Theories of “Compliance”

The question of compliance with international commitments has given rise to various theories of compliance in the past few decades. The main question behind these various theories, which have appeared in both international relations and international law literature in recent years, is simply: why do states comply (or not) with their international obligations? Obviously, “in general states are induced to do so because, in their overall strategic assessment, positive outcomes resulting from compliance outweigh negative ones” (Chan 2006, p. 66). However, there is no clear agreement on the exact processes that lead to compliance, or indeed that even make compliance more likely. Louis Henkin, in one of the earliest attempts to consider the issue of compliance, famously stated that it is “probably the case that almost all nations observe almost all principles of international law and almost all of their obligations almost all of the time” (Henkin 1979, p. 47).¹ However, he was less clear on why nations comply and offered a “remarkably rich” list of factors to explain state compliance (Raustiala and Slaughter 2002, p. 540).

Henkin’s realist model of compliance revolves around a simple cost-benefit analysis, whereby violation would offer more advantage than compliance, although he did acknowledge, “that nations act on the basis of cost and advantage may seem obvious, but the notions of cost and advantage are not simple and their calculation hardly precise” (Henkin 1979, p. 50). This straight forward cost-benefit analysis approach is also taken by neorealist theorists such as Neuhold, whose analysis of state behaviour focuses on strategic incentives at both international and domestic levels. Neuhold proposed that decisionmakers focus on three variables when deciding whether to comply: the magnitude and consequences of possible sanctions; the probability of the sanctions being imposed; and the likelihood of their non-compliance being detected (Neuhold 1999, p. 88). However, neorealist theories such as Neuhold’s work best where nation-states remain the main players in global politics and in many areas of international law, this is no longer the case. Certainly in the case of intellectual property, companies and individual rights-holders also have a significant role to play in ensuring compliance with international commitments.

Challengers to cost-benefit-based theory have arguably proposed more precise models of a state’s compliance. For example, Franck (1995) offered a detailed theory of compliance based on legitimacy and fairness, both substantive and procedural. In this theory of compliance, legitimacy is the key factor; “the legitimacy of rules exerts a ‘compliance pull’ on governments that explains the high observed levels of compliance of international law” (Raustiala and Slaughter, p. 541). However, although legitimacy is clearly an important factor in compliance, Franck’s theory of compliance based on the legitimacy of the rules has been criticised as circular; that the rules are complied with because they are legitimate, but they derive their legitimacy from nations complying with them. Thus, although the issue of the perceived legitimacy of the rules, in this case of the TRIPS Agreement, may play a crucial role in compliance, ultimately Franck’s theory does not go far enough to satisfactorily explain compliance with international law and other factors also need to be included.

In recent decades, other theorists have attempted to bridge the divide between compliance theory in international relations and in international law, a case in point being the managerial theory of compliance presented by Chayes and Chayes, which “rejected sanctions and other ‘hard’ forms of enforcement in favour of collective management of (non)-performance.” Chayes and Chayes (1995) sought to offer an alternative to “enforcement” models of compliance based on the possibility of sanctions. They contend that the reasons states do not fully comply are either ambiguity in the treaty language; limitations in capacity to carry out their undertakings; or the magnitude of the social, economic and political changes required to comply. Therefore, “if we are correct that the principal source of non-compliance is not wilful disobedience but the lack of capability or clarity or priority, then coercive enforcement is as misguided as it is costly” (Chayes and Chayes 1995, p. 22). Chayes and Chayes thus provide a powerful challenge to enforcement models of compliance based on realist theory that states make an active choice to comply or not based on an assessment of the associated costs and benefits, by shifting the emphasis of compliance to a state’s capacity to comply. However, the Chayes and Chayes approach has also been criticised as being incomplete: “As long as one is only interested in coordination games, it provides a good guide to compliance and national behaviour” (Guzman 2002, pp. 1832-3). Furthermore, Chayes and Chayes give the impression that there is a stark choice between the enforcement model and their own managerial model, whereas in fact, they may complement each other (Burgstaller 2005, p. 145).

In the 1990s, dissatisfaction with existing theories and the rise of constructivist theory led to a more normative approach to compliance theory, an example of which is IKoh’s theory of “obedience” with international law. IKoh (1996) claimed that “obedience is compliance motivated not by anticipation of enforcement but via the incorporation of rules and norms into domestic legal systems.” This obedience theory has three sequential components, interaction, interpretation and internalisation. According to this model, public and private actors first interact in a variety of fora to create the legal rule; these actors then interpret the rule and finally, through interaction, internalise the rule; “it is through this repeated process of interaction and internalisation that international law acquires its ‘stickiness’” (Koh 1996, p. 204). However, IKoh provides no explanation of how these legal norms are eventually internalised and “without an understanding of why domestic actors internalise norms of compliance in the international arena, and a theory of why this internalisation tends towards compliance, the theory lacks force” (Guzman 2002, p. 1836). It may be true that international legal norms need to be internalised as a precondition for full compliance, but Koh does not offer a clear explanation of this process of internalisation.

