Two-Level-Games in Seattle and Doha: Domestic Influences on WTO Negotiations

Contents

1 Introduction: The WTO - A Growing Organisation in Paralysis

2 Robert Putnam's Two Level-Game Approach
2.1 The Two Levels
2.2 Ratification
2.3 Win-Sets
2.4 Issue Linkage

3 Explaining Trade Policy: An Overview of Theoretical Approaches

4 The Seattle Conference and the Doha Round as Two-Level-Games
4.1 A Brief Overview of Events
4.2 Key Players' Positions in the Seattle Ministerial Conference
4.3 The Cost of No-Agreement and Time Pressure
4.4 Issue Linkages
4.4.1 Theoretical Approaches to Link Issues
4.4.2 Issue Linkages in the UruguayRound.
4.4.3 Issue Linkages in the Doha Round

5 Outlook: Possible Ways out of the Doha Deadlock

6 Appendix

6.1 References

1 Introduction: The WTO - A Growing Organisation in Paralysis

“The WTO - An Endless Construction Site”^[1] is the title of a recent NZZ article, in which the Doha Round is referred to as in a comatose state. Frustration and helplessness are reported to be the feeling among trade negotiators as the Doha Round approaches its 11th anniversary without successful completion. (Bauer, 2012) At the same time, with Russia “the last major world power” has joined the organisation - after even 18 years of negotiations. (Deutsche Welle, 2012) The question arises, where the reasons for the paralysis of the Doha Round lie and how the organisation - with now a greater extent than ever - can overcome these block­ades. It may appear puzzling to students of international relations, why states still favour pro­tectionism in spite of the basic economic fact that all would profit from free trade.

This paper is to analyse how Robert Putnam's prominent two-level-game approach can be applied to the Doha Round and its preceding Seattle ministerial conference and how it can provide answers to the aforementioned questions. After a summary of Putnam's approach and setting it into the context of modern political theories, the analysis will focus on only few ex­amples, due to the limited scope of the paper. Then, special attention shall be given to the as­sessment of how Putnam's concept of synergistic issue linkage has been and continues to be exercised in the negotiations.

2 Robert Putnam's Two Level-Game Approach

Robert Putnam's article “Diplomacy and Domestic Politics: The Logic of Two-Level-Games” from 1988 provides a theoretic model to explain international negotiations, especially between liberal democracies. It focuses on the effects intra-national interest groups have on foreign policy and vice-versa. Putnam's central message is that these two “levels” are pro­foundly interlinked and influence one another. He calls his approach a metaphor instead of a cohesive theory. (Putnam, 1988: 435) It is rooted in political liberalism, because, as opposed to realist theory, society interests play an important role for state policy and are subject to change. (Putnam, 1988: , Schimmelfennig, 2010, cf. chapter 3.)

2.1 The Two Levels

Key to Putnam's approach is the consideration that negotiators not only have to take care of their counterparts in the international arena, but also have to keep their national constituents in mind. Therefore, the negotiator finds himself operating simultaneously at two levels: At the national one, Putnam calls it Level II, intra-state groups seek to influence their govern­ment in their own interest. At the international Level I, governments try to satisfy the internal pressure by these interest groups, knowing that each agreement found at Level I must be rati­fied by Level II. The negotiator's actions must be somewhat coherent on both levels, although it may not be possible to both satisfy the national level and keep negotiations going at the in­ternational level. (Putnam, 1988: 434, Schimmelfennig, 2008: 154f.)

2.2 Ratification

Ratification of a tentative agreement at Level II can happen formally or informally. Formal ratification could be a parliamentary vote required by the constitution. Informal ratification may be any consequences a government has to expect at home, be it pressure by economic lobbies or a change in public opinion. (Putnam, 1988: 435ff.)

2.3 Win-Sets

The domestic level may - formally or informally - only ratify certain agreements. The amount of all agreements that would possibly find the acceptance of Level II Putnam calls win-sets. Only those agreements from Level I that are within the country's win-set can be ap­plied. This means, successful implementation of an agreement is only possible when the countries' win-sets overlap. Putnam points out that the bigger the win-set, the bigger the over­laps and thus the bigger the probability to come to an agreement. However, a big win-set is not necessarily a bargaining advantage. Schelling called this phenomenon the “paradox of weakness”: A negotiator with a small win-set can make fewer concessions and thus is more likely to get more of his positions through, as his counterparts also know that otherwise his country would fail to ratify the agreement. (Schelling I960, Putnam 1988: 435ff.)

