International relation theories

Some motivations for trade cooperation from theorical perspectives in international relations have similarities with those resulting from economic discussion.

In the ‘more traditional’, statist international relation theories, states are unitary actors, play more prominent role and their preferences are taken as exogeneously given. They include the two most prominent theories of international relations explaining international cooperation: neoliberalism or neoliberal institutionalism developed from classical liberalism, and neo-realism developed from classical realism. Neoliberalism and neorealism are rationalist statist theories, because states as the central actor are self-interested, goal-seeking and utility maximizing actor.136 The further development of international cooperation in the 20th century gives rise to another statist international relation theory: constructivism or strong cognitivism. In contrast to statist theories, the non-statist theories concentrate on the sub-state domestic agents and the question as to how international cooperation is shaped and affected by dometic politics. The non-statist theories of international cooperation are developed in a parallel manner to the statist ones: liberalism and weakly cognitivism.

Neoliberalism

The foundation of GATT and the WTO are based on the (neo-) liberal ideas in international economics and international relation theories, which stress the importance of welfare-enhancement through economic liberalisation and international cooperation.

Neoliberalism therefore merits some attention. Nevertheless, neoliberalism or neoliberal

134 WTR 07, p. 60-1.

135Maggi, G. and Rodriguez-Clare, A. (1998), ‘The Value of Trade Agreements in the Presence of Political Pressures’, Journal of Political Economy, 106, 3, pp. 595-6.

136Hasenclever, H., Mayer P. and Rittberger V. (1997), Theories of International Regimes, Cambridge:

Cambridge University Press (hereinafter Hasenclever et al.), p.23.

institutionalism in general does not provide further motivations for state to conclude trade agreements than international economics. The motivation is the efficiency gain through correction of deficits, such as collective action dilemmas, transaction costs and information asymmetries that arise because of states’ rational behaviour. In such situations, international regime allows states to cooperate by providing information, reducing uncertainty and lowering transaction costs. In the area of international trade, similar to the tradition approach in international economics, trade agreements firstly, help states overcome terms-of-trade inefficiency, termed in neoliberalism as negative world-price externalities.137 Additionally, trade agreement can be viewed as instrument for cost reductions in terms of negotiating, drafting, launching and maintaining trade regime. For this second reason, cooperation in trade will take place irrespective of size and market power, as long as there is expected efficiency gains from the cooperation. The form of trade cooperation, multilateral, bilateral or plurilateral, depends on the market imperfections to be resolved, the negotiation environment, the negotiation costs and the expected gain for continued cooperation. The non-statist rationalist counterpart of neoliberalism is liberalism (in international relation sense). For liberalism, states’s preferences are endogenously determined by domestic rational self-interested individual and social groups preferences translated by domestic institution and process and states pursue their preferences under constraints imposed by the preference of other states. Trade negotiators have to secure political support of domestic constituents or special interest group by taking into account their efficiency concerns while cooperating internationally.138 While liberalism is instrumental in explaining policy determination process, it does not give rise to motivation for trade other than those mentioned earlier.

Neorealism

Whereas neoliberal institutionalism highlights the efficiency gain as the motif for cooperation, neorealism stresses instead on relative gains compared with other actors and compared with alternative non-cooperative policy, as the relative gain can eventually be transformed to higher relative military capability and political influence and create dependence. Therefore, power distribution and accumulation and dependence

137 WTR 07, p. 69.

138 Ibid., p.76.

are the main motif of coopeartion according to the theory. Securiy-obsessed and self-help countries do not cooperate to reap primarily welfare-enhancing mutual efficiencies, but rather try to ‘squeeze out’ as many concessions from other countries to be on a higher power rank. Trade agreements are seen as strategic complement to political and military cooperation. The approach seems not to explain why countries conclude trade agreements, but helps in explain their extent and boundaries, especially between large and smaller countries. Generally, the extent and depth of a trade agreement involving large countries depend on their security ambition and credibility, as smaller countries are willing to join the agreement if large countries can credibly ensure that they will not opportunistically exploit the agreement and provide adequate concessions, economic, political or military nature.139 But in extreme cases, large countries may use trade agreements to increase dependence of small countries which face only with two alternatives: entering sometimes disadvantageous agreements or becoming even worse off from non-entering. Smaller countries can usually either take side with large countries to survive politically and flourish economically, or form trade agreements with other smaller countries to counterbalance large countries.

Cognitivisms

Constructivist or strongly cognitivist theories argue that rationalist statist theories fail to account for the role of ideas in shaping state policy and that international coopertaion can be explained by normative structure that shapes states’ identity.140 Owing to the observation of historical development of multilateral institutions, it is according to constrictivism largely values and ideas prevailing in international system that motivate and shape international cooperation, also in trade affairs. Countries that usually share common ideas and coherent goals tend to form institution, because ideas can influence states behaviours only when they are embodied in institutions which in turn legitimate and disseminate these ideas. For trade cooperation, one of the ideas is for example the peace promoting quality of trade. Multilateral and preferential trade agreements reduce risk of conflict by gradually increasing trust, making countries interdependence through increased trade and specialisation. Post-war European integration is an important example of a trade agreement for which peace was a primary

139 Ibid., p. 93.

140 Hasenclever et al., pp.167-8.

motivation.141 The non-statist counterpart of constructivm is the so-called ‘weakly cognitivist’ theories, which likewise focuses on ideas and values as motivation, but stresses the role of the network of experts with recognized competence in a particular domain, the so-called moral entrepreneur, in shaping states’ values needed for international cooperation.