Commercial liberalism and the six norms

Liberal internationalism is defined by Griffiths, O'Callaghan and Roach (2008, p.190) as a project to transform international relations so that they conform to models of peace, freedom, and prosperity allegedly enjoyed within constitutional liberal democracies.

The same scholars go further by dividing liberalism into three distinct groups. They say these are the three ways to implement the project. The way they present liberal internationalism as a project makes their work interesting.

Three distinct groups

Firstly, commercial liberalism is about free trade between states. States bilaterally or multilaterally via a platform like APEC pursue the goal of trade liberalization. Griffiths, O'Callagahan and Roach (ibid.) argued that economic interdependence would decrease the likelihood of going to war.

Republican liberalism is about democratic peace. The scholars argued that the spread of democracy among states so that governments will be accountable to their citizens makes it difficult to pursue policies that promote the sectional interest of economic and military elites. Also, the notion that 'democracies do not go to war with other democracies' is a fundamental part of their belief system and is manifested in US foreign policy.

The final variant of liberalism is regulatory or institutional liberalism. This implementation of the project involves the building of the international political structure. International institutions are important because they promote the rule of law and moderate the security dilemma among nations according to the scholars. 

Commercial liberalism

The scholars argue that commercial liberalism promotes the idea of free trade and commerce across state borders on the assumption that economic interdependence among states will reduce incentives to use force and raised the cost of doing so. In other words, liberal trade among states without any restrictions is a recipe for a peaceful international system.

Free trade is defined by Investopedia as the unrestricted purchase and sale of goods and services between countries without the imposition of constraints such as tariffs, duties and quotas. Free trade is a win-win proposition because it enables nations to focus on their core competitive advantage(s), thereby maximizing economic output and fostering income growth for their citizens.

In the video by Allen Sens (below) from the University of British Columbia, he outlines six principles of free trade, which are considered as norms in international law. I say norms based on the distinction by Krasner (2007), he said norms are standards of behaviour defined in terms of rights and obligations.

We now accept that when we sign a free trade agreement we agree to reduce tariffs. All states who are party to the agreement are obliged to comply with this norm and the five others norms associated with free trade like reduction of non-tariff barriers, nondiscrimination, national treatment, reciprocity and exemptions.

If a state who is a party to the agreement decides to not reduce tariff or introduce some non-tariff barriers to protect its domestic industries then there will be repercussions. Whatever repercussive measures taken by the other party (parties) like trade sanctions is justifiable because of the protectionist state's inability to respect the agreement. 

These six norms are elemental to the World Trade Organization's existence and function. WTO replaced the General Agreement on Tariffs and Trade (GATT) in 1995, where 125 nations became signatories to its agreements, which had become a code of conduct governing 90% of world trade.

Examples
Hypothetically, in the case of tariffs and non-tariff barriers, through the APEC multilateral fora the PNG government agreed with the Japanese government to remove completely tariffs on cars imported from Japan. This important deal reduced the cost of cars and increased the number of car owners.

In the second year of their agreement, a PNG mechanical engineer trained in Germany by Volkswagen decided to set up a car manufacturing plant with the support of other international rivals in the industry. With the financial support, this particular engineer was able to influence the government via the process of lobbying to subsidized the cost of producing cars by paying for steel. 

This made cars produced by the PNG engineer more cheaper then the cars imported from Japan. As a result, the Japanese government lodged a formal complaint to the APEC Secretariat and the PNG Government about this non-tariff barrier.

Furthermore, in the Pacific Islands Forum, the multilateral Pacific Island Countries Trade Agreement (PICTA) mentions the 6 norms in various segments. For example, in the objectives segment, we have this statement:

"...promote and facilitate this expansion and diversification through the elimination of tariff and non-tariff barriers to trade between the Parties in a gradual and progressive manner, under an agreed timetable, and with a minimum of disruption...."

Article 6 of PICTA talks about the most favoured nation treatment which is connected to the norm of non-discrimination. All who are members of the multilateral trade agreement must be treated equally, or must not be treated in a manner that is discriminatory in comparison to other parties.  

According to the new release from the Office of the Minister of Foreign Affairs, the recent trade continuity agreement signed by the UK and PNG will see British businesses and consumers benefiting from the continued trading arrangements with PNG after the UK leaves the EU.

Furthermore, the news release stated that:

"Businesses will be able to continue to trade as freely as they do now, without any additional barriers or tariffs. It eliminates all tariffs on all goods imported from Papua New Guinea into the UK and will gradually remove around 80% of tariffs on British exports to Papua New Guinea. This will have particular benefit palm oil and tuna."

As per the bilateral agreement, if we remove around 80% of tariffs on British imports then it will reduce the unit or wholesale cost of imports. According to the PNG High Commission in London, PNG imports from the UK are; canned meat, alcohol and spirits, chemical, pharmaceutical products, machinery and mechanical appliance and other manufactured goods. 

For example, if the unit cost of a tin of canned meat from the UK is K20. Then the price will decrease to K16 after the removal of around 80% from my understanding. This will make the tin of canned meat affordable for consumers like you and me. There will be a difference of K3 if you compare with a big can of Ox and Palm canned meat which is about K13.

Conclusion

To understand commercial liberalism, as a variant of liberal internationalism, it is imperative that we understand the six norms. The economic and political behaviour of states including non-state actors is defined by these six norms.

References 
Griffiths, M., O'Callaghan, T., & Roach, S. C. (2008). International relations the key concepts (2nd ed.). New York: Routledge.
Krasner, S. D. (2007). Structural causes and regime consequences: Regimes as intervening variable. In B. A. Simmons and R. H. Steinberg, International law and international relations. Cambridge: Cambridge University Press.