Conditionality, Separation, and Open Rules in Multilateral Institutions

We examine the implications for the viability of multilateral cooperation of different legal principles governing how separate international agreements relate to each other. We contrast three alternative rules: conditionality - making cooperation in one area a condition for cooperation in another; separation - forbidding sanctions in one area to be used to enforce cooperation in others; and open rules, i.e. the absence of any restriction on the patterns of cross-issue cooperation arrangements and sanctions. As an example, we focus on trade and environmental agreements. Our analysis suggests that conditionality is more likely to facilitate multilateral, multi-issue cooperation in situations where the environmental policy stakes are small relative to the welfare effects of trade policies; when the costs of environmental compliance are high, a conditionality rule can hinder multilateral cooperation. Separation can undermine cooperation by limiting punishment, but can also promote broad cooperation by making partial cooperation more difficult to sustain.