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Economic Foundations of International Law

Economic Foundations of International Law

Eric A. Posner
Alan O. Sykes
Copyright Date: 2013
Published by: Harvard University Press
Pages: 374
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  • Book Info
    Economic Foundations of International Law
    Book Description:

    Exchange of goods and ideas among nations, cross-border pollution, global warming, and international crime pose formidable questions for international law. Two respected scholars provide an intellectual framework for assessing these problems from a rational choice perspective and describe conditions under which international law succeeds or fails.

    eISBN: 978-0-674-06763-9
    Subjects: Law, Political Science

Table of Contents

  1. Front Matter
    (pp. i-vi)
  2. Table of Contents
    (pp. vii-x)
  3. I Basics

    • 1 Introduction
      (pp. 3-5)

      Recent years have witnessed a torrent of new writing that uses concepts from economics to analyze international law. The economic or rational choice approach to public international law assumes that states are rational, self-interested agents that use international law in order to address international externalities and obtain the other benefits of international cooperation. This approach also emphasizes that because no external enforcement agent such as a world government exists, international law must be self-enforcing. States must believe that if they violate international law, other states will retaliate or in other ways respond negatively. This self-enforcement constraint is the major analytic...

    • 2 Fundamentals of International Law
      (pp. 6-11)

      International law is the system of laws that governs the relationships of states. States make international law by entering treaties with each other and by recognizing customary norms. International law creates obligations primarily for states: states comply with or violate international law. The one exception to this proposition is international criminal law, a body of law that states have created but that imposes duties on individuals.

      The state is the central agent of international law. Putting aside complexities that we will address later, states make international law; they decide whether to comply with or violate international law; they are the...

    • 3 Economic Analysis of International Law—the Essentials
      (pp. 12-36)

      As explained in Chapter 2, public international law is created by two or more states, by custom or more commonly by treaty, to govern interaction among those states. With few exceptions (such as international investment law and international criminal law), only states have the right to invoke and enforce public international law, and only states are bound by it. Thus, states are the key actors in public international law.

      But what exactly is a “state” from the standpoint of economics? Why do states exist? What do they want from each other, and why do they need a body of “law”...

  4. II General Aspects of International Law

    • 4 Sovereignty and Attributes of Statehood
      (pp. 39-49)

      As discussed in Chapter 2, states are the primary agents in international law. They make international law and they thereby create for themselves the legal obligation to comply with international law. In this way, states bear the same relationship to international law that persons bear to domestic law. But states are different from persons in many ways. The very nature of a state—whether a particular group of people who live in a territory compose a state or not—can be ambiguous. States, unlike persons (but like domestic corporations), can break up and have successors, who inherit some of the...

    • 5 Customary International Law
      (pp. 50-62)

      One of the two main sources of international law is custom, the other being treaties. Customary international law is defined as the “general and consistent practice of states followed by them from a sense of legal obligation.”¹ Before we examine this definition, we should make some general comments about the function of customary international law.

      States often appear to observe rules of law even when no treaty supplies them. This type of behavior occurs today, but the easiest examples to understand come from the past; today, most of these norms of customary international law have been codified in treaties. Here...

    • 6 Treaties
      (pp. 63-78)

      A treaty is a legal agreement between or among states. States can also make nonlegal agreements; the difference between a legal agreement and a nonlegal agreement just seems to be whether states declare that the treaty is legally binding, that is, creates legal obligations. We will talk about nonlegal agreements (“soft law”) later.

      Most treaties are bilateral treaties: two states enter the agreement and the agreement binds just the two of them. A typical extradition treaty, for example, binds two states, which agree to send back to the country of origin certain types of suspected criminals if requested to do...

    • 7 International Institutions
      (pp. 79-112)

      States benefit from elaborate domestic institutions that make, interpret, and enforce the law. Legislatures, executives, administrative agencies, courts, police, and other institutions translate public preferences into outcomes. No one thinks that a state can merely legislate and then assume that people will follow the law. Even people inclined to follow the law may disagree about its interpretation, and of course many people are not inclined to follow the law.

      Yet international law rests on only a handful of weak international institutions. No international legislature or executive exists—with the very limited exception of the UN Security Council. A handful of...

    • 8 State Responsibility
      (pp. 113-125)

      The notion that a “state” has violated international law masks all sorts of complexities, for the fact is that states do not commit harmful acts—people do. This chapter concerns the core question of which acts are attributed to states for purposes of international law—that is, which acts trigger “state responsibility.” For example, if a soldier commits a war crime, then his state—the state of which he is a national—violates international law. But if a tourist commits a murder while in a foreign country, then her state does not violate international law. How are these distinctions drawn...

    • 9 Remedies
      (pp. 126-138)

      The topic of remedies is one of the most undeveloped areas of international law. No treaty regime governs remedies. The topic receives no more than a few pages in the standard treatises and texts. Very few international judicial or arbitration opinions outside trade and investment law address remedies, and other authoritative sources are equally scarce.¹ Members of the International Law Commission (ILC) drafted a handful of articles addressing remedies—part of a larger project of describing the customary international law of state responsibility—but states never formally accepted them.²

      This state of affairs is peculiar. In domestic law, it is...

    • 10 The Intersection between International Law and Domestic Law
      (pp. 139-152)

      International law and domestic law intersect in various ways. First, although public international law per se is usually binding only on states, it may be incorporated into domestic law either directly or as an aid to interpretation of domestic rules. We thus begin this chapter with a discussion of how international law comes to play a role in domestic legal systems, with particular attention to the distinction between “monist” and “dualist” states.

