POLI 354 Lecture Notes - Lecture 5: General Agreement On Tariffs And Trade, Large Deviations Theory, Eurozone
13 May 2018
School
Department
Course
Professor
POLI%358% % Winter%2018%
Poli%358%Lecture%5:%Why%do%States%Comply%with%International%Organizations%
23rd%January%2018%
%
Legend:%normal%text-%from%slides;%italics:(what(the(professor(said(in(class,(over(and(above(the(slides(
%
Table%of%contents%
- Managerial%vs%game%theory%school%
- Compliance%and%reputation%%
- Compliance%and%audience%costs%
%
Recap%
- Fearon’s%model:%bargaining%and%enforcement%
- How%do%countries%sign%into%international%agreements?%
o Issue%linkahe%
- Why%do%countries%sign%into%international%agreements?%
o The%case%of%CAT%
§ Multi%party%dictatorships%
§ Signaling%models%
%
Fearon’s%second%stage:%Enforcement%
- Moving%on%to%the%second%stage%of%the%model%%
- Why%do%countries%comply%with%international%treaties?%
%
Debate%on%compliance%
- Optimistic%view-%how(this(is(self(enforceable(so(we(don’t(need(strict(mechanisms%
o States%wish%to%comply%
o Defection%is%due%to%market%failure%
o Enforcement%is%unnecessary%because(states(naturally(want(to(cooperate%
- Sceptic%view-%pessimistic(approach(to(international(cooperation-(if(states(can,(they(can(
cheat(or(defect(if(punishment(is(not(there(and(the(gains(are(higher-(need(strict(enforcement(
mechanisms(to(get(a(high(and(deep(level(of(cooperation(
à
((force(states(to(commit(seriously(
and(not(deviate(from(the(status(quo%
o States%prefer%to%cheat-%play(a(prisoner’s(dilemma(%
o Compliance%is%high%when%it%is%easy-%when(agreements(are(shallow-(deviate(very(little(
from(the(status(quo%
o Enforcement%is%necessary%condition%for%cooperation%%
%
Managerial%school%(optimistic%view)%
- Popular(in(the(late(1980s-(cooperation(had(improved(post(WW2(
- Three%key%arguments:%
o Compliance%is%generally%quite%good%
o The%high%level%of%compliance%has%been%achieved%with%little%attention%to%enforcement%
o Compliance%problems%are%best%addressed%as%management%rather%than%enforcement%
problems%%
%
Cause%of%non-compliance%(Chayes%and%Chayes’)%
- The%ambiguity%and%indeterminacy%of%treaties%
- The%capacity%limitations%of%states%
POLI%358% % Winter%2018%
- Exogenous%social%and%economic%shocks%
- Sometimes(lack(of(compliance(is(not(due(to(the(preferences(of(the(states(but(factors(that(
countries(cannot(control%
o Chile(example-(didn’t(have(the(proper(intellectual(property(rights(agencies-(that’s(
why(they(didn’t(have(IPR(laws-(had(nothing(to(do(with(unwillingness(to(cooperate.%
%
The%managerial%school%and%enforcement%%
- Punishment%is%too%costly%%
- Sanctions%are%successful%only%with%economically%vulnerable%and%politically%weak%states%
- Retaliation%jeopardizes%future%cooperation%
- Better(to(manage(defection(through(consultation(and(persuasion%
%
Strategy%to%induce%compliance%%
- Increase%transparency%à%reduce%ambiguity%
- Providing%technical%and%financial%assistance%à%improve%state%capacity%
- Deigning%dispute%resolution%procedures%to%improve%mutual%consultation%and%persuasion%à%
helpful%during%economic%crises%%
- Systemic(variables(are(downplayed-(don’t(need(a(realist(approach-(don’t(need(the(stick(or(
the(carrot-(no(emphasis(on(relative(gain(
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Key%question%
- Does%it%mean%that%even%in%the%absence%of%enforcement%states%will%comply%with%any%
agreements?%Downs%et%al%1966%
- Answer%is%no%
o without(strong(enforcement(mechanism-(punishment-(countries(will(not(naturally(
comply(and(commit(to(large(deviations(from(the(status(quo!
