Key Features from Voigt

The paper tackles an important legal phenomenon and deserves credit for its attempt to systematically study the underlying costs and benefits and to provide a first empirical assessment. Let me consider a few aspects that may deserve further reflection; first to the legal questions involved, second to the analytics, and third to the empirical findings.

1 See, e.g., Hafner, The Effect of Soft Law on International Economic Relations, in:

Griller (ed.), International Economic Governance and Non-Economic Concerns (2002) 149, at 160 et seq.

2 As to be distinguished from “treaties”.

I. Legal Questions

First, with regard to the distinction between formal treaties and informal agreements, the paper relies on the involvement of the legislator in the law production process. It seems, however, that this criterion is not ideally chosen.

Historically, the “treaty-making power” was perceived as an essential part of the executive branch of government (in earlier times, the king’s monarchic powers), and as such it did not require any parliamentarian in-volvement. Most of the pertinent constitutional developments of the last 150 years revolve around the constitutional “taming” of these executive powers. The bottom line of this development was to require parliamentari-an approval if the respective international acts, in substparliamentari-ance, amount to law-making in the material sense.³ In that regard, one can also speak of an elimination of a “democratic deficit”. This constitutional development overlaps with a further – albeit distinct – conceptual development, namely that of “dualism”. This concept sees international law and “inner-state law” as two separate bodies of law, such that provisions of international agreement require some (not necessarily step-by-step) translation into na-tional law to become mandatory on this level as well.

Having said that, international agreements conceptually require the in-volvement of the lawmaker only to the extent that they, in substance, touch upon lawmakers’ issues. The paper makes it clear that international agree-ments may be concluded by the executive branch alone in two different cases. On the one hand, “executive agreements” do not require the legisla-tor’s involvement if they remain “underneath” the level of the lawmaker (covering only issues of an “administrative nature”). On the other hand, legislators’ consent may not be needed because the respective covenants are, in substance, too soft to be considered law.⁴ Note that in the first case these international agreements can be very detailed and technical, as is the case with many of the so-called “administrative agreements/acts”. It is perhaps not obvious why these agreements are also considered “informal”

for the purposes of the paper.

The above question is not only a terminological one, but the constitu-tional checks and balances at issue reflect the underlying “principal-agent”

3 It shall therefore not come as a surprise that also historically the early cases of par-liamentarian involvement in the conclusion of treaties has concerned those instances, where the treaties were likely to affect basic constitutional liberties of the constituency (liberty, property). This idea was more generalised in the French constitutions of the French revolution and the Belgian constitution of 1831 that required consent by the pa r-liament, if the international treaty imposes burdens either on the state or on any of its citizens.

4 Still, the legislator may decide to enact provisions under national law to comply with the non-binding rules of soft law agreements, as is de facto very often the case.

relationship between the parliament and the executive branch. In particu-lar, it has been stressed in the literature on the subject that soft law vides a tool for the executive to escape the otherwise required internal pro-cedures of seeking legislators’ consent⁵.

Moreover, the exact borderline between formal and informal agreements may be questionable to the extent that the constitutional framework pro-vides for different degrees of legislators’ involvement. The paper itself refers to Article II of the US Constitution whereby a “treaty” in the formal sense requires a 2/3 majority of the Senate. However, this does not mean that for all other “international agreements” there would be no involvement by the legislator. American constitutional law knows a further category of international agreements that (albeit seemingly counted as “informal” in the paper) require a simple majority of both the Senate and House of Rep-resentatives.

A further, albeit distinct, aspect of these constitutional checks and bal-ances concerns the question of whether the executive branch is empowered to sign constitution-amending agreements (which would, of course, require the approval of the lawmaker). Austrian constitutional law has changed in this respect (in 2008) and has shifted material powers to the legislator.

Whereas under the previous constitution, the (here: constitutional) law-maker was reduced to a veto-role after the conclusion of the treaty (name-ly, to approve or not to approve), the amended rules provide for prior con-stitutional change by the lawmaker. On the basis of the thus amended constitution, the international agreement (no longer constitution changing in itself) may well be concluded.

II. Analytics

Second, to the analytical part. Whereas it seems straightforward to develop the hypotheses, as presented in the paper, based on a broadly-conceived transaction cost perspective, it seems less obvious whether a “market ver-sus hierarchy” view can add too much. With regard to international infor-mal law, hardly any agreement concerns a “spot market exchange” in the sense of an immediate one shot interaction. Both formal and informal agreements typically concern ongoing interaction and obligations (“Dau-erschuldverhältnisse”). Moreover, it seems unclear whether the primary research question should be whether states with a higher frequency of in-teraction shift to informal instruments of international law, but rather why the same states (with a given frequency of interaction) choose formal

5 See, e.g., Schreuer, Die innerstaatliche Anwendung von internationalem “soft law”

aus rechtsvergleichender Sicht, Österreichische Zeitschrift für öffentliches Recht und Völkerrecht 34 (1983) 243.

struments to govern certain international topics on some occasions and informal instruments on others.

III. Empirical Findings

As for the empirical part, the most puzzling result is seemingly the sharp increase and sharp decline of newly approved informal agreements under the Bush administration. Of course, it would be interesting to compare these figures with those for formal agreements to check for a similarity of movements. Even considered in themselves, however, the figures appear ambiguous. It seems as if the respective numbers reflect the newly con-cluded agreements, not the aggregate figures. In this light, it is certainly possible (depending on whether some agreements had expired) that the number of informal agreements increased through the entire period and that figures simply show a decline in the growth rate, not a decline in the absolute number. Such a flattening out of the growth rate would not come as a surprise in a second presidential term. The new government may have entered office with new priorities and may have concluded most of the envisaged agreements already during its first term; in this respect, the sec-ond term may basically cover follow-up agreements and a certain number of new issues, altogether being of minor quantitative importance.

