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Structural conditions for novelty: the introduction of new environmental clauses to the trade regime complex

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Abstract

When do parties introduce novel clauses to a system of contracts or treaties? While important research has investigated how clauses diffuse once introduced, few empirical studies address their initial introduction. Drawing on network theory, this paper argues that novel clauses are introduced when agreements are concluded in certain structures of earlier agreements and the clauses they include. This paper demonstrates this argument using the example of 282 different environmental clauses introduced into the trade regime complex through 630 trade agreements concluded between 1945 and 2016. We find that trade agreements are more likely to introduce novelties when they involve parties with a diversity of experience with prior environmental clauses and introduce more novelties when more parties are less constrained by prior trade agreements between them. Contrary to prevailing wisdom, power asymmetry between the negotiating parties is not statistically significant.

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Fig. 1

Source: TREND

Fig. 2

Source: TREND

Fig. 3

Source: Authors

Fig. 4

Source: Authors

Fig. 5

Source: Authors

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Notes

  1. TREND borrowed its list of trade agreements from the Design of Trade Agreements Project (DESTA). These agreements include free trade agreements, custom unions, and sectoral agreements (Dür et al. 2014). Our list of agreements includes also GATT 1947.

  2. Though 555 (88%) of trade agreements include at least one environmental clause, whether new or not.

  3. The US-Peru agreement of 2006, the 1989 Lomé IV and 1984 Lomé III Conventions, with, respectively, 18, 17 and 16 legal innovations.

  4. When accepting an Academy of Achievement award in 1982, Steve Jobs said: “If you’re gonna make connections which are innovative […] you have to not have the same bag of experiences as everyone else does […] or else you’re going to make the same connections (as everybody else)”.

  5. An alternative would be to use ‘zero-inflated’ poisson or negative binomial distributions: Lambert (1992). We prefer the hurdle model here for its clean interpretation relating to our research questions. Table 3 in the appendix demonstrates the robustness of our results to model choice.

  6. Note that the count part of the endogenous and exogenous models do seem to have considerably more uncertainty in the parameter estimates than in the more comprehensive full and final models.

  7. Note that this result is robust to the introduction of the parties variable, affirming the view that it is the pattern of a treaty’s surrounding network structure that enables or constrains innovation, and not (just) whether it is a bilateral, plurilateral, or multilateral agreement, or how many negotiating parties there are. See also Table 5 in the Appendix.

  8. Note that these expectations are tied to the current saturation level; a less saturated system would see legal novelties appear more likely and more frequently.

  9. This is the maximum observed diversity score.

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Acknowledgements

We would like to thank audiences at the universities of Saint-Louis, Laval, Leiden, and Utrecht.

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  1. Graduate Institute of International and Development Studies, PO Box 136, 1211, Geneva, Switzerland

    James Hollway & Joost Pauwelyn

  2. Laval University, 1030 Avenue des Sciences Humaines, Quebec, G1V 0A6, Canada

    Jean-Frédéric Morin

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  1. James Hollway
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Appendix

Appendix

See Tables 3, 4, and 5.

Table 3 Robustness of our hurdle model choice against common alternatives for (zero-inflated) count distributions: the Poisson, the negative binomial, and the zero-inflated negative binomial model
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Table 4 Robustness of the full model to different subsamples of the data
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Table 5 Robustness of the final model to the influence of temporally specific variables
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Hollway, J., Morin, JF. & Pauwelyn, J. Structural conditions for novelty: the introduction of new environmental clauses to the trade regime complex. Int Environ Agreements 20, 61–83 (2020). https://doi.org/10.1007/s10784-019-09464-5

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