%
The%issue%of%Endogeneity%and%Selection%Bias%
- State%decide%to%agree%upon%the%contract%that%demands%only%modest%departures%from%what%
they%would%have%done%anyway%
- Key%concept:%depth(of(cooperation(“the%extent%to%which%it%requires%states%to%depart%from%
what%they%would%have%done%in%its%absence”%(Downs%et%al.,%1966)%
- Argument:%compliance%is%successful%without%enforcement%if%the%depth%of%cooperation%is%low%
- States%choose%to%sign%the%treaties%with%which%contents%they%are%more%likely%to%comply%%
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Deep%cooperation%and%defection%%%%%%%%%%%%%%%%%%%%%%%%%%%%Deep%cooperation%and%punishment%%
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POLI%358% % Winter%2018%
%
A%Game%Theory%Approach%(Pessimistic%View)%
- Why%is%enforcement%necessary%for%game%theorists?%
o Cooperation%is%a%prisoner’s%dilemma%
o States%must%resort%to%a%punishment%for%defection%
o The%punishment%must%hurt%the%transgressor%state%at%least%as%much%as%the%state%
could%gain%from%defection%%
o If%so,%states%will%shy%away%from%breaking%the%deal%%
%
Empirical%evidence%
- Do%deep%organizations%include%strong%enforcement%measures?%
o From%GATT%to%WTO%
§ Movement(in(1995-(key(difference(is(the(creation(of(the(enforcement(
mechanism(that(is(stricter%
§ GATT-(violators(could(veto(the(violation(%
§ WTO-(violator(doesn’t(have(a(say-(have(a(strong(enforcement(%
o The%EU-%started(in(57(as(a(forum(to(cooperate(that(countries(that(were(fighting(and(
now(has(become(a(much(stricter(agreement-(culminating(with(creation(of(the(euro(
and(now(has(strict(criteria(for(entering(the(eurozone(and(has(strict(punishment.%
o The%IMF-%Forces(countries(to(comply-(provides(loans(to(countries-(not(a(lump(sum,(
but(some(of(the(money(is(allocated(if(and(only(if(conditions(of(the(loans(are(
implemented%
o Enforcement%provisions%in%trade%agreements%
%
Evidence%from%trade%agreements%
to%have%greater%cooperation-%need%to%have%
sanctions%that%make%it%costly%to%defect.%%
This%course:%side%with%game%theoretic%view-%
states%don’t%cooperate%naturally,%and%leaders%
have%incentives%to%defect.%
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Why%comply?%
- Cooperation%is%difficult%%à%prisoners%dilemma%
- Enforcement%mechanisms%are%important%
- Why%comply?%
o Role%of%reputation%%
§ Creates(incentive(for(leader-(max(utility(function(made(of(power-(want(to(
stay(in(power-(so(reputation(makes(them(comply(and(agree(to(thing(%
§ If(they(are(not(discounting(the(future-(then(self-interestedly-(they(will(comply(
if(the(benefit(of(cooperation(are(greater(than(the(costs(of(compliance(%
§ Cheaters(develop(a(bad(reputation-(states(exclude(from(future(cooperation(%
Document Summary
Poli 358 lecture 5: why do states comply with international organizations. Legend: normal text- from slides; italics: what the professor said in class, over and above the slides. Why do countries sign into international agreements: the case of cat. Moving on to the second stage of the model. Optimistic view- how this is self enforceable so we don"t need strict mechanisms: states wish to comply, defection is due to market failure, enforcement is unnecessary because states naturally want to cooperate. Popular in the late 1980s- cooperation had improved post ww2. Three key arguments: compliance is generally quite good, the high level of compliance has been achieved with little attention to enforcement, compliance problems are best addressed as management rather than enforcement problems. Sanctions are successful only with economically vulnerable and politically weak states. Better to manage defection through consultation and persuasion. Providing technical and financial assistance improve state capacity.
