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American Politicians Sign Bad Trade Agreements Because They Don't Understand International Law

America's trade diplomacy leaves America naked in a world where other nations pursue the most sophisticated mercantilist policies their bureaucrats can devise, backed up by disciplined diplomacy that puts economic objectives first and doesn't take treaty law too literally.
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The debate over signing the awful Trans-Pacific Partnership free-trade agreement is hamstrung by the fact that some American politicians don't seem to understand what international law is.

They talk about signing this agreement like it's a lease on an storefront in Indianapolis, where what's written down on paper really determines what happens. A deal is a deal, and once made, courts can be relied upon to enforce whatever was agreed to.

But international law doesn't work this way, and it's worth thinking through why.

International law is not like ordinary civil or criminal law because there exists no sovereign to compel the obedience of nations. There are no judges with police to back them up.

Instead, international law is analogous to the rules of a game of stickball being played by children on a vacant lot: its rules only mean anything insofar as they are enforced by the players upon themselves.

Obviously, as in the case of stickball, the players will enforce certain rules, because that is the only way they can have a game.

So international law is not a completely vacuous concept, as cynics suggest.

But the players also won't enforce any rule grossly to the disadvantage of any particularly powerful player, because there's no sovereign with the power to do so. The only "power" is that player's desire for the game to go on with efficient, advantageous, and stable rules. Which has its limits when circumstances make those rules disadvantageous.

In the case of trade, nations do sufficiently want to "have a game," or engage in orderly trade, to pay some attention to rules. So the trade arena isn't chaos.

That's why there are World Trade Organization tribunals, backed up by the WTO giving "permission" to one or other of the disputants to impose tariffs on the other.

But that's it.

This means that the Anglo-American legal framework Americans tend to take for granted simply does not exist internationally.

And therefore that a trading model based upon neutral and consistent enforcement of legal obligations is not feasible.

Unfortunately, this is precisely the concept of law that many American politicians bring to trade agreements, because that's what they were taught in domestic law schools and what they were used to, back before they were elected to Congress and had a law practice in their district.

There is no way to take power politics out of trade, which means that there is no way to leave everything in the hands of a neutral and rational free market once we but construct the right international legal machinery. We can indeed - pace the imperfections - do that domestically, which misleads us into trying to do it internationally.

America's trade diplomacy thus leaves America naked in a world where other nations pursue the most sophisticated mercantilist policies their bureaucrats can devise, backed up by disciplined diplomacy that puts economic objectives first and doesn't take treaty law too literally.

Our nakedness has, ironically, made us even more desperate in pushing for free trade: having disarmed ourselves by throwing open our markets, we desperately need to disarm everyone else by forcing their markets open, too. But we try to do this after having thrown away our principal leverage: access to our own market.

We rationalize this implausible approach with the fantasy that the rest of the world "must" inevitably embrace our own laissez faire economic ideals, including free trade, due to their innate superiority, one day soon.

So China, which is watching its own economy boom while ours stagnates, is somehow going to convert to our policy model.

But even if Beijing mysteriously did suddenly decide to do this, in America there exist federal courts that will enforce American adherence to the letter of agreements like the TPP. In China, there is no independent judiciary and the courts are just an enforcement arm of the political objectives of the government. So they won't. So their system is profoundly set up not to be compatible with the concept of law we're expecting it to conform to.

The WTO's tendency has been to expand over time on two separate tracks. Track one, for those powerless to resist its dictates (or foolish enough to actually believe in them), consists in ever-more-rigid rules, of ever greater scope, designed to usher in a borderless world economy, at least on paper. Its ultimate ambition has been described as "writing the constitution of a single global economy."

Track two, for nations shrewd enough to practice mercantilism while preaching free trade, is a puppet show designed to square these nations' policies with the legal framework that props open their foreign markets. Since this puppet show furthers the interests of both foreign governments and "American" U.S.-based multinational corporations, neither has any reason to announce publicly that the game is a racket.

So perhaps the saddest defect of the WTO is that despite its undemocratic and authoritarian implementation of an economic ideal that makes no sense even in theory, it actually has failed to deliver where free trade might do some good. Rational protectionism is the best policy, followed by a genuinely level playing field; the WTO has delivered neither.

And to a huge extent, this is our own fault, because we agreed to it based on a misunderstanding of what it means to "agree" to a set of rules without a real sovereign.

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