      Second, and related, although states are usually the only parties with standing to invoke public international law in international dispute tribunals, acts that violate international law and/or domestic...

  5. III Traditional Public International Law

    • 11 Treatment of Aliens, Foreign Property, and Foreign Debt
      (pp. 155-162)

      Control over territory is a sovereign prerogative, yet it bumps up against other states’ interests in what happens in a foreign state’s territory. These interests arise in many ways. Citizens of foreign states—that is, aliens—enter a state’s territory, as tourists, temporary employees, merchants, and in other capacities. Foreign states have an interest in the well-being of those aliens. The aliens often bring property when they enter a state or purchase property after they arrive, including immovables such as land. The foreign state has an interest in ensuring that its nationals’ property rights are respected. And foreign nationals often...

    • 12 The Use of Force
      (pp. 163-189)

      War has always been considered the central problem of international relations. It imposes extraordinary hardships on people: killing and maiming soldiers and civilians alike, damaging the environment, wasting resources, and disrupting life in countless ways. Many wars are, of course, relatively small and contained. But some wars spin out of control and cause enormous destruction. In World War I, more than eight million soldiers died in battle, whereas in World War II twice that number died.¹ But even these figures do not fully capture their consequences. During World War I, three empires collapsed: the Russian, Austro-Hungarian, and Ottoman. Subsequently, in...

    • 13 The Conduct of War
      (pp. 190-197)

      Laws of war have existed since ancient times. The Greeks recognized a rule prohibiting armies from pursuing defeated enemy armies. Soldiers in the Middle Ages granted quarter to enemy soldiers who threw down their weapons. In the eighteenth century, armies recognized an elaborate code of conduct that determined the rights of soldiers captured after the successful siege of a fortress. Laws of war were, until recently, not formally codified in treaties or conventions but evolved as custom. But by the end of the nineteenth century, the major states agreed that the laws of war that were then recognized ought to...

    • 14 Human Rights
      (pp. 198-208)

      The principle of sovereignty can be understood as a commitment to mutual indifference about the goings-on in other states. Before that principle developed in the seventeenth century with the peace of Westphalia, states—or the proto-states that then existed—had not made this commitment. States believed that the happenings in other states mattered, down to the religious beliefs and practices of people who lived in them. It was easy to justify war in such circumstances. The Protestant government in one state could argue, plausibly to its people, that the Catholics in another state followed the Antichrist. War, though usually motivated...

    • 15 International Criminal Law
      (pp. 209-222)

      Individuals are generally not liable for violating international law; states are.¹ For example, an individual who commits a tort against an alien is not subject to international liability; the tortfeasor is subject to domestic civil liability, and international law comes into play only if the state in question fails to provide an effective tort law remedy that does not discriminate against aliens. In international law, the victim’s state has a claim against the tortfeasor’s state for failing to provide a domestic legal remedy. The relevant lawbreaker in international law is the state, not the person.

      We explained this general pattern...

  6. IV The Environment

    • 16 International Environmental Law
      (pp. 225-232)

      Suppose that a factory manufactures goods, producing a benefit for consumers, workers, and shareholders, but in the process causes air pollution that imposes a cost on people who live in the neighborhood. In conventional economic analysis, the factory’s production is socially beneficial if and only if the value of production exceeds all of its costs, including the costs of pollution. Ideally, this should be true both in terms of the total value and cost of production but also “at the margin.” Thus, if the pollution increases as output increases, the scale of operation should not expand past the point where...

    • 17 The Law of the Sea
      (pp. 233-260)

      The law of the sea derives from an array of treaties and customary norms dating back centuries.¹ The United Nations Convention on the Law of the Sea (UNCLOS) represents an effort to codify and to some extent reform the law of the sea for the modern era.² UNCLOS has been ratified by most major nations, but the United States remains a holdout.

      UNCLOS is among the most significant developments in international law of the last half-century. States traditionally sought to maintain international order by dividing the world and assigning exclusive or quasi-exclusive regulatory authority over areas to the states with...

  7. V International Economic Law

    • 18 International Trade
      (pp. 263-287)

      International trade law is by far the most elaborate and detailed body of international law in existence, consisting of dozens of bilateral, regional, and multilateral treaties. The largest multilateral arrangement—the World Trade Organization (WTO), successor to the General Agreement on Tariffs and Trade (GATT)—now has over 150 members as well as the most extensively developed dispute resolution system of any body of international law. International trade law also happens to be the area of law that has received by far the most attention from economists. Accordingly, this chapter is rather longer than a number of others.¹

      Neoclassical economic...

    • 19 International Investment, Antitrust, and Monetary Law
      (pp. 288-328)

      We conclude with three areas of international economic law that have received less attention from scholars but that nevertheless raise a range of fascinating questions. Because the literature on these subjects is scant, our treatment of each will be fairly brief.

      Foreign investors are vulnerable to actions by host governments that diminish the value of their investments. Once an investor builds a factory, for example, the costs are largely “sunk,” in the language of economics—that is, an investor cannot recoup costs by dismantling the factory and leaving but must be allowed to operate to earn a reasonable return. Without...

  8. Notes
    (pp. 329-354)
  9. Acknowledgments
    (pp. 355-356)
  10. Index
    (pp. 357-372)