FAIRNESS CONSIDERATIONS IN WORLD POLITICS :
Lessons from International Trade Negotiations
ETHAN B. KAPSTEIN
INSEAD
BLVD. De CONSTANCE
77305 FONTAINEBLEAU CEDEX FRANCE
and
CENTER FOR GLOBAL DEVELOPMENT
WASHINGTON , DC
ethan.kapstein@insead.edu
March 2007
For publication in Political Science Quarterly
Ethan B. Kapstein is Paul Dubrule Professor of Sustainable Development at INSEAD,
Visiting Fellow at the Center for Global Development, and Research Associate at the French
Institute for International Relations. His most recent book is Economic Justice in an Unfair
World: Toward a Level Playing Field (Princeton University Press 2006). He wishes to thank
seminar participants at the Center for Global Development, Georgetown University, the
National University of Singapore, the National Technological University of Singapore,
Oxford, Princeton, Sciences Po, and the University of Washington, and Michael Barnett,
Christian Barry, Charles Beitz, Dan Esty, Benjamin Goldsmith, Bernard Manin, Thomas
Pogge, and the editors and anonymous reviewers of Political Science Quarterly, for their
comments on earlier drafts.
FAIRNESS CONSIDERATIONS IN WORLD POLITICS:
Lessons from International Trade Negotiations
ABSTRACT
In recent years social scientists have greatly expanded their assumptions concerning what
constitutes strategic behavior. Whereas homus economicus was conceptualized as a selfish,
short-term utility maximizer, both experimental evidence and empirical research demonstrate
that individuals often adopt “fairness considerations” in their strategic interactions. This
article considers the implications of this body of work for international relations theory and
applies it to a particular case, that of international trade negotiations. As I will demonstrate, an
understanding of the role that fairness considerations play in international negotiations is not
only empirically illuminating, but may enrich both rationalist and constructivist approaches to
the study of world politics.
FAIRNESS CONSIDERATIONS IN WORLD POLITICS:
The Case of International Trade
“The Brazilian delegation decided that the limited gains that were on the table in Cancun
were not worth it.” Brazilian Foreign Minister Celso Amorim, commenting on the failed
“Cancun Summit” of the World Trade Organization, October 2003.1
In recent years social scientists have greatly expanded their assumptions concerning
what constitutes strategic behavior. Whereas homus economicus is usually conceptualized as a
selfish, short-term utility maximizer, both experimental evidence and empirical research
demonstrate that “fairness considerations” may influence the decision-making of agents in a
variety of strategic interactions.2 Specifically, in game-theoretic experiments, “proposers”
often make more generous offers than theories that assume maximizing behavior would
predict, while “respondents” often reject offers that they consider “unfair,” even if these
would improve some objective function like income. The above citation from Brazilian
foreign minister Celso Amorim provides a neat expression of this research finding.
This article considers the implications of research in fairness economics for
international relations theory and applies it to a particular case, that of multilateral trade
negotiations. On first glance, world politics seemingly presents a “hard case” for the existence
of fairness considerations, or concerns on the part one negotiator with how others feel about
the distribution of the gains from social cooperation. After all, the international system is
usually conceived of as a competitive environment in which survival is always at stake.3 In
2
that realm, states must act selfishly in order to advance their overwhelming interests in
gaining power, wealth, and security.4
Within the sub-field of international political economy, trade negotiations would also
appear to present a hard case for fairness considerations. While public officials might make
frequent, discursive references to “justice and fairness” as considerations that guide their
negotiations5, political economists tend to dismiss such language and model trade policy as a
purely mercantilist affair, where the objective of governments is to increase net exports.6 In
support of these power-oriented approaches to trade policy, economic theory teaches that
great powers may seek to extract rents from the rest of the world by imposing optimal tariffs
on trading partners, while realist theory teaches that states in international negotiations seek to
maximize their relative gains.7 When one adds to this mix elected politicians who promote the
trade preferences of those special interest groups that support them with campaign finance,
then little room remains for the adoption of fairness considerations.8
Empirical studies of international economic negotiations have also tended to dismiss
any fundamental role for norms of fairness. In his account of several bilateral and multilateral
negotiations over trade and finance, for example, John Odell emphasized market forces,
domestic politics, bounded rationality, and the beliefs of the individual negotiators as the most
important variables shaping bargaining strategies.9 But could an appeal to fairness
considerations help explain some of the outcomes that he observed in international
negotiations, such as cases where the United States refrained from pressing its economic
advantage even when domestic politics and market forces would have recommended doing
so?
Despite the inauspicious terrain seemingly presented by world politics, the idea that
these considerations might influence strategic interactions among states has intrigued a
growing number of scholars in the fields of political science, economics and law in recent
3
years, as exemplified by a flurry of publications which reflect a wide range of theoretical
approaches. Cecilia Albin, for example, relies on constructivist theory and discursive
evidence to argue that norms of fairness have facilitated international negotiations across a
wide range of issue-areas, from acid rain to nuclear non-proliferation.10 Focusing on the
division of territories in the context of recent peace treaties, such as the Dayton Accord for
postwar Yugoslavia, Roland Stephen and William Boettcher make use of recent work on
cooperation theory in biology and psychology in order to explain the “surprising amount of
even-handed treatment of others in international politics...”11 For their part, economists Kyle
Bagwell and Robert Staiger develop formal models which demonstrate that the design of the
postwar international trade regime entailed a commitment by “the governments of powerful
countries…not to exploit their weaker trading partners.”12 And legal scholar Thomas Franck
has written a major treatise in which he builds the case that international law has entered a
“post-ontological era,” where it no longer has to defend its very existence, but instead is
increasingly evaluated by policy-makers, jurists and plaintiffs according to standards of
procedural and distributive justice.13 This body of work is pointing towards a potentially
significant theoretical finding: that states, operating in the context of an anarchic and
uncertain environment, sometimes adopt fairness considerations in their strategic interactions.
