Legal Framework for International Business

I. Theory

Liberal and institutionalist arguments in international relations are often intertwined as liberal institutionalism, and have often been offered by the same IR scholars. However, it is useful to disaggregate the two and identify elements of liberal IR theory, beyond those linked to institutionalism.

Liberal IR theory makes a number of assumptions which contradict at least in part the realist view of the international system. They disagree, first, that the structure of the international system (in other words, international anarchy or lack of world government, and the balance of power) is the primary determinant of state behavior. They instead point to internal facts including the type of government and constitutional order that states have, as well as other factors such as domestic politics, civil society, and individual beliefs. Liberals focus on the interests and preferences of actors, and how preferences are aggregated and negotiated. Thus, governments represent the interests of at least some segment of the domestic polity, even if they are not democratic. Therefore, their behavior in the international system reflects to some degree the preferences and internal actors. Individual states may each pursue their own self-interest, but they do not necessarily conceive of that interest identically or behave identically.
A central agreement of liberal IR theory is that the nature of the domestic political and constitutional order matters for understanding state behavior. Liberal and democratic states, on this logic, are more likely to comply with international law and to conduct their relations, at least with other liberal democratic states, in a legally ordered fashion. This is in part due to the adherence to the rule of law present in the democratic order, and the constraining effect of a democratically empowered electorate and civil society. This is related to arguments that some liberals make regarding the democratic peace.¹
Much as the democratic peace theory argues that democracies fight each other less, for reasons both normative and structural, some liberal IR scholars suggest that liberal democracies are more likely to adhere to international obligations. This is again for reasons that are both normative and structural: countries that purport to adhere to the rule of law domestically may see similar virtues in supporting it internationally; similarly, domestic legal structures in democratic states may be better adapted to incorporate international obligations, or may even be shaped so as to require it. This of course ought not be overstated: the US, as the world’s most powerful democracy, has not only unsigned the ICC treaty, and publicly campaigned against it, but has failed to ratify international legal agreements such as the Kyoto Protocol or the United Nations Convention on the Rights of the Child. One commentator suggests that it is not necessarily strong democracies that sign on to human rights agreements, but rather newly democratizing countries, which use such agreements as a safeguard against returning to old authoritarian ways.
Liberal IR scholars in general are arguably much more sympathetic to the role played by international law in world politics than realists are. Their focus on the interests of actors and how those are aggregated by domestic institutions and constitutional structures resonates with a legal perspective on political order. In other words, both liberal IR theorists and international legal scholars share a focus on the roles played by institutions and rules in creating political order. An additional characteristic of liberalism that resonates with an international law perspective is the liberal belief in progress in international relations. Whereas realists tend to view international politics as an unchanging and ongoing power struggle amongst states, liberals generally are optimistic about the role that rules and institutions can play in creating international order, reducing conflict, and fostering greater levels of cooperation between states.