Strategic use of courts

Today, a quick side note that isn't particularly relevant to my research but which came up in reading (Gehring 2010, in Deadlocks in Multilateral Negotiations, which I've mentioned before) and which I thought was interesting: one way to get out of a deadlock is to litigate your way out of it. There are enough court or court-like forums out there that one strategy, if you are in deadlock with a negotiating partner or partners, is to strategically bring a case to one of these courts that deals with the issue at hand, and then use the result as a basis for building an agreement. I think this is particularly common in Europe (which has a particularly important history of codifying court case results into regional law), but it happens in other contexts too.

I think this is neat because it isn't obvious why it should work. Of course, it sets a precedent, and there may be a certain level of effect based on the idea that once an alternate, court-based mechanism for dispute resolution has been used, countries ought to expect it to be used again and therefore might as well codify the results. Still, it seems to me that at least part of the effect is basically psychological, and you can imagine a variety of ways that could be true. For instance, there's a lot of general evidence that negotiations tend to coalesce around arbitrary points of convergence once those arbitrary points are mutually known to everyone, so a court ruling could serve that purpose (some have argued this is basically what happened with the early history of the EU). Alternately, a court ruling could change people's estimations of the credibility of their opponents' positions: if I thought you were bluffing before, and I could get you to back down if I negotiated hard enough, a court ruling in your favor on a specific issue might suggest that you weren't bluffing (and even if you had been, that you might not be now).

Explanations for deadlock: beliefs about the issue area?

Martin Daunton writes:

The contrast between success at Bretton Woods in 1944 and relative failure in the trade negotiations between 1945 and 1948 has implications for the hypotheses explored in this book. Historically, trade was more prone to deadlock than exchange rates, for trade was often more highly politicised than international monetary issues which were usually seen  as technical matters best left to central bankers, and only understood by economic experts. Monetary issues rarely became a matter of partisan politics that determined elections or party identity. ("From Bretton Woods to Havana," in Deadlocks in Multilateral Negotiations, Amrita Narlikar, ed.; pg. 49)

On the one hand, I'm not an expert in this area. On the other hand, I find this explanation unsatisfying. Daunton is basically saying, well, we just think about monetary issues as a distant, "technical" issue, while we think about trade as immediate and open to political interaction. I'm not sure I believe this; and even if I did believe it, it would just push the question back a step. If we think of the two issue areas differently, why do we do that? So there are two possible trains of thought here.

1) If I do believe the offered explanation, what accounts for the different ways of thinking about the two issues? After all, in practice both have important effects on the national/global economy, so there's no a priori reason to think people should be personally interested in one but not the other; and I'm unconvinced that the one issue area is objectively all that much more complicated or "technical" than the other. One possibility is that it has to do with the mechanism for the effects caused by policy in each area. The effects of monetary policy are, I think, pervasive but non-specific and indirect from the perspective of specific industries. The effects of trade policy, on the other hand, while also pervasive are often very industry-specific and very direct. There's more payment to getting involved politically in trade policy, because you have a shot at very materially changing your own playing field if you succeed, and it's cheaper to do so because the issue area can be hived off into many separate fields. Getting policy-makers to pass a rule that only affects your industry has to be easier than swinging them on an issue of national-level policy.

2) If I don't believe the offered explanation, what might be a better explanation? Earlier in the chapter, Daunton refers to, regarding monetary policy, "...the emergence of a broad degree of consensus between technical experts; and the formulation of a plan by two countries - Britain and the United States - whose financial clout meant that it could largely secure its wishes within the broad consensus on policy." So basically... there was no deadlock because all the key players wanted roughly the same thing in monetary policy (not as clearly the case in trade policy). The fact that monetary policy was designed to prevent a recurrence of a catastrophe that everyone had already gotten a chance to experience, while trade policy negotiations were more an attempt to secure hoped-for gains even if it caused some short-term adjustment pains for domestic interests relative to existing policy, probably helped. To me, this seems a more intuitively satisfying explanation. I think the power of "everyone agreed on this" vs. "key players disagreed on this" to make the difference between success and failure in negotiation tends to be undervalued in negotiations literature!

News Roundup, 8.26.11

General News and Politics

U.S. emissions up 3.9 percent in 2010 (UPI, August 19)

That's the largest single-year rise since 1988, driven by economic rebound.

US cap-and-trade scheme set for key battle (Financial Times, August 21)

Opponents of the northeastern RGGI multi-state cap-and-trade a gearing up to try to push participant states out of it. Ironic since, as noted below, the scheme is actually running into problems because it's NOT coming anywhere close to constraining actual emissions. But it's seen as a test case by both sides. Meanwhile, Gov. Christie just vetoed a bill that would have kept New Jersey in the scheme.