In this article, I examine the possible presence of fairness considerations in world
politics by offering some competing hypotheses and empirical evidence with respect to the
Uruguay Round of international trade negotiations, recognizing that a single case can only be
suggestive of broader theoretical possibilities at best.14 Among the questions that this analysis
raises are: Did the major trading blocs, the United States and European Union, act as
mercantilist theory would predict? Did they adopt maximizing strategies in their trade
negotiations, or did they seek “equitable” agreements, particularly with developing countries?
If the latter, how do we explain the behavior that we observe?
4
As we will see, great powers adopt fairness considerations—and in particular the norm
that trade agreements should work to the benefit of developing countries—in negotiating
international agreements because such norms are necessary to brokering deals and to
maintaining political support (not only internationally but, increasingly, domestic as well) for
the status quo institutions and regimes that support the global economy. To put this more
sharply, agreements that are perceived as being unfair are unlikely to prove durable. This
does not mean, however, that world politics is fair or just or even that it is moving in that
direction. The more modest claim that I make here is simply that fairness considerations play
a role in tempering the mercantilist or rent-seeking forces that drive state behavior in the
realm of trade policy.
The theory of fairness that is developed in these pages differs in important respects
from the notion of “enlightened self-interest” that is occasionally found in the international
relations literature. Enlightened self-interest generally refers to “far-sighted” decision-making
on the part of leaders that, despite the immediate pressures of, say, elections or politicalbusiness cycles, takes into account the long-term consequences of an action, or incorporates
the “shadow of the future.”15 The model that informs this article, in contrast, is based on
short-run or even “one-shot” strategic behavior in which agents nonetheless eschew selfish
maximization strategies. I will show that under certain conditions, such as situations in which
there is considerable uncertainty about how an agent will respond to an “offer” in a bargaining
situation, it may be advisable for agents to adopt other-regarding preferences, and to seek
outcomes that all agents view as being fair.16
This article is in four sections. Following this introduction, I discuss the relevant
research in modern economics and game theory which illuminates why agents might adopt
fairness considerations and discuss its relevance for international relations theory.17 I then
provide an analysis of the trade case, with specific reference to the Uruguay Round
5
negotiations that led to the creation of the World Trade Organization (the current “Doha
Development Round” of negotiations has not yet been completed). I conclude with some
reflections on my theoretical and empirical findings for policy-making, including with respect
to the Doha Round, and for political science research.
The Theory of Fairness: Implications for International Relations Theory
Do fairness considerations play any role in shaping strategic behavior? That question
has become a hot topic in social science, and is even beginning to infiltrate international
relations theory. To be sure, on the one side, contemporary realist theory seems to hold that
these considerations are of little account. Indeed, there is no mention of the fairness literature
at all in John Mearsheimer’s magisterial work, The Tragedy of Great Power Politics, nor does
he even discuss the classical realist accounts of moral reasoning in world politics.18
On the other side of the divide, the constructivist school of international relations,
along with related traditions like the “English School,” have made normative considerations
central to their theorizing.19 In this view, the international system is a social realm in which
states construct their own understandings of what constitutes appropriate behavior. Through
the work of “norm entrepreneurs,” for example, who capture the imagination of large groups
of citizens and eventually political leaders around the world, concerns with human rights,
poverty reduction, and other “global” objectives can climb to the top of international agendas
as inter-subjective understandings of appropriateness are forged. In this account, international
institutions may play especially important roles as incubators and transmission belts for global
norms.
One major point of difference between realists and constructivists concerns how each
defines a state’s “interest.” Realists, for example, tend to adopt as one of their cornerstones
6
the microeconomic assumption that agents “are exclusively motivated by their material selfinterest,” where materiality is usually defined in terms of power, wealth, or security. 20 It
follows from this definition that “The duty of governments...is to maximize the assets of their
States, without regard to the...interests of any more inclusive society (italics added).”21 While
the “self-interest” hypothesis has undoubtedly promoted the establishment of progressive
research programs in many disciplines, including international relations theory, its limitations
in explaining both individual agent behavior and collective action have attracted increasing
attention from natural and social scientists.22
Constructivists, in contrast, have a much more elastic notion of interest, one that is not
determined once and for all by the anarchic structure of the international system. Instead,
states create their own interests in interaction with their domestic polities and with each other.
A major weakness of the constructivist account of interest formation, however, is that it is ad
hoc and idiosyncratic in nature. Interests arise from myriad sources, and for myriad reasons.
To date, constructivists have failed to provide convincing micro-foundations for their theories
of how interests are formed.23
One promising approach toward bridging these differing views of “interest” within the
scholarly international relations community would begin with reconceptualizing our
assumptions of what constitutes strategic behavior. Experimental game theorists, for example,
have shown that in many interactions agents do not pursue a strategy of maximizing their own
short-term payoffs, as both microeconomics and much of international relations theory would
predict, but instead demonstrate an “other-regarding” concern for the payoffs that each player
receives.24 In short, agents reveal a preference for outcomes that they believe to be equitable
or fair.
