On this episode of the Matrix Podcast, Daniel Lobo, a PhD student in the UC Berkeley Department of Sociology and a 2022-2023 Matrix Communications Scholar, interviewed Ryan Brutger, Associate Professor of Political Science at UC Berkeley.
Professor Brutger obtained his PhD in politics at Princeton University and was previously an assistant professor at the University of Pennsylvania. He is broadly interested in international relations and foreign policy. His research spans international political economy, international law, international security and political psychology, examining the domestic politics of international negotiations and cooperation.
Lobo spoke with Professor Brutger about his new article, Litigation for Sale: Private Firms and WTO Dispute Escalation, which presents a theory of lobbying by firms for trade liberalization, not through political contributions, but instead through contributions to the litigation process at the World Trade Organization. “In this ‘litigation for sale’ model, firms signal information about the strength and value of potential cases, and the government selects cases based on firms’ signals,” Brutger wrote in the paper’s abstract. “Firms play a key role in monitoring and seeking enforcement of international trade law, which increases a state’s ability to pursue the removal of trade barriers and helps explain the high success rate for WTO complainants. The theory’s implications are consistent with interviews with trade experts and are tested against competing theories of direct political lobbying through an analysis of WTO dispute initiation.”
A transcript of the interview is included below.
Podcast Transcript
Woman’s Voice: The Matrix Podcast is a production of Social Science Matrix, an interdisciplinary research center at the University of California Berkeley.
Daniel Lobo: Hello and welcome to the Matrix Podcast. I’m Daniel Lobo, your host coming to you from the Ethnic Studies Changemaker studio, our recording partner on UC Berkeley’s campus. Our guest today is Professor Ryan Brutger, Associate Professor of Political Science at the University of California, Berkeley.
Ryan obtained his PhD in politics at Princeton University and was previously an assistant professor at the University of Pennsylvania. He is broadly interested in international relations and foreign policy, his research spans international political economy, international law, international security, and political psychology, examining the domestic politics of international negotiations and cooperation. Thanks for being here, Ryan.
Ryan Brutger: Thanks so much for having me.
Daniel Lobo: So we’re here to discuss your recent publication entitled, “Litigation for Sale, Private Firms and WTO Dispute Escalation.” Before we dig into this piece, I’d like to situate your work for our listeners. As a scholar of international relations and foreign policy, your research examines how domestic politics shapes and is shaped by international negotiations and cooperation. What do you see as the most exciting developments in this field? What contributions do you see your work making?
Ryan Brutger: I think there’s a lot of exciting work being done in these areas. So I’ll just focus on two that I’m particularly interested in. One of those is thinking about how the public’s, the mass public in different countries think about or choose not to think about international relations and foreign policy. And so some of my work contributes to this realm but there’s lots of other great work being done. And I think this is really important at this point in time because we’ve seen that more and more people are questioning the value of globalization of trade, immigration et cetera.
And so I think understanding how individuals react to news about international relations, about trading for example, about immigration is very important. And so some of my work in this area has really focused on how do we build domestic coalitions of support for international cooperation. And I’ve looked at this in security bargaining, in international political economy, so thinking about how do we get support for trade agreements.
I’m also extending some of this to look at support for international climate cooperation, I think one of the most pressing issues facing the world today. And so I think this is an area where lots of people are doing great work and I’m hopeful that my work is one small part contributing to a better understanding in this realm. And then the second area that I think really has made leaps and bounds forward in recent decades is work being done in international political economy that focuses on the role of private firms in shaping foreign policies.
And in particular I think there’s great work being done by the likes of Professor In Song Kim, Professor Ian Osgood, and others that are really looking at how different types of firms can play critical roles in helping shape a wide range of policies, especially when it comes to trade.
And this is an area that the paper that we’ll discuss today I think contributes to. Because I look at the role of private firms in both monitoring and seeking enforcement of international trade law and looking at how there’s variation across these firms because not all firms are going to benefit the same, some might be challenged by increased globalization while others benefit. And so diving into that I think has been really important for understanding the consequences of globalization but also some of the causes of the foreign policies that help facilitate globalization.
