TRADITIONAL AND FLEXIBLE MODELS OF TRADE: AN INTERVIEW WITH JON PEVEHOUSE

By Alexsandra McMahanStaff WriterOn March 3, 2011, Jon Pevehouse, a Professor of Political Science at University of Wisconsin-Madison presented at the School of International Relations and Pacific Studies. Pevehouse has co-authored two books - Democracy from Above? Regional organizations and Democratization and While Dangers Gather: Congressional Checks on Presidential War Powers — and written numerous academic papers in pursuit of answers to the coinciding effects that a nation's internal and external politics have on one another. His latest event, sponsored by the Laboratory on International Law and Regulation, drew approximately thirty passionate individuals looking to understanding the relationships of politics and economic trade. An academic known for his focus on the interrelated aspects of domestic and foreign policy, Pevehouse discussed his most recent efforts to develop a model that accurately reflects a nation's preference for a flexible or institutional system of trade agreement. Pevehouse’s recent work concentrates on the tension between a traditional school of thought and the newer rational flexibility model. He has found in his research that the underlying assumption that democracies desire a more flexible design in trade agreements is evidentially lacking. During his presentation, Pevehouse analyzed the two main advantages proposed by a flexible model: the flexibility to aggregate when a nation faces internal concerns and the ability for cover if the nation's situation changes unexpectedly. Although the advantages of "concerns and covers," as Pevehouse refers to them, are intended to protect nations against domestic unknowns and uncertainties, his research thus far has led to the conclusion that leaders in democratic nations want constraint and binding agreements in their trade affairs. There are also, Pevehouse points out, "uncertainties and unknowns" that are endemic to economic systems, such as trade shocks and fluctuation in exchange rate as well as some of the external factors of international politics that weigh heavily on the decisions made by states domestically; as a result, the attempt by the new theory of flexibility fails to create a an effective rationale for developing trade agreements. Because most economists and researchers focus on particular occurrences, their likelihood, and how they affect systems, Prospect asked Pevehouse to elaborate on what brought him to the topic of bonds between different systems and effects:PROSPECT: Much of your work focuses on the agreements and organizations that create international entities and how this affects internal politics of individual nations. Can you elaborate a bit on the direction your current research is developing with this relationship, and what your focus will be for today’s presentation?PEVEHOUSE: Well, let’s start with today. Today is going to be looking at the question of the international design of institutions and how domestic factors really influence what the nature of those agreements look like. For decades now, political science has been interested in when states decide to make [trade] agreements, and under the basic macroeconomic and political conditions under which they make agreements. What I am interested in is the domestic factors which shape when they make them, how they make them, and exactly what rules are written down. In other words, we have been focused on when they write the rules, from a sort of state-to-state perspective, and I am interested in what rules they are writing, and how the domestic politics of various countries at the table might influence what those rules are. More generally, most of my work deals with some aspect of international institutions, how their politics influence them, or how their membership in those institutions may influence the various states that become members in some shape or form.PROSPECT: What brought you to this issue [the underlying assumption that democracies desire a more flexible design in trade agreements is evidentially lacking.]?PEVEHOUSE: You know, I had this theory, and I thought I would start there, and see where it went.PROSPECT: Could you elaborate on that, maybe how you’ve reached this point from your past research and where you’re looking to go with it?PEVEHOUSE: Sure. The general theory is that there is a trend in international relations over the last five to six years. It's the idea that one thing that has really influenced the design of international agreements has been flexibility, a flexibility to sort of allow governments to aggregate bits and pieces of the treaty temporarily. Maybe they get punished, maybe they do not, but the overall goal is to do two things: One is that you may get more people in, might get more people signing if they are aware [they are not] going to get punished the first time they have the littlest wrongdoing. But also, it allows what I call cover - what in the talk I’m going to call cover. For instance, if you are in a recession, you can aggregate from a trade treaty for a very short period of time to placate your domestic interests. With that knowledge, states are much more likely to sign, to take on deeper commitments. Or so goes the [new] argument. I am skeptical of that, and I'm skeptical because I feel like what we thought for decades was that these treaties were to lock you in- to lock into these commitments. I’m just trying to suggest there is a little bit of tension between the new ideas and the old ideas. I'm sort of agnostic as to which is more accurate, so then I have to try to engage in some empirical testing to see ‘well, what are some of the main implications of this?’ And what I feel is one of the main implications is you should see democracies wanting more flexible agreements for electoral reasons, but that’s not actually what I find. I find that democracies like these agreements to be more cover, more law-bound [and less flexible], which is consistent with, I think, what could be the traditional theory.PROSPECT: Do you believe we gravitate towards that traditional model because we are aware of exactly what we are receiving, and there is not that flexibility? That is, because it creates a more static approach, and therefore a more stable one?PEVEHOUSE: That is my argument, that it is about policy lock-in. The leaders want policy lock-in, and they don’t want a future elected official, whether it is an executive or legislative [official] to come in and undo that, right? Because especially in the trade world, business and firms develop expectations of what their trade relations are going to look like. If you have people coming in, every five or so years, and aggregating, or getting in and out, then the environment sort of breaks down. And so, these leaders that want them and push for them, they want them to stay on the books. That's what they want. They don’t want the flexibility as much as they want policy continuity. And you know, it’s not always a 1-to-1 trade off. You can have some flexibility and continuity — I don’t want to say it’s a complete trade off — but I do think there is some underlying tension there, so I was just curious as to see, empirically, historically, what do we see has happened.PROSPECT: Within that tension, within your research, have you found that our desire for stabilization is at all in conflict with the constant movement of globalization, the constant change of the world, especially as we see policies and trade develop so rapidly in a lot of areas?PEVEHOUSE: Good question. That's, you know, one of the