In developing this broader account of rational behavior, researchers have made
particularly extensive use of the Ultimatum Game (UG), which has been tested with a variety
7
of social groups in a variety of countries. As we will see, the UG has opened up new ways of
thinking about rationality, with potentially profound implications for international relations
theory as well. Perhaps most importantly, it has led to the finding that the adoption of fairness
considerations may be crucial to the achievement of cooperative outcomes in many settings,
and that such outcomes can be achieved even in the absence of iterated negotiations.
Under the one-shot, two person UG, a Proposer (P) and a Respondent (R) have the
opportunity to divide a sum of money. P makes an offer to R, who can either accept it or
reject it. If R accepts the offer, P and R divide the money according to P’s proposal. If R
rejects the offer, however, both P and R must walk away from the table empty-handed, so that
neither of them wins any money at all (see Figure 1).
The classic, rational actor model of homus economicus would lead us to predict that P
would make R a lopsided distributive offer of, say, 99/1; that is, P would offer R 1 unit, while
keeping 99 units to herself. For the profit-maximizing agents in this one-shot game, 1>0 so
both P and R are made better off even by this “egoistic” division. Maximization strategies,
therefore, lead to very unequal divisions of the pie.
But experimental economists, repeating the UG in a variety of countries and under a
variety of conditions, have observed a puzzling result. As Nowak, Page, and Sigmund report,
“Obviously, rational responders should accept even the smallest positive offer, since the
alternative is getting nothing. Proposers, therefore, should be able to claim almost the entire
sum. In a large number of human studies, however, conducted with different incentives in
different countries, the majority of proposers offer 40 to 50 percent of the total sum; and about
half of all respondents reject offers below 30 percent.”25
Experimental economists Ernst Fehr and Simon Gachter describe R’s rejection of P’s
offer as an example of “negative reciprocity”; that is, an offer that is perceived by R to be
unfair is answered with rejection, with the Amorim quote provided at the beginning of this
8
article providing a case in point.26 Julio Rotemberg stresses the role of negative reciprocity in
exchange relationships even more strongly, but in a manner that is particularly relevant for
international relations theory. He finds that when people don’t receive what they consider to
be a fair distribution, they may be expected to respond “with strong disapproval, and even
anger” (italics added).27 If that is the case, it suggests that states may adopt fairness
considerations in their international negotiations for instrumental reasons, such as to avoid
angry or rebellious reprisals against “unfair” offers. Conversely, fair offers by P and their
subsequent acceptance by R provide an example of what Fehr and Gachter call “positive
reciprocity”; more on this below.
9
FIGURE 1
THE ULTIMATUM GAME
Proposer
Decider
Yes
Decider
No
FP* 99
0
FD** 1
0
D=Fp/ FD*** :
Low
Yes
No
50
0
50
0
Hi
*payoff to P
**payoff to D
***probability that D accepts P’s offer
Source: Adapted from Matthew Rabin, “Bargaining Structure, Fairness and Efficiency,”
manuscript, Department of Economics, University of California, Berkeley, 24 February 1997.
10
Researchers have drawn at least three significant findings from the Ultimatum Game
which are relevant to the present study.28
First, P’s may adopt fairness consideration in their own self-interest. Proposers who
don’t care about what others think—who are rational egoists—must nonetheless fear rejection
of an “unfair” offer by R and the absence of any payoff whatsoever. The adoption of fairness
considerations can therefore be (though is not necessarily) efficiency enhancing, to the extent
that it leads to an agreement and thus an increase in welfare for both of the agents.
Second, the Proposer’s concern with achieving an equitable or fair result arises in part
from uncertainty about how R will respond to its offer. If P knows that R will willing accept a
greedy offer, P will be much more inclined to propose a lopsided division. Not knowing R’s
response ex ante, however, P is driven toward a focal point, like a 50/50 split, consistent with
the outcomes of many bargaining games. In this sense, the presence of uncertainty also
provides possible support for Bagwell and Staiger’s model of the GATT, cited earlier, in
which the great economic powers voluntarily act like small ones in the interest of a
multilateral agreement (we also note that this resonates with a Rawlsian “veil of ignorance”).
Third, the UG suggests the possibility of cooperation or positive reciprocity even in
the context of a one-shot game; it relies neither on iteration on the one hand nor an
asymmetric distribution of power on the other. To be sure, iteration and/or hegemony may be
helpful to “cooperation,” but they are not necessary conditions. Needless to say, this finding
could be of substantial import to students of international regimes, who have relied on both
these auxiliary assumptions in theorizing the emergence of cooperative arrangements; again,
we will have more to say on this below.
Among other things, these findings from the UG suggest the possibility that
international relations theorists ought to consider examining a broader class of games beyond
those framed by the Prisoner’s Dilemma and its offshoots. To be sure, the UG represents an
11
imperfect model of world politics, as do most other game-theoretic models. Political agents
are rarely in one-shot settings and actors usually have outside options which alter the nature of
the bargaining game. Still, as a metaphor for international bargaining if nothing more, the UG
should not be dismissed too quickly, as it provides an interesting counterpart to the games
normally used by international relations theorists, including Prisoner’s Dilemma and Battle of
the Sexes.