Daniel Lobo: Fascinating. Now I love the focus on the firms as an actor in this story. And so I’m excited to dig into this theory that you’ve constructed in this paper. So in your forthcoming article on the dispute litigation process at the World Trade Organization, the WTO, you advance a theory of how private firms lobby for trade liberalization through contributions to the litigation process. So you’ve touched on this a little bit but if you could expand on why the focus on firms in this story.
Ryan Brutger: So I think focusing on the firms is both really important but also just very sensible and logical because if we think about who’s engaging in trade by and large that’s firms and these are typically private firms, of course, there are some exceptions in different countries where there might be state owned enterprises and such. But in general, private firms are the actors who benefit from engaging in trade, they’re the ones who if they face a trade barrier, it’s their profits that are going to be harmed, it might be their workers who suffer.
And so thinking about the perspective of these firms is critical when assessing how they engage and are affected by international law. In addition to that, when we think about international trade law, I argue that firms are uniquely situated to play an important role in monitoring international trade law and seeking enforcement of those laws. And in part, this is because there’s what I call an information asymmetry between the firms and their governments.
And so as I already mentioned, firms are the actors who are most directly affected when they face a trade barrier. So they’re likely to be the first to know when a new trade barrier has arised that is affecting their flow of goods or potentially limiting their trade in services. And this means they’re going to essentially be able to help the government identify these trade barriers because there’s so many policies that are being put in place around the world that might affect trade that governments don’t have the capacity to monitor all of these different changes.
And so they rely on firms to bring them this information and to help them learn about trade barriers. And so that’s part of the reason why I think it’s really important to focus on firms, both because they’re the actors most directly affected but then they also have this informational advantage and can really play an important role in sounding the alarm especially when they’re facing significant trade barriers.
Daniel Lobo: Absolutely. Now after reading this paper, I definitely agree that firms are uniquely positioned in this story of trade dispute litigation. And so digging into this a little bit more specifically, you argue that the private firms monitor WTO compliance and motivate states to seek enforcement of treaty obligations by contributing resources to support the litigation. And as you said, by signaling information regarding the legal strength and the value of potential cases.
And as you note in your paper, this results in a few effects one of which being a greater probability of the complainant country winning the case. What do you see as the main implications of these findings?
Ryan Brutger: So I think these findings have a number of different implications. And I can break these down into maybe four implications that are important to focus on. So number one, if we think about the role of firms in being able to identify and then help governments pursue specific disputes, this means that the firms actually get to shape what types of trade barriers are challenged at the WTO and where we’re most likely to see enforcement.
So in the paper, I then develop both through formalization but also just thinking about collective action problems in general, a theory where we can think about which types of firms are most likely to pursue disputes at the WTO. And I argue that they’ll do so, firms want to challenge barriers that cause a high level of harm to them, that’s very straightforward. But the firms also face a collective action problem.
And so I model this and show that firms that are larger are much more likely to be able to overcome that collective action problem and they’re most likely to not face collective action problems when trade barriers specifically affect a very narrow product line or a narrow maybe even just a single firm or a small set of firms. And so this means you’re most likely to have firms pressuring the government to bring cases on product specific disputes as opposed to trade barriers that affect lots and lots of different products.
And this has a really big effect if you think about it because if the government was able to bring cases that affect lots of different products that might provide a larger public good and it might help increase trade or reduce costs to goods and services for the entire population. But if we think about firms being able to coordinate their activities or overcome collective action problems when they face these narrow product specific barriers, it means we’re much more likely to have disputes that only affect a very small number of products or a single firm.
And so it almost becomes like you’re moving towards private benefits in these disputes. And so that has a big implication for whose voices are represented at the WTO and the types of trade barriers that are challenged. Now we can think about this on another dimension though and that’s which countries are likely to have cases brought? Because part of what the theory also outlines is that governments face what I call a bureaucratic constraint, you can think of this as a budget constraint.
They only have so much money and so especially when we come to the agencies responsible for trade, they tend to focus on negotiating new trade agreements as opposed to enforcing the old ones. And so lots of times they may not be able to allocate resources to fight for their rights being protected by enforcing trade barriers. But firms can step in and contribute their own resources to do so, and this can play an important role in that more disputes can be brought because it brings more resources to the table.