China might stop UN CO2 credit supply in 2015, Barclays says (Bloomberg, August 25)

That is, they may withdraw from the Clean Development Mechanism, the UNFCCC/Kyoto Protocol mechanism that funnels money to developing countries in exchange for the right to claim "credits" toward emissions reductions targets. Not quite sure what to make of this, given that the CDM is basically a way to funnel money into developing countries. Barclays speculates that "China might be expecting to keep its emissions reductions for itself to meet its own greenhouse gas targets, rather than export them". Unclear whether that means there's a likelihood of China taking on international commitments in the future. China is also starting pilot emissions trading programs domestically, so this may have to do with isolating or supporting those?

Inhofe calls out Romney on climate (Washington Times, August 25)

Inhofe endorses Rick Perry instead.

Eight views on climate change: a guide to the Republican candidates (iWatch, August 26)
What it says on the tin. Highlights: Bachman thinks climate change is "manufactured" and wants to shut down the EPA; Perry has been a little less clear but appears to have a similar positions; Romney mostly admits climate change is real but is officially unsure how much of it is man-made and doesn't want to do anything about it.

Markets and Industry
Xcel CEO: climate change science is 'pretty solid' (RealAspen, August 22)
This is interesting because Xcel happens to have been shaped significantly by regulatory action. The article notes that Xcel is the number one utility in the nation for wind - but this is in no small part because it's a dominant utility in two states - Minnesota and Colorado - that have successful histories of instituting renewable portfolio standards. Xcel fought the regulations, but its interests have been shaped by them.

Business leaders call on state to protect market certainty, press ahead on AB32 (Sacramento Bee, August 23)
Green policy has become entrenched enough that it has a constituency within business in California.

Northeast climate change emissions market threatened (AOL Energy, August 23)
The limping economy combined with increased use of natural gas has carbon emissions down, which is actually bad for emissions-trading schemes; with current emissions well below caps, prices and trading are both depressed, and allowances are going begging even at the legal minimum price.

Are we entering cleantech's Dark Ages? (GreenBiz (blog), August 24)
Gives a run-down of the subsidy and investment-supporting programs that are likely to be cut as a result of the discretionary spending cuts in the recent budget deal.

Smart Grid has trouble attracting smart money (GLOBES, August 24)
Israel has put together a multi-country Smart Grid Consortium, but VC hasn't responded warmly yet; investment in smart grid in general is pretty cool at the moment.

VCs may be hot for cleantech, but markets stay lukewarm (The Globe and Mail, August 25)
The important point of this article is this: "From late 2006 to May of 2008, a U.S. cleantech EFT was up over 40 per cent while the NASDAQ was essentially flat. ... Since 2008, the EFT has declined slightly while the NASDAQ has been up over 15 per cent."

Science, Technology and Innovation
Climate change linked to wars? (IOLscitech, August 25)
People have sort of assumed this for a while, but a study published in Nature uses the natural warming/cooling oscillation of El Nino/La Nina to study the effects of El Nino's warming and drying on countries' stability. They find that El Nino years are twice as likely (6% rather than 3%) to have civil war break out in affected countries (countries not affected by El Nino tend to stay around a 2% chance).

U.S.' first large-scale geologic C.C.S. facility breaks ground (EcoSeed, August 25)
Carbon capture and storage project in Decatur, Illinois.

Public opinion surveys

From today's reading, regarding survey data:

"...although Republican voters approved of [the] Kyoto [Protocol] by 54 per cent in 2001 and by 83 per cent in 2003..."

Wow, really? 54 and 83%? That seems counter-intuitively high for Republican voters. How interesting!

"...they also agreed that the United States was right not to accept Kyoto by 64 per cent in 2001 and 49 per cent in 2002 (only 37 per cent thought the decision was wrong in 2002)."
(Vezirgiannidou, 2010. "Entering the Zone of Agreement: the United States in Climate Change Negotiations", in Narlikar (ed.), Deadlocks in Multilateral Negotiations: Causes and Solutions, p. 173)

Ah, never underestimate the power of survey data to make you think you know more than you do if you don't read the whole thing or think carefully about what different constructions respondents might put on the questions than you do. For instance, apparently there's a whole segment of the US population that approves of the Kyoto Protocol... for other countries. Which is in fact totally rational, if you think about it.

Playing with economic numbers

Today's big project was looking at data for energy inputs by industry versus GDP by industry. It took me a while to find appropriate data and start putting it together, and it's still frustrating, because it's almost, but not quite as detailed as I want. For instance, "Mining" breaks down to "oil and gas" and "Mining other than oil and gas", but what I really want is oil, gas, and coal. I haven't found a data source that lets me pull coal out of the "other" category.

Oh well. I did come up with the amount of a money spent on energy inputs per dollar of value created, by industry. The top three industries in terms of amount spent on energy inputs per dollar created are all transportation: water transportation, air transportation, and truck transportation. I guess that makes sense; energy is the main input for those industries. After that it's a grab bag: metals manufacturing, paper products, farms, "non-metallic mineral products" (basically cement is what drives that), wood products, "government enterprises" (??), food/beverage/tobacco, and a few others.