In short, the argument that emerges out of behavioral game theory is that the adoption
of other-regarding preferences may be crucial to the establishment of cooperative
arrangements—arrangements that are deemed by all parties to be of mutual advantage. These
considerations help to broker successful negotiations and promote the stability of the
agreements that have been reached. As Elinor Ostrom has written, based on her vast
experience of studying institutions around the world, “fairness is a crucial attribute…of robust
systems.”29
On the other hand, the failure to appeal to such considerations may undermine any
chances for the establishment of peaceful or stable arrangements, as aggrieved parties respond
with anger to those who have acted “unfairly.”30 Henry Kissinger put this sentiment well
when he wrote that international agreements that are viewed as being fair inhibit “the desire to
overthrow the world order.”31 As usual, E.H.. Carr said it best when he wrote, “Those who
hope to profit most by (a political) order can in the long run only hope to maintain it by
making sufficient concessions...to those who profit by it least…”32 In other words, there is
power in fairness.33
But is that really so when it comes to the competitive world of multilateral
negotiations? After all, every political scientist is sensitive to “cheap talk.” In the next section
we examine the role of fairness considerations in practice, taking the “hard case” of
international trade.
12
Fairness Considerations and International Trade
Research on fairness can help to illuminate what might be called the “ethical
transformation” that seems to be shaping the global economy. Whereas scholars and policymakers once emphasized the efficiency aspects of international exchange, increasing attention
is now being paid to issues of distributive justice, and particularly to the fate of those who are
most vulnerable to rapid economic change.34 We are witnessing widespread accusations over
the alleged “unfairness” of the global economy, especially in terms of its influence on
developing countries and the poor within them. It is not just agents with a direct, material
stake in the debate who are making these claims, but any number of academic observers as
well. The Nobel Prize-winning economist Joseph Stiglitz, for example, has stated, “Of course,
no one expected that the world market economy would be fair…”(italics added).35
But if international market structures are rigged against developing countries, their
chances for long-run growth must be poor. While the foreign aid of the world’s leading
industrial countries in 2005, for example, was on the order of 107 billion dollars, the value of
trade to developing countries that same year, in contrast was approximately 3 trillion dollars.36
It is for this reason that economists generally consider trade to be an “engine of growth.”
Unfortunately, in an international trade regime composed of great powers and small
states, the presence of unfairness should come as no surprise. After all, great powers have the
capacity to impose optimal tariffs on the rest of the world so as to shift the terms of trade to
their advantage. Any number of economic models demonstrate that, under these asymmetric
conditions, small states would actually transfer income to great powers via their trade
arrangements.37
13
If great powers can extract rents from the international system, do they act as rational
maximizers and actually do so? Or have they restrained their behavior in a way that shapes
material outcomes? We will now examine those questions in the context of the Uruguay
Round (UR) of trade negotiations, which took place during the 1990s and led to the
establishment of the World Trade Organization (WTO).
For her part, Albin found, on the basis of her interviews with trade negotiators, that
“fairness and justice issues” were deeply embedded in the UR trade talks. She asserts these
issues “concerned the structure of the talks…the process and procedures…and the
outcome…”38 Similarly, in their interviews with trade officials, a trio of World Bank
economists found that “a sense of fairness, of appropriate contribution, was an important
concept” during the trade round, which helped bring it to a successful conclusion.39
Examining the earlier “Tokyo Round” trade talks of the 1970s, Kenneth Chan had already
detected similar sentiments among trade ministers, stating that “egalitarian considerations”
were “important” to the international negotiations. Indeed, Chan states that these
considerations were so significant that they led the ministers to adopt a tariff-cutting
formula—the so-called “Swiss formula”—that reflected the interests of the smaller parties to
the talks, and not those of the great powers, the United States and European Union, who in
fact had advanced different liberalization schemes.40 Again, Chan argues that the U.S. and
E.U. restrained themselves in the interest of winning an international agreement, particularly
one that took into account the interests of smaller states.
In this section I examine the claim that fairness and equity considerations—meaning in
this particular context the advancement of an agreement that was particularly beneficial to
developing countries—mattered to trade negotiators by focusing on the alternative outcomes
the Uruguay Round might have reached; the exercise is thus a counterfactual one. Since
“ought implies can,” if fairness considerations actually influenced these international
14
negotiations we should be able to discern the material effect it had on outcomes, beyond
shaping the “atmospherics.”41 Drawing on the work of J. Michael Finger and his colleagues at
the World Bank, I analyze the Round from a mercantilist or power-oriented perspective—the
traditional political economy approach to trade policy—and from a fairness perspective.42 To
put this in terms of hypotheses about the negotiations:
H1: The mercantilist interests of the great trading powers, the United States and the
European Union, shaped the Uruguay Round. Therefore, the United States and European
Union adopted trade policies that enabled them to extract more concessions from the world
than they gave.
H2: The Uruguay Round was influenced by fairness considerations. Therefore, in the
interest of promoting a multilateral trade agreement that worked to the advantage of the
weakest states, the United States and European Union restrained their mercantilist impulses
and negotiated an agreement from which developing countries gained relatively significant
market access, compared both to the status quo and compared to what the US and EU
received.