This case, when we think about disputes that’s disputes to open up trade to get back to the agreements that were reached say in the Uruguay Round or other portions of the GATT and WTO negotiations. Importantly, this is likely to have the largest effect where that bureaucratic constraint or the budget constraint is binding and so you can think about countries that don’t have as many resources. So think of lower income countries, they might not from the government side of it have the resources to effectively bring a case to the WTO.
But if a firm, particularly a large firm in their country is affected, that firm could choose to contribute its own resources potentially even hiring private attorneys who have specialized knowledge and thus allow them to have their dispute brought to the WTO. Now importantly, only governments get to bring the dispute to the WTO, but this means you can increase the representation of low income countries and that again, has an effect on whose voices are represented at the WTO.
Now you did mention earlier that the probability of winning a dispute also goes up. And that’s because if we look at this through the formal theory in the paper, it actually shows that there’s essentially a screening mechanism that takes place where firms are only going to contribute to these disputes if they believe there’s a high probability of being won and that’s conditional on some other factors. But essentially it means that only the strongest legal claims are likely to be brought to the WTO.
And so that’s why you end up having this very high percentage of complainants winning their disputes at the WTO, which we can think about that as being potentially relatively efficient. By contrast, we have another type of international law which often comes forward in investment disputes. So we have investor state dispute settlement where investors can directly sue other states.
But without this screening mechanism in play there it turns out lots of cases that are essentially frivolous get brought. And so the complainants lose a lot but that takes up a lot of resources, it takes up government time, and so we don’t see that taking place as much at the WTO.
Finally, what I would say is that there’s also a way in which private firms by hiring specialized attorneys can really help increase the quality of the argumentation and I conducted a number of interviews with elites from around the world and from the WTO secretariat. And they emphasized that especially for countries that don’t participate in WTO disputes that often, this makes a huge difference in improving the quality of their argumentation and the probability that they’re going to win as well.
And so substantively, the role of firms can really help countries advocate for themselves and I think that effect plays out the most in the low income countries that typically don’t bring very many disputes to the WTO.
Daniel Lobo: Fascinating. And a clear justification for the focus on firms, I do want to pick up on this last point you made because this is a unique feature of the paper that you conducted these in-depth interviews with trade experts from around the world to understand dispute escalation patterns at the WTO. I’m curious what was this process like for you? Can you discuss the value of inductive research approaches and political science and in the social sciences more broadly?
Ryan Brutger: Oh, that’s a good question or set of questions. Doing these interviews is probably the most fun part of this entire project. I love getting to talk to the people who have worked on these cases from a wide range of perspectives. In total I ended up interviewing 38 individuals who had engaged in WTO disputes in a wide range of capacities.
Some were in-house counsel for private firms that were trying to make sure that their interests were represented, others were officials working in trade bureaucracies from around the world. I also interviewed private attorneys who worked at major law firms, and as I said before, also the folks at the WTO. And so this really provided a wide range of perspectives that one was just fascinating to learn about and the specific cases that come up.
And secondly, realizing that even in very different environments, we saw some of the same patterns over and over. So you asked about the value of inductive reasoning in political science and the social sciences and I think it has a very important place. So I was lucky enough shortly after I graduated college to end up working in Washington, DC and working in the realm that allowed me to be privy to lots of these disputes and participating in international disputes working on the legal side of them.
And so I essentially got to observe a number of different cases playing out and seeing these patterns and that’s actually what inspired the project in the big picture. So I was able to combine what I learned from these specific cases and then engage in the formalizing of a much broader theory and that led to new implications coming out of the model specifically thinking about the collective action problems and things.
And so I was able to triangulate I think from the bottom up using the inductive approach but then also deductively using the bigger theory to think of additional implications that could be tested and examined both through qualitative interviews and in the quantitative work in the paper. And I think what this really did is also gave me a much better sense of the importance of firms in different situations.
So there are occasionally disputes that go to the WTO where firms don’t play a massive role in lobbying. They’re relatively rare, some of these came up in the early intellectual property rights cases that the United States was bringing in part because they wanted to establish a precedent at the WTO.