A further point: multilateral agreements and decisions by international associations/organisations are, at least to some extent, functional substi-tutes. The same countries may, for example, deal with a certain issue, un-der regular international law by multilateral agreement or on the European institutional level by the respective (formal or informal) instruments. The number of (formal and informal) international agreements may, therefore, depend on the availability of institutional alternatives under the respective association or organisational structure.

C. Conclusion

Finally, a word on the paper’s focus on bilateral agreements. This focus is, at least from a lawyer’s perspective, somewhat surprising. Informal inter-national law is predominantly a phenomenon of multilateral agreements and international organisations, not so much of bilateral agreements. Soft law instruments cover a huge spectrum of acts/documents, inter alia reso-lutions of international organisations (or even international conferences), declarations, statements, conclusions, and recommendations.⁶ One may only think of the various recommendations in the framework of the OSCE

6 See, e.g., Hafner ibid, also for possible reasons for soft law; and Schreuer ibid.

or the framework of the WTO dispute settlement procedures. The reasons for the adoption of informal rules (“soft law”) in multilateral environments are manifold, but they have to do with the specific functional task of inter-national law between politics and power. Soft law instruments are there-fore, for example, used to direct the international communities’ attention to new problems, to express concern about them, to change certain basic rules of international relations, to test the acceptance of certain rules, to demon-strate opinio iuris or even to specify pre-normative rules with the prospect of development into binding rules.

It seems worthwhile to extend the analysis developed in this paper to these phenomena as well, since the organisational features of these instru-ments allow for an even more immediate application of the respective transaction cost-based and governance structure-based analysis. A pursuit of the paper with a particular focus on the soft law of international organi-zations is, therefore, not only welcome, but highly promising.

The Economics of Informal International Law – An Empirical Assessment

by

Christoph Kimmerle

The discussion of “The economic analysis of international law making – an empirical assessment” mainly involved comments on the following issues:

the conceptualization of the term “soft law” in the paper, the empirical data set chosen, the overall relevance of soft law in the international sphere, and the use of transaction cost theory.

During the discussion, several participants described alternative options for defining the term soft law and argued that the definition proposed in the paper could be improved in terms of conceptual clarity. Contrary to the author’s argument that most (US) soft law works on a bilateral basis, some participants argued that soft law is mainly employed in multilateral coop-eration. Accordingly, soft law was seen as an instrument mainly used by international organizations. The international organizations turn to soft law in the form of written standards to overcome the coordination problem while allowing them to benefit from the flexibility and changeability of-fered by these softer agreements. Generally, the question arose which kind of agreements could be qualified as belonging to the category of soft law.

Some participants argued that, in their view, the US Executive Agree-ments, in the paper defined as falling into the realm of soft law, actually classify as hard law. They came to this contrary assessment because these agreements were seen to be binding international treaties from an interna-tional law perspective.

In the course of the discussion, attention focused on the empirical basis of the paper. The participants asked whether the three policy areas in which executive agreements were mainly employed had something in common. In addition, one participant found that the present incentives would also merit closer attention: he wondered whether the tendency of the

US executive agreements between 2000 and 2006 could also be explained by other surrounding conditions specific to this time span. The participants then asked whether soft law in contrast to hard law might be an instrument predominantly used by developed democracies as opposed to dictatorships.

They reasoned that this could be due to the fact that the legal foundations of longstanding democracies such as the US are more developed, so that soft law might be perceived as a tool to fill the remaining gaps. Moreover, a country-by-country comparison was suggested to identify the actual rele-vance of soft law in the US compared to other countries.

One attendee then addressed the question of whether soft law really could be seen as less politically relevant. It was argued that at least for some soft law, for instance in case of particular technical standards, this is not the case. These soft laws, although non-binding, usually have a great impact on state behavior. (The author replied that his paper asks why the term soft law has become so popular recently and does not analyze the po-litical impact of different types of soft law or of soft vs. hard law). Another attendee argued that the mentioned principal-agent relationship between the legislative and executive branch only holds if treaty making were to lie within the powers of the former. However, in his point of view, this is not the case as international treaty making actually falls within the realm of the executive branch.

The discussion then turned to the application of transaction cost theory in hypothesizing the employment of international soft law. One participant asked for the meaning of modification costs. His understanding of modifi-cation costs was in terms of the difficulties in changing softer law. The author’s reply was that the category of modification costs in the paper ad-dresses the procedure of ratification, i.e., if ratification is needed, modifi-cation becomes relatively costly. Another attendee was interested in the actual relevance of the different categories of soft law in more general terms. He questioned the explanation of diverging degrees of legal impact due to the classification into different categories of law. Additionally, he was interested in existing empirical evidence of the explained phenomena.

Moreover, he discussed the interaction of the different types of transaction cost. In particular, he wondered whether cases exist in which a relative decrease (or increase) in one specific category of transaction cost had led to an increase (or decrease) in the use of informal cooperation. Additional-ly, this participant suggested thinking of law-making as a specific invest-ment. He also concluded that the more specific such an investment, the greater the likelihood of the relevant actors to turn to relatively harder law.