Putnam sees three major determinants for win-sets: Firstly, preferences and power distribu­tion on the domestic level. Constituents might have different opinions about e.g. the cost of “no-agreement”. Also, Putnam distinguishes homogeneous issues, where all constituents ba­sically have the same aim in negotiations, and heterogeneous ones, with cleavages within the constituency. Interest assessment becomes even more complex with issue linkages, which shall be in special focus later on. (Putnam 1988: 441fif)

Secondly, the institutions at the domestic level shape the country's win-set. Higher ratifica­tion requirements for example, like a two-thirds vote instead of a single majority, make a win-set smaller. Also, the higher the power concentration, like in an autocratic state, the greater the win-set. Governments of liberal democratic countries, which are very reliant on their constituency, thus face smallerwin-sets. (Putnam 1988: 448ff.)

Lastly, the negotiator's strategies influence the size of the win-set. He may pretend to have a smaller win-set or use side-payments to push the negotiations in his preferred direction.

2.4 Issue Linkage

Putnam names the possibility to link different issues in order to create new options for agree­ments. If two countries have no overlaps in their win-sets of one sector, say agriculture, nego­tiations in only this sector will not be successful. But combining this sector with another one, e.g. industry, an array of trade-offs between these sector's interests appear and the negotiators may choose to make some concessions to either group in order to get the support needed for ratification.^[2] This strategy is especially relevant in trade negotiations, like those at the WTO, where interests often are compromised through “package deals”. (Putnam 1988: 446)

3 Explaining Trade Policy: An Overview of Theoretical Approaches

The international trade regime has been the subject of studies from different schools of polit­ical science. Realist scholars like Kindleberger (1981) have tried to explain the emergence of the Bretton-Woods-System, which after the Second World War was created predominantly by the United States. While this matched the realist theory of hegemonic stability, the later evol­ution of the GATT without a global economic hegemony and the WTO after the Uruguay Round posed difficult, some say impossible, questions to realist theory. (Schimmelfennig, 2010: 254f., Conceiçâo-Heldt, 2011: 18, Milner, 2002: 455)

Neoliberal institutionalism (NLI) was able to explain the perseverance and development of the international trade regime using its theories of institutional stability and spill-over-effects, but like realism, it uses systemic explanations for these developments. Therefore, the recent blockades in WTO negotiations rely on a shift in power balance among WTO members, not on a change in state interests. The NLI shares realism's concept of unitary-rational actors and therefore denies cleavages among state constituents. Preferences are thus exogenous and do­mestic groups are not subject to further research. (Grieco, 1988: 488ff., 494, Moravcsik 1997: 521ff., Schimmelfennig 2010: 255ff., Schnell 2005: 15)

The liberal school of thought disagrees on these points. It opens up the “black box”, with which realists had blinded out the formation of state preferences and focuses on the interests of domestic groups and their influence on government policies. Conceiçâo-Heldt points out that the unitary-rational actor model cannot sufficiently explain trade policy, as societal in­terests in trade are more heterogeneous than for example security issues: There are always “winners and losers at the domestic level.” (Conceiçâo-Heldt, 2011: 19) Milner (1997) finds that in both domestic and international agreements, distributional consequences matter. Hoekman and Kostecki (2002: 38) even observe that trade negotiators “spend less time nego­tiating with trading partners than they do internally.”

Liberal scholars have both used society- and system-centered explanations. The former analysed the cleavages within society, which Waltz (1959) had called “Second Image”, and their influence on the international system. Gourevitch (1978) proposed his model of “Second Image Reversed”, which says that the international system also influences a state's society. (Moravcsik 1993: 483)

Combining the two, a popular liberal approach for explaining the entanglements between intra-state interest formation and international negotiations has been Putnam's aforemen­tioned two-level-game, with many scholars applying it to the international trade regime. (Conceiçâo-Heldt, 2011, Ziegler, 2009, Paarlberg, 1997, Davis, 2004) Conceiçâo-Heldt (2010) focused on principal-agent-relations within the European Union with the example of the 2001 Doha negotiations. Patterson (1997) even expanded Putnam's metaphor to three levels, the third one being the European Community. Also in 1997, Robert Paarlberg ex­amined agricultural policy reforms in the Uruguay round focusing on the role of synergistic issue linkages, which he assesses less powerful than Davis (2004). (Milner, 2002: 450ff., Schimmelfennig, 2010: 260f.) In the following, domestic interest formation shall be analysed using the example of the pre-negotiations to the Doha Round in Seattle in 1999.

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^[1] Original title of the article: “Die WTO - eine Baustelle ohne Ende” (Bauer, 2012)

^[2] Putnam illustrates this phenomenon using political indifference curves. They show how seemingly unbridge­able differences in one sector can be overcome through linkage. (Putnam, 1988: 447)