But by and large firms do play a really important role and one example of that I learned about when I was interviewing an official who was familiar with a case that arose between Mexico and Costa Rica was that Costa Rica had put in place new regulations on pesticides that could be used on avocados and not just pesticides but the health and safety standards. Mexico was arguing that these were being applied in a discriminatory manner.
But at first it was actually just a consortium of avocado producers who had this complaint and this concern and they brought this concern to their government. And the government initially said this isn’t a case, every country has different health and safety standards. We have similar health and safety standards, it didn’t meet the basic initial level of confidence to even move forward with the case.
What happened then is that this collective of avocado producers actually brought in assistants, began preparing some of the arguments to the case and changed the government’s mind. So this is where the private actors played this pivotal role, they then ended up bringing that dispute to the WTO because the government did realize, hey, the firms are right. There is a case to be made here and the panel ended up ruling in their favor.
And so hearing these stories and really understanding when government officials changed their mind, so in the absence of firms if we hadn’t theorized their involvement, I would have never done these interviews and we might just have assumed that the government always knew there was a case to be had here. But in truth, if firms weren’t engaging that dispute would have likely never been brought.
And so I think engaging in these interviews really highlighted the importance of firms and that was true regardless of whether I was interviewing folks who had the firms perspective or the government’s perspective. For example, one of the international trade officials I interviewed, I can share with you just a little quote from him because this one actually caught me by surprise and he said, “There are two main reasons the government can’t manage the facts, in this case, of a dispute and the first that they just don’t have the facts.
Typically the data of what type of violation has taken place is proprietary. You need to have access to proprietary data so you rely on private businesses to bring the data forward.” Second, the costs and resources to put the facts together and process the dispute. Take the European Commission, they can’t afford to put someone on fact-finding for a case full time. They don’t have those positions and can’t assign someone to do it because there’s no place in the budget for it.
Getting quotes like that and realizing that even government officials who work on these cases know their limitations and know their reliance and where they emphasize like this quote that they need this private proprietary information, really I think helps us understand what happens at the World Trade Organization and especially at a time when the organization is in crisis, when the dispute settlement mechanism has been essentially brought to a halt due to disagreements over the appellate body appointment process.
I think it’s critical that we know how the institution actually works, whose voices are represented in the institution so that we can take those facts into consideration when thinking about also how to reform the system and potentially improve it. And so that’s why I think this type of research is so critical in not only recognizing how international law has worked, but also building the foundation so that we might think about how it can work better in the future.
Daniel Lobo: Fascinating. And I love that quote that you raised and it makes me think how else would you get access to this data on capacity constraints or budgetary constraints without talking directly to the actors involved. So I do think it’s an excellent case in point of the value of an inductive approach.
And so I want to circle back to some of the effects that you mentioned earlier, particularly picking up on this concept of firms bringing additional resources that in ways in which the state might be constrained. Your theory of informal firm lobbying in WTO dispute litigation, challenges conventional wisdom and the literature on compliance with international trade law.
You argue that the ability of firms to help countries overcome resource constraints can level the playing field between developed and developing countries as you said on the one hand, and also enhance the influence of large multinational corporations on the other. So I’m curious, do you see this arrangement as net positive? Are there concerns of private influence in this process?
Ryan Brutger: That’s a great question. I see this process as having mixed effects that can be both concerning and also reassuring. And so I can’t give you a simple yes or no answer on whether this is net positive or not because on one hand, I think it’s critical that we do seek to monitor and enforce international law and help bring countries back into compliance when they’ve deviated.
And so having firms assist governments in that process really makes sense to the extent that firms are the actors most directly affected. And this I think also works in a way that does provide benefits. I mentioned the avocado case and even if we’re worried that it’s a large collective that might have undue influence, they also have lots and lots of workers whose jobs are protected or maintained in part because their interests are represented in these disputes.
On the other hand, when we recognize that the types of trade barriers that are more likely to be challenged with private firms wielding this influence are relatively narrow and closer to providing private goods as opposed to public goods that’s certainly concerning. And so I think there’s benefits in that more countries can have their cases heard that the cases that are heard tend to be important and strong cases.