The first hypothesis H1 reflects the classic political economy or mercantilist theory of
trade liberalization. As Paul Krugman has neatly put it: “To make sense of the trade
negotiations, one needs to remember three simple rules about the objectives of negotiating
countries:
1. Exports are good.
2. Imports are bad.
3. Other things equal, an equal increase in imports and exports is good.”43
15
This motivation means that governments will seek to extract the most “concessions” in
terms of market access (measured in dollar terms) abroad in return for the fewest concessions
at home; it is in this sense that trade policy is mercantilistic, or driven by the logic of relative
gains. When governments of more or less equal economic power negotiate over trade
liberalization, however, they will find equilibrium in something like strict reciprocity or
equivalent market access. Only by offering up equal “concessions”—by adopting a trade
liberalization strategy based on strict reciprocity—is market opening politically feasible in
this case.44
It must be emphasized that the very term “concessions” that is commonly used by
trade negotiators when they grant market access to a partner points directly to the mercantilist
nature of the trade regime, since we know from economic theory that even a unilateral
opening to trade is good in welfare terms for the importing country, as it makes that country
more efficient. Thus, the term “concessions” is perverse from an economic perspective and
instead reflects the hard political realities that openness will only occur as a “concession” to
another state, usually in return for “concessions” of equal value.
As the mercantilist or wealth-maximizing hypothesis suggests, trade negotiators from
the United States and European Union would seek to extract the most concessions possible
from smaller and weaker states. That is a feasible bargaining strategy because of the economic
importance that market access to the U.S. and E.U. means for exporters from developing
countries. Market power places the U.S. and E.U. in a strong position to demand extensive
market liberalization from small states in return for limited market opening, perhaps only for
products that simply are not grown in these regions, like tropical agriculture. We would thus
expect developing countries to offer significantly greater concessions to the U.S. and E.U.
then they receive in return from them.
16
The second hypothesis H2 yields a very different set of predictions. In this case, trade
negotiators from the great powers are modelled as actors who seek to make what will widely
be viewed as a “fair deal” in comparison with two “reference points”: the status quo, and the
gains made by the US and EU. In short, under H2, developing countries would enjoy nonreciprocal market access. These fairness considerations would require negotiators to moderate
their mercantilist impulses, and take into account the interests of others.
In order to test these hypotheses empirically, Table 1, drawn from Finger et.al.,
provides the monetary value of the “concessions” received and concessions given by the
European Union and the United States during the Uruguay Round, and by a group of
developing countries for which data is available. As can be seen, both the U.S. and E.U. gave
up more concessions than they received from the rest of the world; and no developing country
was required to give up more concessions than those received. This seems puzzling from the
political economy perspective, as the evidence suggests that purely mercantilist considerations
cannot explain the outcome of the Uruguay Round of trade negotiations.45
The outcomes are also puzzling from the perspective of realist theories with their focus
on relative gains. The “gross” concessions gained by Brazil, for example, were twice those
gained by the United States in terms of each nation’s Trade/GDP ratios. Thus, from both
reference points of the status quo and of relative gains, Brazil seemingly came out ahead. To
be sure, winning relative gains from trade might matter a lot more to Brazil than to the United
States, but again the acceptance of a lopsided division could also be suggestive of what
constitutes an appropriate outcome from a multilateral trade agreement.46
Further, beyond the granting of market access concessions that can be quantified, the
Uruguay Round included several provisions of particular importance to developing countries
whose value is more difficult to calculate, including stronger dispute settlement procedures
that make it easier to bring grievances to an arbitration panel. In support of this system the
17
industrial countries are even providing grants to developing countries for the legal advice they
need in making such claims.47 The Uruguay Round also led to the creation of the World Trade
Organization, which includes many more developing country members than did its
predecessor, the GATT, and indeed at least one developing country representatives has
already headed the new organization.
This study of the Uruguay Round must pose a puzzle to international relations
theorists who view it as inconceivable that great powers, like the United States, might restrain
their own capacity to gather monopoly rents in the global economy. For example, Andrew
Hurrell writes that “The degree of US power is so great that it does not need to make
concessions or to self-bind in order to prevent even major developing countries from shifting
to more oppositional policies.”48 But this overlooks the possibility that negotiators from the
great powers might actively wish to promote the development of poorer nations, to the extent
that domestic political-economic considerations grant them agency to do so.
Again, these findings should not be interpreted to mean that the international trading
regime works to the advantage of the world’s poorest nations. Industrial world protection of
its agriculture, for example, is viewed by developing countries as a profound barrier to their
growth, along with such policies as tariff escalation; more on this in the conclusion, where I
take up the collapse (as of this writing) of the “Doha Round” of trade talks. The more modest
point is simply that fairness considerations may have influenced the trade negotiations by
restraining the mercantilist or rent-seeking appetites of the United States and European Union.
18
TABLE 1
Concessions Given and Received During the Uruguay Round ($MM)*
Country/Region
Concessions Received
Concessions Given
European Union
578816
627939
United States
214791
283580
Argentina
6331
0
Brazil
38037
98
Chile
3291
0
Colombia
6323
81
Indonesia
16222
3355
Malaysia
36108
28966
Mexico
960
3
Peru
1586
58
Philippines
19748
12847
Sri Lanka
1595
33
Uruguay
772
6
Venezuela
2051
806
*Concessions Received and Given are calculated as the anticipated value of the tariff cuts in millions of dollars.