Gains from climate negotiations (and their problems)

One of the problems with climate negotiations is that there are potential benefits at stake, but none of them are the right kind at the right scale. Without benefits to negotiate over, you are not playing a positive-sum game; you're playing a zero-sum game (worse, it might even be a negative-sum game, depending on how you frame it). Psychologically, humans would often rather take stupid risks than incur a certain loss, so zero-sum or negative-sum negotiations are poison. To my mind, the potential benefits on the table with climate change subdivide into three categories, and none of them have the right configuration to drive significant compromise:

1) Large, certain, public goods. The gains of averting climate change are large and relatively certain: while we can't estimate their precise size very well, there is wide agreement that they are real, and many believe that they would be significant if they could be achieved. However, they are also public goods, meaning they cannot be divided up as private incentives, and they are vulnerable to free-riding. These won't drive compromise, at least not until the losses that are the alternative to a deal start to become tangible and large. That would probably be too late. The problem with this class of gains is the type of good: the fact that it's public.

2) Small, certain, private goods. Some gains that could result from a global deal are better-suited to negotiation in that they are private goods. These are gains such as access to carbon markets or the fruits of research, and receipt of negotiated side payments for actions - that is, things like sums paid to developing countries through the Clean Development Mechanism to help them defray the costs of low-carbon projects. These are also certain and predictable: countries can negotiate them with confidence because they are under the control of the parties involved. However, they are just too small in practice. The sums involved in these types of gains are overwhelmed by the likely costs of climate mitigation action, at least in the near future. Therefore, they won't drive compromise either. The problem with this class of gains is size.

3) Large, private, and uncertain goods. This category consists of the types of stuff people mean when they talk about "green growth". The emerging consensus is that the industrial and economic growth in green business could be large. And those gains would or could be private. But they are highly uncertain: no one really knows what the green economy will look like or precisely where the money and enduring jobs will be. These types of gains can't drive compromise because people don't know how much they should compromise for them or what types of compromises they should and shouldn't make. They don't know enough about the future of green business to negotiate over the rules for it. The problem with this class of gains is uncertainty.

Failure

Treaty failure has two definitions:
1) Parties to negotiation fail to sign any treaty.
2) Parties to negotiation sign a treaty in some manner that is suboptimal: for instance, a treaty is signed, but only after a negotiation process that costs more than the treaty gains; or, a treaty is signed, but its terms are such that the parties to negotiation collectively do not realized the desired gain from cooperation.

The first category, failure to sign, has two subcategories:
1a) A potential treaty existed, but participants to negotiation failed to find it for some reason.
1b) No potential treaty existed, at least at the time of negotiation, because parties' interests did not overlap.

I'm interested in case 1b. Perhaps unsurprisingly, it's actually rather hard to find literature about 1b - or at least, I'm finding it so thus far. I suppose that could be either good or bad, depending on your perspective.

Ways to avoid deadlock: soft law

Okay, the last few weeks have been a cornucopia of distractions from actual dissertation progress, but let's get back on the horse.

My interest right now is in deadlock - situations where treaties can't be reached because parties to the negotiations simply have differing interests or desires - because I think I'm working toward a dissertation that's about how to overcome deadlock.

One general category of strategies essentially involves watering down the agreement to avoid controversy. Armin Schafer (2006) discusses one example of this: soft law, which is to say, agreements that aren't binding, don't delegate any authority (other than authority to monitor), and don't entail sanctions if nations don't follow through. Schafer is specifically discussing multilateral surveillance, in which countries don't agree to binding policy, but do agree to let each other (or a supranational third party) monitor what they do in the relevant policy space. This monitoring leads to regular rounds of evaluation and recommendations (again, non-binding). It basically gives parties an opportunity exercise recurrent pressure and persuasion on each other in the pursuit of convergence or movement toward a desired common policy, without putting countries in a position of having to agree up front to anything they don't want to do.

This interested me in the context of climate change because it's a tactic that largely hasn't been tried (arguably, the Kyoto Protocol's structure, in which developing countries are encouraged to do all they can and set non-binding or aspirational internal goals, is a step in this direction, but to date it hasn't been matched with any mandated monitoring by external parties - though recently such monitoring has been a subject of negotiation, so perhaps this is coming). But I think it suffers from two problems.

First, I think to work, the parties involved need some level of general friendliness and common overarching goals (even if they disagree on best practices or specific objectives); and I believe they need to have a mutual sense of subscribing to the same general terms of debate and accepted policy space (for instance, countries in the EU do, I think, have a general sense of there being an accepted spectrum of reasonable policy options based on a very general agreed-upon view of how economics work - even if individual countries may fall further toward liberalization or socialism on the spectrum). I don't think either of these conditions hold between the developed and developing nations in the climate issue area.

Second, as Schafer himself notes, "international organisations do not introduce multilateral surveillance because of its proven effectiveness but rather when no substantial agreement is obtainable." (207) In other words, we don't necessarily know that this will work; so if, as I suggest, conditions aren't well-structured to make this strategy viable, it's not really clear that this type of agreement is better than no agreement at all (except insofar as it serves as a face-saver to the parties involved).