1 Introduction. Cambridge University Press International Institutions and National Policies Xinyuan Dai Excerpt More information

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1 1 Introduction Why do countries comply with international agreements? How do international institutions influence states compliance? These are central questions in international relations (IR) and arise naturally in many situations. One example is the following. In the framework of the Long-Range Transboundary Air Pollution (LRTAP) Convention, twenty-one European countries agreed in 1985 to reduce their sulfur emissions by at least 30 percent, with 1980 as the base year. By the deadline for implementation in 1993, most countries had reported reaching this goal, and some reported much steeper reductions. This presents the characteristics of a classic collective action problem. Sulfur emission reduction entails large short-term costs. Furthermore, because acid rain travels over a long distance and often across borders, the potential benefits of emission reduction are widely diffused. The combination of concentrated costs and diffuse benefits may give rise to free-riding incentives. So it is natural to ask: why do countries comply with their commitments and how do international institutions influence national compliance? According to a central argument in IR, international institutions can resolve such collective action problems among states: they monitor states compliance with treaties and, by providing compliance information, they facilitate reciprocity and thus induce compliance. 1 Empirically, however, the monitoring program under the LRTAP Convention monitored only the aggregate pollution levels. It did not monitor or verify each country s emission reduction. Rather, for compliance measurement, the Convention essentially relied on 1 For the analytic foundation of neoliberal institutionalism, see Keohane (1984), Krasner (1983), and Oye (1986).

2 2 international institutions and national policies governmental self-reports. Indeed, faced with collective action problems, many international institutions do not directly monitor states compliance with treaties. In those situations where they provide compliance information, it is often not states that use the information to either reward or sanction other states. We are therefore confronted with three critical puzzles on international institutions in general. First, do international institutions by and large monitor states compliance with treaties? If so, how? Second, when international institutions do not have independent monitoring capabilities and consequently also lack the ability to enforce compliance, what drives states compliance with international commitments? Third, limited in both monitoring and enforcement, how do weak international institutions influence states compliance? These puzzles present themselves frequently and repeatedly. How, for example, does the International Atomic Energy Agency (IAEA) monitor states compliance with the Non-Proliferation Treaty (NPT)? How does the World Trade Organization (WTO) detect noncompliance with trade agreements? If international institutions adopt varying modes of monitoring, what is the pattern and what explains the empirical regularity? Furthermore, when treaty organizations do not detect noncompliance or enforce states compliance directly, as with many environmental agreements, why do states comply with these agreements? Is it merely because the agreements are shallow? If so, why are different countries able to overcome different numbers of obstacles toward complying with these agreements? Finally, when international institutions do not have much capacity in either monitoring or enforcement, as in the areas of environment and human rights, are they simply irrelevant? Or do some international institutions perform indirect functions that have previously been underspecified in IR theorizing? Resolving these puzzles is vital to a better understanding of why and how international institutions matter. While the earlier cooperation theory and regime theory have shed much light on the creation and maintenance of international institutions, a central question in

3 introduction 3 recent years concerns the effects of international institutions. Specifically, how do international institutions influence sovereign behavior? This book seeks to resolve each of the three critical puzzles on international institutions. In this chapter, I first outline key components of my argument on monitoring arrangements, compliance mechanisms, and the power of weak international institutions. I then discuss the methodology and organization of the book. I postpone a thorough literature review until chapter 2 in order to carefully situate this book in the appropriate context of IR theorizing. argument in brief This book argues that international institutions can influence national policies through alternative mechanisms than carrots and sticks. Specifically, they can employ victims of noncompliance and empower domestic pro-compliance constituencies to monitor and enforce national compliance. Resolving the first puzzle about monitoring arrangements, I specify the underlying incentive structures in different types of regimes. I highlight states interests as well as their desire to utilize victims of noncompliance in diverse monitoring arrangements. Resolving the second puzzle about compliance mechanisms, I use a game-theoretic model to construct what I call the domestic constituency mechanism. I argue that national compliance reflects the political leverage and monitoring ability of domestic constituencies. Resolving the third puzzle about the effects of weak international institutions, I show how international institutions can empower domestic constituencies and thereby alter the strategic environment that governments face domestically. International institutions can increase the political leverage and improve the informational status of pro-compliance constituencies in specific ways. This book thus develops a theoretical framework to bring nonstate actors and domestic mechanisms into the study of international institutions. By spelling out important yet previously underspecified indirect channels of influence, this book sheds important light on why and how international institutions matter.