Source: Finger, Reincke, Castro 1999
19
Conclusions
Several years ago, Donald Puchala and Raymond Hopkins asserted that “The degree of
bias may make a considerable difference in a regime’s durability…’Fairer’ regimes are likely
to last longer…”49 Elinor Ostrom has concluded much the same thing in her analysis of a
wide variety of institutions around the world.50 The analysis of fairness considerations
provided in this article lends some qualified support to these findings. At least in the case of
international trade, fairness considerations do appear to have played a role, however modest,
in shaping outcomes in ways that a mercantilist would find perplexing. In negotiating the
Uruguay Round, the great powers restrained their rent-seeking capacity and reached an
agreement that gave developing countries more concessions than they received from them, in
addition to strengthening dispute settlement procedures and creating a new trade organization,
the WTO.
The sources of fairness considerations in world politics, to the extent they are present,
certainly require further research beyond the preliminary and cursory sketch offered in this
article. For example, if such considerations are a “rational” response to the uncertainties
associated with world politics, why haven’t states appealed to them more frequently? Clearly,
international history does not provide a rich field for the study of fairness in action, but
neither does it provide a blank slate. Foreign aid and particularly international humanitarian
relief are among cases where states appear to act with concerns that are not merely reflections
of some short-term, maximizing calculus. The fundamental “third question” that we have not
addressed adequately in this article is, “when does fairness matter”? That issue needs to be
taken up in future research.51
To date, the tentative answers that scholars have provided with respect to the evolution
of fairness considerations are not altogether satisfactory in the context of international
20
relations theory. Biological models of moral reasoning, for example, hold that human
beings—among other animal species—are “hard wired” to cooperate.52 It is certainly apparent
that social cooperation among humans is widespread. But it is also fitful, and biologists have
not yet explained the variance in cooperation that we observe across time, place and species
(even chimps and bonobos, for example, exhibit great differences in cooperative behavior);
this remains a key research challenge.
Scholars have also tried to explain fairness and its limits as a function of the
distribution of power. Many years ago, for example, Waltz expressed skepticism about the
need of the superpowers during the Cold War to make nice to their friends and allies, while
Robert Goodin has argued that today’s unipolar power, the United States, has no reason to do
so. Indeed, the Bush Administration’s apparent eschewing of international cooperation across
a wide range of issue-areas, including climate change, trade, and Iraqi disarmament,
seemingly provides corroborative evidence of a highly “amoral” state.53 At the same time,
such behavioral evidence is selective, since international cooperation still remains broad and
deep across many fields of endeavor. This suggests the possible limitations of a purely
structural approach, and points to the need for further exploration of how and why moral
reasoning is employed by agents in different bargaining situations.54
A third approach to the study of fairness considerations is fundamentally constructivist
and emphasizes the social context within which different approaches to problem-solving arise
and are diffused. Thus, to say that agent A adopts “fairness considerations” presupposes that
agent B can identify them as such and respond appropriately, a problem that is likely to be
especially complicated in the international setting; indeed, Schelling made this point in the
context of bargaining theory several decades ago.55 More research with respect to how norms
of fairness evolve in the international community would be of tremendous value and, as the
21
reference to Schelling indicates, could be fully compatible with game-theoretic approaches to
international cooperation and conflict.
A fourth approach to the study of fairness would be drawn from political economy,
and in some respects could help to bridge constructivist and rational actor approaches toward
interest formation, helping us to understand outcomes that remain puzzling, like those with
respect to the trade regime we have analyzed earlier. To date, political economy models of
electoral politics have focused heavily on special interest groups, but have generally limited
the analysis to sectoral special interests and their role, say, in setting tariff policies. In these
models, it seems inconceivable that a great power would give more trade “concessions” than
they would receive.
But part of the answer could lie with other types of special interest groups, such as
those representing developing world interests. Unfortunately, far fewer studies have been
done of these non-governmental organizations, like Oxfam, Amnesty International, or the
Roman Catholic Church, that nowadays can also play a significant role in at least certain
political constituencies, particularly in Western Europe, though perhaps of rising importance
in the United States as well (particularly religious-affiliated groups). Thus, a British
parliamentarian may be as influenced by a human rights group as by a local industry suffering
from foreign competition. A rich research agenda awaits those who marry political economy
with more “normative” approaches to world politics, and could provide the key to some of the
puzzles we have uncovered.
The study of fairness considerations need not be limited, of course, to international
cooperation theory and the world economy. Writing of the war between Azerbaijan and
Armenia over Nagorny Karabakh, for example, Neal Ascherson has written that the conflict
was “driven on both sides by fanatical national egoism, which gave no place whatever to the
thought that the other side might also have legitimate identity or rights.” (italics added)56
22
The conflict between Israel and Palestine can probably be described in similar terms. Again,
how and when other-regarding behavior arises is an issue of potentially great importance to
students of cooperation and conflict alike.
From a policy perspective, research on fairness provides architects of international
institutions with a useful warning: that arrangements that are perceived to be unfair will invite
backlash and rejection. As Mohamed ElBaradei has written of the nuclear non-proliferation
treaty, “The very existence of nuclear weapons gives rise to the pursuit of them….as long as
some countries possess them and others do not, this asymmetry breeds chronic global
insecurity…controlling access to nuclear-weapons technology has grown increasingly
difficult.”57 Knowing this is to realize the importance of alternative strategies for dealing with
such power asymmetries.
