Yielding Sovereignty to AIIs
7
It might also be useful to place AIIs within the more general literature on delegation. States
of course delegate many different kinds of things, including resources, task administration, and
information gathering. To be considered an AII, however, states must delegate decision-making
authority that is legally binding on matters pertaining to a state’s domestic jurisdiction. Legally
binding authority requires states to change their policies under threat of penalty for
noncompliance. To illustrate, in Milgrom, North and Weingast’s (1990) classic study on
champaign fairs and the law merchant, the judges collected information but did not decide who
should be punished. They were agents, but not authoritative ones. Their modern equivalent is
found in dozens of international organizations that collect information but cannot require states
to change their practices. In a similar vein, the World Bank administers many projects and
influences a variety of developing countries, but always reaches negotiated agreements with the
countries in which those projects take place. The bank serves as an agent for developed
countries, but has no authority to simply impose its decisions on client states.
AIIs thus constitute a rare but important subset of international institutions that occur only
when states delegate decision-making authority. AIIs may take a variety of forms. In the most
well-known form, states delegate to a single independent-agent, an autonomous, unitary, third
party decision-maker such as the World Trade Organization or the European Court of Justice. In
a second type, mutual delegation, states do not delegate to an independent third-party agent, but
rather to each other. The key difference is that there is no central agent, no single authoritative
voice, and yet states agree to abide by the independent decisions of other states. The best-known
example is the EU’s cassis de dijon regulatory regime under which member states agree to
accept the regulatory decisions of other member governments. Another example was the
GATT’s delegation to all states of the ability to interpret and implement rules on trade sanctions.
Convention