driving forces behind the move, and people who are arguing for flexibility, is that trend of globalization, the constant change, because they say, there’s a lot of unknowns in the world, right? Globalization is creating more unknowns in a lot of ways, so people want to keep these agreements flexible, to deal with those unknown parts. Again, I don't want to deny that there is that dynamic that is still there, but when you think about the trade agreement, and you think about, for example, the Bush administration pushing the South Korea [trade] agreement, and now Obama taking over the South Korea free trade agreement, and pushing that forward. We’re not signing these because they're also signing them. [We're signing them] because they’re locking down a set of policies both right now, and 40 years from now. What I’m sort of interested in is, how do they actually write down on a piece of paper what these regimes look like, based on you know, the current state of what i would call the balance of power domestically. We’re finding these democracies like less flexible agreements, unless you’ve got a lot of opposition members in congress or in parliament. In which case, they’re dialing it back because they want the flexibility; they want a little wiggle room once they come to power, to wiggle out of these obligations when they come to power. That’s the basic idea.PROSPECT: That goes along with your book While Dangers Gather a little bit. Your work in that emphasizes that a president’s ability to exercise war powers is highly dependent on partisan politics in congress. Currently, do you think this has impacted our President's military action and trade policy because of the congressional split, and the very volatile relationship of Congress and the President?PEVEHOUSE: I do think that with trade policy, initially, it worked a little to the opposite because Obama viewed it as a way to reach out to the Republicans: ‘here’s something we can all agree on. Let’s get a couple of these agreements done.’ Whether they’ll actually get done, I do not know. Clearly, South Korea is moving forward. On military policy, I think, consistent with the book, I always think that we’re pointed in the same direction, which is Presidents are just much more careful when they’re faced with high opposition in Congress because they’re worried: What if things go badly, they’re worried about trying to get appropriations, and you know, in extreme cases, there’s going to be a rally effect… Take the proposal for a no fly zone over Libya. I don’t think that’s going to happen for a lot of reasons. Obama worries that, you know, should we get an airplane shot down over Libya enforcing this? Congress, the House in particular, is going to be up in arms, [saying] "We didn’t get this authorized, this is a bad idea." You can just see it coming, not that this would not happen if there was a unified government under the democrats, but I think that Obama would be far less worried about the political fallout in that scenario than the current one.PROSPECT: Speaking of the US, have you seen a huge impact from non-profit or non-governmental institutions or organizations when dealing with US foreign policy in particular? As your writings have emphasized a very practical incorporation of real-world factors into public policy, do you believe that these non-governmental organizations and their actions should or should not be taken into consideration by governmental departments?PEVEHOUSE: I think that the trend — I don't focus a lot on [it in] my own, current research — although having a read a fair bit about this, and thought about it in relation to my research, there is a growing trend. The way I think about this and what I have some graduate students working on is: when do non-profits and NGOs get a seat at the table? Then, what do they do with that seat at the table? I think the trend over the last twenty to thirty years is that, more often than not, they’re getting a seat at the table in certain issues, such as the environment and human rights. I think there are other issues like trade, where they're getting fewer seats at the table, but again, the trend is up. It’s starting from a low point, but the trend is up. Personally, I think the answer to [whether they should get seats] is yes. The answer depends on what you see as your underlying model of diplomacy — whether you see a Republican model, such as we do in the US, where pressure groups get their say on various issues by working those channels, those pressure channels — and are NGOs sort of the same, are they just a version of pressure groups, interest groups on the international scene, you know, just advocating for the position that they believe in? Just like a firm would, just like a country would. And I think that if that’s your underlying model, then, they have just as much right to be there as anyone else. Now, whether they’re really included or not, I think varies by issue area and varies by time, but they certainly have the right to be there.PROSPECT: You say this trend is increasing, and a lot of research supports that. Do you think that it is at all in relation to the increase of globalization of communication abilities, the ability for these organizations to ‘go global' as opposed to just being national?PEVEHOUSE: I think it’s both, I mean. So yes, I think part of it is globalization, and as you say, communication — the increasing speed and decreasing cost of communication. You’ve seen this salient in the Middle East in the last couple of weeks, right? Everyone has access to this technology, or a lot of people have access to this type of technology, whether it’s cellphones, or internet, etc. So that’s part of it, but I think the other part is [that] in the last twenty to thirty years, we have seen a trend towards democratization, that flattened out over the last five to six years. If you look towards global trends in democracy, they flattened out starting around 2000. Now, obviously, who knows what’s going to happen in the Middle East? It could be heading up again. You’ve got what started in the 1970s; you’ve got what Huntington labeled the 3rd Wave of Democratization. You had more societies, more tension, more abilities for these groups [the NPOs] to penetrate societies, and these groups that were already there to reach out to other non-profits, global non-profits, and other states. I think it is a confluence of a number of factors, one of which is globalization, and democracy is another.PROSPECT: With that political fallout [from internal political actions] and its relation to [the United States'] international politics, nations such as China and India are really growing politically and economically. Many argue that the United States is slowly slipping from our position as a highly prominent country in the international realm of diplomacy and trade. As we consider the world in the next few decades, what value do you think the United States’ actions will maintain in international agreements as we approach our domestic issues and deal with these foreign competitors?PEVEHOUSE: That's a good question. I think right now... the way I see this happening is, I think we're entering another era of potentially a sort of great geo-strategic balance of power game. What I've seen in the last decade is the United States pushing to keep China happy and keep us happy for various reasons. And also India — it’s a great balancing game. The US moving closer to India is a way to check China’s power and the gist of the game; I think that is an important factor.Photo by European Union 2011 PE-EP/Pietro Naj-Oleari