Similarly, many developing countries continue to view the international trade regime,
which has traditionally focused on reciprocal tariff reductions between the United States and
the European Union, as one that remains tilted against their interests. During the ongoing
Doha Development Round of trade talks, for example, industrial and developing countries
have remained deadlocked over the issues of market access and subsidies with respect to
agriculture. As Brazilian foreign minister Celso Amorim said upon walking away from the
trade talks in 2003—as if he had just played the Ultimatum Game with an extremely greedy
Proposer—“The Brazilian delegation decided that the limited gains that were on the table in
Cancun were not worth it.”58 For Amorim, no deal, even one that brought some material
benefits to Brazil in the form of greater market access abroad, was better than one that failed
to address the problem of industrial world protection of its farming sector.59
In an important sense, Amorim’s comment reflects different “reference points”
regarding fairness between developing countries and the industrial world. From the
developing world perspective, fairness in trade means much greater access to industrial world
23
markets, particularly in agriculture. From the industrial world perspective, it simply means
restraining their mercantilist impulses. This suggests that a crucial task for any negotiation is
to find the “focal point” given the differing visions of fairness, the differing reference points,
that parties bring to the table.
To conclude, I have argued in this piece that fairness considerations may be critical to
the creation and maintenance of social cooperation.60 Great powers adopt these considerations
in negotiating international agreements because it helps to broker deals and to maintain the
status quo institutions and regimes that have been built. As a consequence, they sometimes
eschew narrow, self-interested maximization strategies, and make offers that appear
surprisingly generous from the mercantilist and realist standpoints, if not always from the
perspectives of the beneficiaries themselves.
If this broad characterization is true, it implies that we should consider expanding our
research agenda in international relations to incorporate the findings of behavioral game
theory, among other fields that are seeking to understand social cooperation, such as
evolutionary biology. In the process, we will necessarily challenge our traditional assumptions
of what constitutes an actor’s interest, and our ideas concerning how preferences and
strategies are formulated. A research program on fairness in world politics could contribute
both to theoretical understanding of international cooperation, and ultimately to public policy
as well.
24
Notes
1
Celso Amorim, cited in Newsweek International, 13 October 2003.
Ernst Fehr and Klaus Schmidt, “Theories of Fairness and Reciprocity: Evidence and Economic Applications,”
University of Zurich, Institute for Empirical Research in Economics, Working Paper 75 (February 2001).
3
For an alternative analysis of realism and morality that focuses on leaders’ preferences, see Scott D. Sagan;
“Realist Perspectives on Ethical Norms and Weapons of Mass Destruction,” in Sohail Hashmi and Steven Lee,
eds., Ethics and Weapons of Mass Destruction (New York: Cambridge University Press, 2004).
4
John Mearsheimer, The Tragedy of Great Power Politics (New York: W.W. Norton, 2002).
5
Cecilia Albin, Justice and Fairness in International Negotiation (New York: Cambridge University Press,
2001).
6
Gene Grossman and Elhanan Helpman, Special Interest Politics (Cambridge, Ma.: MIT Press, 2001).
7
Joseph Grieco, Cooperation among Nations: Europe, America, and Non-Tariff Barriers to Trade (Ithaca, NY:
Cornell University Press, 1990).
8
Grossman and Helpman, Special Interest Politics.
9
John Odell, Negotiating the World Economy (Ithaca, NY: Cornell University Press, 2000).
10
Cecilia Albin, Justice and Fairness in International Negotiation (New York: Cambridge University Press,
2001).
11
Roland Stephen and William Boettcher, “Fair Treatment in International Politics: The Psychological
Microfoundations of Fair Play,” paper presented to the Department of Political Science, University of North
Carolina at Chapel Hill, November 20, 2002, 1.
12
Kyle Bagwell and Robert Staiger, “GATT-Think,” NBER Working Paper 8005 (November 2000), 7.
13
Thomas Franck, Fairness in International Law and Institutions (New York: Oxford University Press, 1995), 6.
14
The Uruguay Round was selected rather than the Doha Round talks simply because they have been completed
and thus can be assessed while the Doha talks are still ongoing, at least as of this writing. This case has also been
analyzed in Cecilia Albin, Justice and Fairness in International Negotiations (Cambridge: Cambridge University
Press, 2001) from a fairness perspective, but my analysis differs significantly from the one she presents.
Specifically, I try to assess whether fairness matters by framing testable hypotheses.
15
See Robert Keohane, After Hegemony: Cooperation and Discord in the World Political Economy (Princeton:
Princeton University Press, 1984), for a discussion of policies in which leaders allegedly adopted policies based
on “enlightened self-interest.”
16
I thank an anonymous reviewer for stressing the difference between moral reasoning and enlightened selfinterest.
17
The relevant literature is huge and I can only make reference to a small part of it, with some important
contributions necessarily overlooked. I thank an outside reviewer for highlighting the need to make this point.
18
John Mearsheimer, The Tragedy of Great Power Politics (New York: W.W. Norton, 2002).
19
For a useful review see Jeffrey T. Checkel, “The Constructivist Turn in International Relations Theory,”
World Politics 50 (January 1998): 324-348.
20
Ernst Fehr and Klaus Schmidt, “Theories of Fairness and Reciprocity: Evidence and Economic Applications,”
University of Zurich, Institute for Empirical Research in Economics, Working Paper 75 (February 2001).
21
Percy Corbett, Morals, Law and Power in International Relations (Los Angeles, Ca.: The John Randolph
Haynes and Dora Haynes Foundation, 1956), 4.
22
Eleanor Ostrom, “A Behavioral Approach to the Rational Choice Theory of Collective Action,” American
Political Science Review 92, 1 (March 1998): 1-22.