So we’re not seeing a lot of what we might call misuse of the dispute settlement mechanism because they don’t push for cases when they’re low value or when they think that there’s not a very good chance of winning, of course, there’s going to be occasional exceptions to each of these. But then I think we could also think about what this does to international law in the long run. If large firms, particularly multinational firms are best positions to have their interests represented, we know that actually shapes the progress of international law.
Now technically at the WTO, the law is the law and the rulings don’t change that. But in practice we see interpretation playing out, we see whose voices are represented and that has an effect in the long run. And so I think it can be concerning and so we might want to having recognized that this is taking place, think about this in the reform process.
Now there are efforts already underway to address some of the discrepancies or disparities in WTO law. And so there is an advisory center that helps low income countries prepare cases but that still requires that they know that there’s a trade barrier that they want to dispute in the first place. And so if they lack that information that still creates a problem.
And so I think there’s a real tension between wanting to see international law upheld and also having large corporations wielding much more influence than other companies. That said, large corporations also employ more people but it doesn’t necessarily connect directly to thinking about the public good. These are certainly firms working for their private interest, trying to have those interests represented and indeed that might help their employees, that might help sustain jobs but those benefits are certainly being limited given the nature of the cases that are being brought.
Daniel Lobo: It’s fascinating. It’s a complex arrangement, it’s almost like the idealism of having the state be the one most in charge of this process of providing traded public goods versus the very pragmatic realistic view that firms are on the front lines of these trade disputes and have the resources to signal the strength of these cases to collect the information required to make compelling arguments. Yeah, that’s fascinating.
Ryan Brutger: And on this point, I will say, through my interviews officials noted those officials working for the government that they really do have the public interest at heart. I mean the European Commission officials emphasized this repeatedly, they want to bring cases that provide broad benefits to society. USTR here in the United States emphasizes similar concerns, but then they run up against as you say these very pragmatic concerns of what information do they need to bring cases? What resources do they have to bring cases?
And so there’s a tension between the two and that’s why I think recognizing the role of firms also helps us understand, again, where the actual disputes are playing out and whose interests are represented versus the ideal approach of what the government might want to bring if they had all the information and all the resources.
Daniel Lobo: This conversation has been fascinating. I’m sure our listeners are very interested in digging into this piece more carefully. Can you let us know where they can read this?
Ryan Brutger: So this is being published, it’s forthcoming in the American Political Science Review. They’re also welcome to visit my website for a preprint version of it as well.
Daniel Lobo: Great. And I guess my last question here for you, can you talk about how this research project fits into your broader research agenda? What else do you have coming down the pike and what are you most excited about?
Ryan Brutger: So this fits into my broader research agenda of thinking about how domestic factors interact with international law and cooperation and vice versa. There’s probably too many things on my agenda to talk about all of them, but I will say one project that I’m particularly excited about that relates to some of the points we’ve been talking about today is a project that I’m working on with Professor Amy Pond. And together we’re looking at support for antitrust policies also known as competition policies, both at the domestic level but also international cooperation on this.
And the reason I say this relates is because we are concerned about the increasing concentration of industries, the fact that fewer and fewer companies are making up a larger portion of international trade, a larger portion of the production line, et cetera. And so that has implications for how they wield that economic power, it has implications for again whose voices are represented in democracies and in government.
And so we’re looking at antitrust policy as a tool to potentially curb some of the influence that firms may have or at least ensuring that we have free and fair competition so that they can’t use their size to say bully out other competitors and things like that. And so that’s leading to a number of papers that Pond and I are working on together.
And I think it’s a very exciting line of work but one that I hope more political scientists will also take up and start thinking very seriously about the importance of antitrust and competition policy, especially as large companies, you can think of many of our tech companies not only control in many cases, the flow of information but also have so much private data, et cetera. So I think there’s a lot to be done in this space moving forward.
Daniel Lobo: Excellent. Another timely and important topic to be thinking about. So thank you for your work, and again, thank you for joining us today for the Matrix Podcast. Ryan, it’s been a pleasure.
Ryan Brutger: Thanks so much for inviting me, Daniel.
Woman’s Voice: Thank you for listening. To learn more about Social Science Matrix, please visit matrix.berkeley.edu.
