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February 24, 2009


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Joel Trachtman

I find Richard's application of hegemonic stability theory to the WTO a bit jarring. With 150+ members, lots of give and take, and lots of evidence of U.S. non-dominance, isn't the WTO evidence against HST? Moreover, it takes a special kind of modernism--a faith in a kind of infinite progression of international economic integration--to pronounce the WTO dead, or to declare that it is finished as a forum for multilateral negotiations. I would favor deploying a theory from a different part of Chicago: the international law Coase theorem (ILCT). The ILCT would suggest that states enter into treaties, including new rounds of WTO negotiations, in order to overcome transaction costs, including strategic costs, in connection with valuable transactions. ILCT is founded on cost-benefit analysis. Where the benefits of the transaction are small, therefore, the costs might not be justified. I think this explains where we are in the DDA far better than HST. The ILCT also leaves room for technological, social, economic, and ideational change that might make it worthwhile later to use the WTO. In fact, the WTO institutional structure is now a distinct and valuable institution, which in turn will enable transactions and contracting that would not have been possible in its absence. I was going to use a Mark Twain reference regarding premature reports of death, but I like this one better:

"theories don't prove nothing, they only give you a place to rest on a spell, when you are tuckered out butting around and around trying to find out something there ain't no way to find out..."- Mark Twain, Tom Sawyer Abroad

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