Preferences over Regional or Multilateral Precedent?
-Complainant’s expectation concerning future value of the precedent
-Likelihood that the complainant will use the resulting case law in future litigation, more than other members will use it against them