4 4 international institutions and national policies Monitoring arrangements Although it is a centerpiece of neoliberal institutionalism that international institutions provide information to facilitate compliance with international agreements, few have asked exactly how they provide this information. Empirically, except in a few large and strong international treaty regimes, treaty organizations rarely provide the information completely by themselves. A host of nonstate actors participate in monitoring states compliance to a varying extent. There is in fact much diversity in monitoring arrangements. For example, in the NPT regime, the treaty organization carries out both routine and special inspections. In contrast, human rights treaty organizations rarely go beyond collecting governmental self-reports. While these examples show the diversity in how much or how little treaty organizations do, the following examples illustrate the diversity in how involved other actors are in different treaty regimes. The rules of the General Agreement on Tariffs and Trade (GATT), and subsequently WTO, are only enforced as a result of formal complaints filed by states. In many environmental regimes, in contrast, nongovernmental organizations (NGOs) detect noncompliance and bring it to light. Why do arrangements to monitor compliance differ among regimes? In particular, who detects noncompliance and who brings it to light? What is the function of treaty organizations, states, and nonstate actors respectively in diverse treaty regimes? And what accounts for such variations? Chapter 3 seeks to resolve the puzzle about monitoring arrangements. In particular, I develop a theory of monitoring arrangements by specifying the underlying incentive structures in regimes across a range of issue areas. Two critical questions present themselves: do states have interests in monitoring compliance and how do they pursue cost-effective monitoring arrangements? I argue that two factors (1) the interest alignment between victims of noncompliance and their states, and (2) the availability of such victims as low-cost monitors provide a concrete handle with which to address these questions. To assess states interests in

5 introduction 5 monitoring, we need to know whether they have incentives to protect the potential victims of noncompliance. This will depend on who the victims of noncompliance are and whether their interests are aligned with that of their states. Additionally, because states simultaneously tackle multiple domestic and international tasks, they face resource constraints. To pursue cost-effective solutions, states may take advantage of other stakeholders who are able to detect noncompliance and who are willing to bring this information to light. The availability of noncompliance victims as low-cost monitors thus interacts with states interests in shaping how they design monitoring arrangements. Along these two dimensions, cost-effective monitoring solutions differ between regimes. As a result, treaty organizations, states, and nonstate actors play different roles in different kinds of regimes. I detail four types of monitoring: by treaty organizations, by victims and states, by victims and NGOs, and by NGOs. I demonstrate the utility of this theory by examining a series of regimes in such diverse areas as money, trade, security, human rights, and the environment. The empirical cases the International Monetary Fund (IMF), the NPT regime, the GATT/WTO, and various human rights and environmental regimes display variations in the interest alignment between victims of noncompliance and their states on the one hand and the availability of such victims as low-cost monitors on the other. As these empirical cases vary along the two dimensions, international institutions adopt different modes of monitoring, subscribing varying tasks to treaty organizations, states, and nonstate actors. Compliance mechanisms While international institutions often solve the prisoner s dilemma (PD) type of problems by providing compliance information and thereby facilitating reciprocity or reputation mechanisms, problems that resemble a PD game at the international level may present governments with an entirely different strategic environment domestically. Some domestic actors gain, while others may lose, if the