23
See Checkel, “The Constructivist Turn,” for an elaboration of these points.
24
See Norman Frohlich, Joe Oppenheimer, and Anja Kurki, “Beyond a Theory of Self-Interest: Modeling OtherRegarding Preferences,” manuscript, University of Maryland, 31 March 2003.
25
Martin A. Nowak, Karen M. Page, and Karl Sigmund, “Fairness Versus Reason in the Ultimatum Game,”
Science 289 (8 September 2000): 1773-1775, at 1773.
26
Ernst Fehr and Simon Gachter, “Fairness and Retaliation: The Economics of Reciporcity,” Journal of
Economic Perspectives 14, 3 (Summer 2000): 159-181.
27
Julio J. Rotemberg, “Minimally Acceptable Altruism and the Ultimatum Game,” unpublished manuscript,
Harvard Business School, 16 July 2004, p. 4.
28
Gary Bolton, et.al., n.d., “Testing Theories of Other-Regarding Behavior: A Sequence of Four Laboratory
Studies,” unpublished manuscript.
29
Elinor Ostrom, Understanding Institutional Diversity (Princeton: Princeton University Press, 2006), 263.
30
See, for example, the arguments in Sagan, “Realist Perspectives on Ethical Norms.”
2
25
Cited in Joel Rosenthal, “What the Sages Say,” lecture delivered at the Fletcher School of Law and
Diplomacy, Tufts University, during academic year 2000-2001, downloaded at
www.cceia.org/printerfriendlymedia.php
32
E.H. Carr, The Twenty Years Crisis (New York: Harper and Row, 1962 (orig. 1939), 169.
33
I thank Michael Barnett for emphasizing this point.
34
Ethan B. Kapstein, Economic Justice in an Unfair World (Princeton: Princeton University Press, 2006).
35
Joseph Stiglitz, “A Fair Deal for the World,” New York Review of Books 49, May 23, 2002, 9.
36
For data on aid see www.usoecd.org; for data on trade see www.wto.org
37
Jee-Hyeong Park, “International Trade Agreements Between Countries of Asymmetric Size,” Journal of
International Economics 50 (2000): 473-495.
38
Albin, Justice and Fairness, pp. 108-109.
39
Cited in J. Michael Finger, Ulrich Reincke and Adriana Castro, “Market Access Bargaining in the Uruguay
Round,” World Bank Policy Research Working Paper 2258 (December 1999), 7.
40
Kenneth S. Chan, “The International Negotiation Game: Some Evidence From the Tokyo Round,” Review of
Economics and Statistics 67, 3 (August 1985): 456-464.
41
I thank Jack Snyder for highlighting this point.
42
See J. Michael Finger, Ulrich Reincke and Adriana Castro, “Market Access Bargaining in the Uruguay
Round,” World Bank Policy Research Working Paper 2258 (December 1999). To be sure, other hypotheses
could be framed, such as an efficiency hypothesis, or the claim that the Uruguay Round was designed to
maximize world trade.
43
Cited in Bagwell and Staiger, “GATT-Think,” p. 9.
44
See Bagwell and Staiger, “GATT-Think.”
45
For a similar line of argument, see John Conybeare, “Public Goods, Prisoner’s Dilemmas and the International
Political Economy,” International Studies Quarterly 28 (1) 1984: 5-22; I thank an anonymous reviewer for
bringing this article to my attention.
46
Joseph Grieco, Cooperation among Nations (Ithaca, NY: Cornell University Press, 1990).
47
See Ethan B. Kapstein, Economic Justice in an Unfair World: Toward a Level Playing Field (Princeton:
Princeton University Press, 2006).
48
Andrew Hurrell, “Power, Institutions and the Production of Inequality,” in Michael Barnett and Raymond
Duvall, eds., Power in Global Governance (New York: Cambridge University Press, 2005).
49
Donald Puchala and Raymond Hopkins, “International Regimes: Lessons from Inductive Analysis,”
International Organization 36, 2 (Spring 1982): 61-91.
50
Elinor Ostrom, Understanding Institutional Diversity (Princeton: Princeton University Press, 2006).
51
A useful start has been made by Robert Goodin, “How Amoral is Hegemon?” Perspectives on Politics 1
(March 2003): 123-126. But Goodin emphasizes structural features of international power and overlooks the
possibility of variance across issue areas.
52
Edward O. Wilson, “The Biological Basis of Morality,” The Atlantic (April 1998), downloaded at
www.theatlantic/com/issues/98apr/biomoral.htm.
53
Goodin, “How Amoral is Hegemon?”
54
For the importance of bargaining context, see Robert Powell, “Bargaining Theory and International Conflict,”
Annual Review of Political Science 5 (2002): 1-30.
55
Thomas Schelling, The Strategy of Conflict (Cambridge, Ma. Harvard University Press, 1960).
56
Neal Ascherson, “In the Black Garden,” New York Review of Books, November 20, 2003, 37-40, at 38.
57
Mohamed ElBaradei, “Towards a Safer World,” The Economist, October 18, 2003, pp. 43-44, at 43.
58
Celso Amorim, cited in Newsweek International, 13 October 2003.
59
The main issue which caused the breakdown of the Cancun talks concerned whether developing countries
were willing to negotiate on the “Singapore disciplines” with respect to investment and competition policy, in
return for limited agricultural market liberalization by the United States and European Union.
60
Ostrom, Understanding Institutional Diversity.
31