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Free Trade, Public Goods and Regime Theory a Theoretical Discussion of the Links Between Trade Theory Ans IR-Theory Kirkelund, Ole

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Free Trade, Public Goods and Regime Theory a Theoretical Discussion of the Links Between Trade Theory Ans IR-Theory Kirkelund, Ole Roskilde University Free trade, public goods and regime theory a theoretical discussion of the links between trade theory ans IR-theory Kirkelund, Ole Publication date: 2000 Citation for published version (APA): Kirkelund, O. (2000). Free trade, public goods and regime theory: a theoretical discussion of the links between trade theory ans IR-theory. Roskilde Universitet. Arbejdspapir / Institut for miljø, teknologi og samfund, Roskilde universitetscenter No. 23 General rights Copyright and moral rights for the publications made accessible in the public portal are retained by the authors and/or other copyright owners and it is a condition of accessing publications that users recognise and abide by the legal requirements associated with these rights. • Users may download and print one copy of any publication from the public portal for the purpose of private study or research. • You may not further distribute the material or use it for any profit-making activity or commercial gain. • You may freely distribute the URL identifying the publication in the public portal. Take down policy If you believe that this document breaches copyright please contact [email protected] providing details, and we will remove access to the work immediately and investigate your claim. Download date: 25. Sep. 2021 Free Trade, Public Goods, and Regime Theory: A theoretical discussion of the links between trade and IR-theory By: Ole Kirkelund WORKING PAPER NR. 23 MARTS 2000 Institut for miljø, teknologi og samfund Department of Environment, Technology and Social Studies Abstract This working paper provides a theoretical discussion of the linkages between in- ternational trade theory and international relations (IR-) theory concerning inter- national trade liberalisation. IR-theory on international co-operation is generally labelled "regime theory". Regime theory aims at explaining the different political "driving forces" behind international co-operation concerning global and regional public goods (e.g. environmental protection). International trade liberalisation is typically seen as a public good since it yields both global and national economic benefits for all trading countries according to David Ricardo 's classic trade theory. International agreements (i.e. international regimes) such as the General Agree- ments on Tariffs and Trade (GATT) and international organisations such as the World trade Organisation (WTO) have therefore been at the centre of regime theory. However, regime theories concerning international co-operation on securing global interests in free trade seem to be more or less divorced from discussions on the nature of free trade as a public good. That is to say, the logic of game theory and political economy approaches, which are often employed in these analyses seem to be somewhat inconsistent with pure "Ricardian" trade theory or even the neo-classic version of Heckscher-Ohlin-Samuelson. If one furthermore considers the propositions of new trade theories stressing imperfect competition, increasing returns to scale, and strategic trade policies it is necessary to take a critical look at the nature of free trade as a public good. The propositions of classic trade theory, main stream regime theories are insufficient for analysing the politics of the inter- national trade regime. In particular, the rationalistic propositions of main stream neo-liberal and neo-realist perspectives on international co-operation are prob- lematic. The gap between new insights of modern trade theory and IR-theory on interna- tional trade liberalisation may give way for alternative or supplementary explana- tions on how the WTO regime works. Here cognitive or "reflectivist" IR- perspectives on international regimes will be considered. These perspectives stress the significance of factors such as ideology and moral values. The discussion unfolded here constitutes an important theoretical component of a forthcoming Ph.D. dissertation by the author of this paper (Working title, "Free Trade, Public Goods, and Regime Theory: Lessons from WTO trade-enwonment disputes"). The main body of the present paper will appear again in my dissertation where it will serve as a theoretical point of departure for analysing concrete dispute settle- ments in the WTO. This provisional publication is intended to stimulate the de- bate on the relationship between regime theory and trade theory and facilitate feed back on my current work concerning the WTO regime. TEK- S AM FORLAGET ISBN 87-7753-145-0 Roskilde University P.O. Box 260 DK - 4000 Roskilde Denmark Phone (+45) 46 74 20 00 + lok. 2513 • Fax (+45) 46 75 44 03 • E-mail [email protected] Ole Kirkelund Department of Environment, technology, and Social Studies Roskilde University Free Trade, Public Goods, and Regime Theory: A theoretical dis- cussion of the links between trade theory and IR-theory Contents: ABSTRACT............................................................................................................................... 2 INTRODUCTION....................................................................................................................... 3 FREE TRADE AND PUBLIC GOODS .......................................................................................... 8 Introduction....................................................................................................................... 8 Public goods...................................................................................................................... 9 Collective action.............................................................................................................. 10 Conclusions ..................................................................................................................... 12 THE CASE FOR FREE TRADE: GLOBAL AND NATIONAL INTERESTS IN TRADE...................... 14 Introduction..................................................................................................................... 14 Absolute or comparative advantages? ........................................................................... 16 The benefits of trade liberalisation.................................................................................. 19 Capital mobility, market imperfections, and free trade as a public good ....................... 21 Strategic trade................................................................................................................. 26 Conclusions ..................................................................................................................... 28 REGIME THEORY AND TRADE LIBERALISATION IN THE WTO.............................................. 30 Introduction..................................................................................................................... 30 IR-theory and regime theory ........................................................................................... 33 Relative or absolute gains: The neo-liberal / neo-realist debate .................................... 35 Cognitive / Reflectivist alternatives................................................................................. 38 CONCLUSIONS....................................................................................................................... 41 REFERENCES ........................................................................................................................ 46 1 Abstract This working paper provides a theoretical discussion of the linkages between in- ternational trade theory and international relations (IR-) theory concerning inter- national trade liberalisation. IR-theory on international co-operation is generally labelled “regime theory”. Regime theory aims at explaining the different political “driving forces” behind international co-operation concerning global and regional public goods (e.g. environmental protection). International trade liberalisation is typically seen as a public good since it yields both global and national economic benefits for all trading countries according to David Ricardo’s classic trade theory. International agreements (i.e. international regimes) such as the General Agree- ments on Tariffs and Trade (GATT) and international organisations such as the World trade Organisation (WTO) have therefore been at the centre of regime theory. However, regime theories concerning international co-operation on securing global interests in free trade seem to be more or less divorced from discussions on the nature of free trade as a public good. That is to say, the logic of game theory and political economy approaches, which are often employed in these analyses seem to be somewhat inconsistent with pure “Ricardian” trade theory or even the neo-classic version of Heckscher-Ohlin-Samuelson. If one furthermore considers the propositions of new trade theories stressing imperfect competition, increasing returns to scale, and strategic trade policies it is necessary to take a critical look at the nature of free trade as a public good. The propositions of classic trade theory, main stream regime theories are insufficient for analysing the politics of the inter- national trade regime. In particular, the rationalistic propositions of main stream neo-liberal and neo-realist perspectives on international co-operation are prob- lematic. The gap between new insights of modern trade theory and IR-theory on interna- tional trade liberalisation may give way for alternative or supplementary explana- tions on how the WTO regime
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