6 6 international institutions and national policies government does not comply with an international agreement. Trade agreements, for instance, affect import-competing industries and consumers differently within a single country. Similarly, regarding environmental agreements, industries and environmental groups often take opposing stands. When those who are victimized by noncompliance have crucial leverage over the government, compliance can be rational even if the country as a whole pays for it more than benefits from it. We need to specify such domestic sources of enforcement before we can begin to identify, in theoretically coherent ways, how international institutions may work through these sources to influence national compliance. How should we conceptualize domestic sources of enforcement? Chapter 4 seeks to resolve the puzzle about compliance mechanisms. I model a government s compliance decision in the shadow of competing domestic constituencies. While the government makes a compliance decision on behalf of domestic constituents, the latter may have a certain leverage over the government. While this leverage varies with political institutions, it also varies with certain attributes of domestic constituents. For instance, domestic interest groups vary not only in their size and resulting political clout; they may also be informed of the governmental policy or understand the policy process to different extents. Using a game-theoretic model, I show that a government s compliance decision is determined not only by the electoral leverage of domestic constituencies but also by their informational endowment. On the one hand, compliance decisions tend to be biased toward large interest groups which have a significant electoral influence. On the other hand, interestingly, compliance decisions can also be biased toward special interests, if these groups are much better informed about the policy process. This is because, facing an inference problem, the relatively better-informed group is more likely to base its approval of the government on the actual policy rather than random disturbances in the policy process. Accordingly, the policymaker would lose more support by fooling the well informed than by fooling the ill informed.

7 introduction 7 I demonstrate how the domestic constituency mechanism works empirically by studying European countries compliance with the LRTAP Convention. Typically viewed as in a classic collective action problem, European countries compliance with the LRTAP Convention is often taken as evidence for the direct effect of international institutions. A closer look at it, however, reveals that national compliance varies significantly from country to country, which suggests a domestic story in the first place. To illustrate how the domestic constituency mechanism works in this case, I conduct categorical data analysis involving all participating countries, as well as in-depth examination of some signatory countries. Consistent with the central finding in the model, European countries compliance with the 1985 Sulfur Protocol reflects the electoral leverage and informational status of domestic constituencies. Power of weak international institutions Driven by the realist challenge to demonstrate the effect of international institutions, the rationalist institutional literature tends to prize powerful economic and financial institutions in the interstate context. As a result, that literature has been rather quiet on how weak institutions, such as many in the areas of environmental and human rights, influence states behavior, possibly through alternative channels. However, my studies of monitoring arrangements and compliance mechanisms suggest that there exist nonstate stakeholders that international institutions may utilize. In particular, if international institutions can work effectively through domestic compliance mechanisms, even weak international institutions may have powerful effects on states behavior. Limited in monitoring and enforcement capacities, how do weak international institutions influence states behavior? Chapter 5 seeks to resolve the puzzle about the effects of weak international institutions, by locating the analysis in the domestic context, where international institutions may influence a state s behavior by altering the strategic environment that a government faces domestically.

8 8 international institutions and national policies Whenever an international agreement has domestic consequences, there are domestic stakeholders with an interest in states compliance with the agreement. These domestic constituents may influence the government s compliance decisions to a varying extent. Thus, to facilitate states compliance with their international commitments, international institutions may seek to empower domestic pro-compliance constituents in specific ways. Drawing from the model of domestic constituency mechanism, international institutions may alter the domestic environment in at least two ways. They can increase the political leverage and further improve the informational status of procompliance constituents. While these indirect channels of influence are arguably important for all international institutions, they provide a feasible and important pathway particularly for weak international institutions to influence states behavior. This pathway is feasible because the stakeholders with the most profound interest in compliance with weak international instruments are often domestic constituents which are the victims of their own governments noncompliance. Meanwhile, this indirect pathway is important to both weak international institutions and domestic constituents, which have an incentive to utilize each other. To the extent that they can do so, such weak institutions may nevertheless prove powerful in influencing states behavior. To demonstrate how weak international institutions influence states compliance through domestic constituencies, I first revisit the acid rain case. I argue that the LRTAP Convention has empowered domestic environmental activists by providing them with specific relevant information and by legitimizing their demands. I then broaden the empirical analysis to trace how a weak international institution in a different issue area realized its potential power. By legal standards, the Helsinki Final Act in the Conference on Security and Cooperation in Europe (CSCE) was not even a formal treaty. Yet it had a historical impact on the political changes in the former Soviet bloc. I argue that such an impact was realized largely through domestic constituents. Besides providing human rights activists and the public

