When do international institutions effectively promote economic cooperation among countries and help them resolve conflict? Although the international system lacks any central governing authority, states have created rules, particularly around international economic relations, and empowered international tribunals to enforce those rules. Just how successful are these institutions? In this book, Lauren J. Peritz demonstrates that these international courts do indeed deliver results - but they are only effective under certain conditions. As Peritz shows, states are less likely to comply with international rules and international court decisions when domestic industries have the political ability to obstruct compliance in particular cases.
This dissertation asks: when do international courts promote cooperation among countries? I argue that international courts can successfully restore economic relations between disputing governments but their impact depends on domestic politics. When confronted with an adverse legal ruling from an international court, a defendant government must determine whether and when to comply. Governments are constrained by domestic institutional divisions and partisan conflict: "veto points." Countries with substantial divisions are less likely to comply because more political actors must coordinate to implement the ruling. As partisan divisions grow, government leaders are constrained by their domestic opposition and compliance becomes more difficult. The design of the international court contributes to this effect. Courts vary in their ability to sanction violations. When the court is designed to be flexible, imposing low costs for noncompliance, the impact of domestic politics is particularly pronounced. These arguments are tested with international trade disputes at the World Trade Organization (WTO) and the European Court of Justice (ECJ). The first empirical chapter uses WTO disputes to examine the impact of domestic politics in the defendant country on compliance with adverse legal rulings. Adverse rulings require a defendant government to remove trade barriers so this chapter assesses compliance using trade flows. I build a novel data set on compliance using the method of synthetic case control and product-level time-series trade data. I infer the defendant complied if trade flows increased after the dispute, relative to estimated levels that would have occurred in the absence of the ruling. The estimates show compliance problems are both widespread and systematically linked to domestic politics. Domestic constraints---measured in terms of veto points---hinder compliance.The second empirical chapter tests my main argument on the European Court of Justice. I show that domestic political constraints in European Union countries also impact compliance with adverse legal rulings. I focus on infringement disputes over trade-related issues, instances in which European member states imposed illegal barriers to intra-European commerce. This chapter uses a hierarchical model that captures the multi-level structure of the data. By examining intra-European trade over time, I show that adverse rulings lead to a modest increase in trade but this tendency is conditional on domestic politics. Defendant governments with many veto players appear impervious to adverse rulings. The findings indicate that ECJ rulings can prompt governments to open their markets to more European commerce, but that domestic politics can obstruct this process. The third empirical chapter evaluates the effectiveness of international dispute settlement along a different dimension: the time to resolve a dispute. Because prolonged lawsuits can buy defendants time to ``cheat'' at the expense of plaintiffs and other members of the international institution, they can have deleterious effects on cooperation that are similar to noncompliance. This chapter demonstrates that WTO and ECJ lawsuits against defendants with many domestic veto points lasted longer on average, before the countries acquiesced. Moreover, the ill effect of veto players on dispute resolution has been stronger in the WTO than the ECJ. I argue that the design of the international court mediates the impact of domestic veto players on dispute duration. In sum, my dissertation shows that international courts can successfully promote economic cooperation between countries but their effectiveness hinges on domestic politics.
