The Unconditional Most-Favored-Nation Clause and the Maintenance of the Liberal Trade Regime in the Postwar 1870s

Abstract

AbstractInternational institutions within the past thirty years become the subject of renewed interest as scholars vigorously dispute their utility. Neorealists draw on the post–World War II era to advance sweeping general claims of institutional inefficacy. This study, by contrast, deploys the same hard-test method Grieco applied to the 1970s Tokyo Round negotiations to the crisis-rife 1870s to construct a unique methodological objective: a rigorous hard-test of nineteenth-century institutional autonomy. Three principal findings emerged. First, the maintenance of a liberal world economy in the turbulent 1870s is explained by an unlikely commercial instrument and the unprecedented regime design of an unexplored international institution—respectively the unconditional most-favored-nation (MFN) clause and the informal conventional tariff system (CTS) regime it underpinned—not British hegemony. Second, the international trade regime was not a public good unilaterally provisioned by “hegemonic” Britain via the 1846 Corn Laws Repeal. The regime was instead a private good that was collectively provisioned by all its constituent member states via the unprecedented interstate practices institutionalized in the 1860 Cobden-Chevalier Treaty and then autonomously maintained by a negarchical and self-enforcing sanctioning mechanism. Finally, the informal CTS regime's enforcement mechanism autonomously altered the interests and behaviors of states in directions incongruent with executive preferences solely through the brute force of rational calculations imposed by decentralized international institutional constraints. Both the French and British executives in the 1870s believed the regime was normatively inappropriate and unsuccessfully attempted to exit amid eight system-threatening crises. Nonetheless, the MFN-based regime's self-enforcing sanctioning mechanism autonomously induced compliance: conceptualized as unitary states' behavior deviating from executives' first-order preference. The extraordinarily turbulent 1870s therefore provide an unexplored historical vantage point to make strong institutionalist claims in an era, issue area, and under conditions that they are least likely to be validated.