9 introduction 9 with vital information, the Helsinki Final Act strengthened the leverage of human rights activists in specific ways: it legitimized human rights initiatives, enabled human rights activists to make strategic use of the Final Act, and provided a focal point for various opposition movements. Furthermore, through follow-up meetings, the CSCE provided a forum for the continuing mobilization of human rights activism. methodology and organization This book develops a rationalist framework to bring nonstate actors and domestic mechanisms into the study of international institutions. Along with mainstream political science, I assume that political actors are goal-oriented and instrumental in that they try to maximize their goal achievement. Two considerations dictate this methodological approach. First, my concern with causal mechanisms implies an analytical approach. In order to specify why states comply with international agreements and how international institutions influence states compliance, one needs to pay close attention to the strategic environment that shapes actors incentives. In other words, specifying causal mechanisms requires a careful examination of micro-level incentives. I extract explicit and formal lines of reasoning and, where appropriate, employ game theory to facilitate explanation. Second, recent debates on international institutions suggest the need to reexamine the rationalist framework in which important theories of international institutions have been founded. Scholars have criticized neoliberal institutionalism for its systemic orientation, and some have attributed this shortcoming to its methodological rationalism. However, at the foundation of neoliberal institutionalism are two distinct characteristics. One is instrumental rationality and the other is the state-centric focus. One does not need to imply the other. In fact, I contend that earlier theories of international institutions fail to incorporate nonstate actors systematically, not because of their rationalist orientation but because of their state-centric focus. Indeed, this book provides a rationalist account of how international institutions

10 10 international institutions and national policies influence states behavior through nonstate actors and domestic mechanisms. The rationalist approach has limitations as well as advantages. 2 Like all efforts at IR theorizing, the analytical approach adopted here entails abstracting away from many of the details of the real world. Instead, it focuses on the essential logic of the simple stylization of world politics. Such stylization often requires the analyst to focus on certain dimensions (particularly rational concerns) rather than all dimensions (including nonrational concerns). However, for example, to say politicians care about the reward of staying in power is not to say that in reality they care about nothing else. The interesting question is, to the extent that politicians care about the reward of staying in power, what are some of the implications? Ultimately all theories extract certain dimensions out of many and no theory can fully capture the complex workings of the real world. To some extent, in fact, stylization is often a necessary part of systematic theorizing. Its goal is to identify crucial causal mechanisms in an analytically coherent framework. While I seek both rigor and parsimony in developing theoretical arguments, I attempt to avoid some pitfalls of abstract theorizing. First, I assume only that actors act rationally, in that they by and large follow the logic of instrumental rationality. 3 Accordingly, actors do not need to be motivated by material interests. Indeed, rational choice theory only presupposes that actors pursue their goals in an instrumentally rational manner, regardless of whether these goals are defined in terms of material self-interest. Thus, based largely in the rational choice tradition, this book is nevertheless open to the 2 Many pioneering scholars have discussed these issues. See, for examples, Gowa (1994), Milner (1997), Powell (1999a), Kahler (1998), Snidal (2002), Lake and Powell (1999), as well as Martin (1999), Bueno de Mesquita and Morrow (1999), and Powell (1999b) in a special volume of International Security devoted to this topic. 3 This is closer to what John Ferejohn (1991) terms as thin rationality rather than thick rationality. Among key differences, thin rationality does not eliminate otherregarding concerns. For a similar distinction of rational man as opposed to economic man, see Elster (1984).

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