Another competing theory of compliance which emerged in the late 1990s was proposed by Andrew Guzman, whose theory of compliance relies on reputational factors to explain a state’s compliance and instances of violation. In his model, when a state considers whether or not to comply with an international obligation, the possible sanctions it would face are paramount. These sanctions “include all costs associated with such a failure, including punishment or retaliation by other states, and reputational costs that affect a state’s ability to make commitments in the future” (Guzman 2002, p. 1845). Guzman cites several factors which affect the reputational impact of a violation, which include the severity of the violation, the reasons for the violation, the extent to which other states know of the violation, and the clarity of the commitment and the violation. This reputational theory is similar to the Chayes’ managerial approach in that it places reputational concerns at the centre of a state’s compliance.

However, Guzman himself recognises the limitations of his reputational theory in its applicability to areas where the stakes are high.

In the past few years, the scope of theories of compliance has moved beyond the traditional question of why states comply with international agreements. For example, recent theories of compliance have sought to diminish the distinction between “hard” law, such as formal treaties, and “soft” law, such as bilateral Memoranda of Understanding (Guzman 2002, p. 1828). There is also a growing recognition in international relations theory that states are not the only relevant actors in international relations. Liberal theories of compliance such as those proposed by Slaughter and Moravcsik rest on a “bottom-up” view of politics, in which the demands of domestic interest groups are crucial (Burgstaller 2005, p. 166). Although it is undeniably important to acknowledge the role of individual actors in the international arena, focusing on these diverse and multifarious interest groups can also lead to overly complex theories of compliance.

Therefore, over the past few decades, there have been various theories advanced to explain a state’s compliance or otherwise with its international obligations, but no single theory has yet achieved recognition as complete. There are still clear gaps in the theories, with some theories suiting some legal obligations better than others. It is important to recognise that although compliance is a significant area of study in contemporary international relations and legal study as outlined in discussion of the key theories above, “compliance remains a relatively young field. Many core concepts are debated and empirical testing of compliance theories is limited” (Raustiala and Slaughter 2002, p. 548). Furthermore, using compliance theory as a source of solutions to non-compliance and as a tool to evaluate strategies to reduce non-compliance have been identified as key priorities for policy researchers to pursue (Downs and Trento 2004, p. 19). Consequently, this study of China’s compliance with international IP standards as embedded in the TRIPS Agreement can contribute to this ongoing development of compliance theory. Furthermore, as there is not yet any agreement over a model of compliance for individual states with international obligations, it is difficult to decide exactly which model of compliance should be applied in this study.

It is clear that although the study and theory of compliance in both international law and international relations literature has been underway for several decades, there is no clear agreement on why a state complies with or reneges on its obligations. There are also clear differences between these theories based on the approach they have taken to compliance. Compliance theories have been clustered into six broad conceptual categories and it is useful to explore these categories in the context of China’s compliance with international IP standards.² The first category of compliance theories considers the problem structure. In the case of IP, it is both a large problem and pervasive in all developing countries at a similar stage of economic development. The problem is further complicated because infringing behaviour is often hidden. The second category of compliance theory is that of solution structure, which focuses on the specific institutional design or framework of the agreement. In the case of the TRIPS Agreement, it is consequently important to consider whether the framework of the institutional structure of the TRIPS Agreement itself raises or lowers the cost of compliance.

The third category of compliance theory is that of solution process, which includes the methods and processes by which the institution operates. In other words, the rules themselves must be seen as inclusive, fair and legitimate to encourage compliance; the TRIPS Agreement must be seen as fair by China and other members for full compliance to follow. This echoes the approach taken by Franck, focusing on the legitimacy of the rules themselves. The fourth category of compliance theory is norms. Through a process of socialization, new norms may be adopted by the country leading to changes in behaviour. Thus, it is important to not only consider the pre-existing legal and cultural norms in China, but also the norms associated with the TRIPS Agreement and the congruence between them. The fifth category is that of domestic linkages or “structural links between international institutions and domestic actors” (Raustiala and Slaughter 2002, p. 546).

Some theories have taken this category a stage further by proposing a general relationship between the type of domestic regime and its inclination to comply with international commitments. Under this general relationship, “liberal” states are more likely to comply and under the definition often used, China is not a liberal state. Thus, this type of compliance theory would hold that China is automatically less likely to comply given the nature of the Chinese state as non-liberal. The final group of compliance theory is based on international structure. This considers the institutionalisation of the international system and suggests that “highly institutionalised systems may create positive spirals of compliance by embedding states in regularized processes of cooperation that are mutually reinforcing” (Raustiala and Slaughter 2002, p. 548). This kind of compliance theory would focus on the WTO as an international trading system and ask how the WTO institutions such as the Council for TRIPS and the dispute resolution body encourage compliance.

The significance of these disparate categories is that ideally all of these categories need to be included in order to broaden existing discussions of compliance in the Chinese context. It has been stated that ideally scholars concerned with China’s rule conformity should aspire towards an overarching framework encompassing a host of domestic and external factors to explain compliance (Mushkat 2011, p. 68). Moreover, as an emerging field, it is also crucial not to discount any important influences on China’s TRIPS compliance. Therefore, this study will seek to incorporate elements of all these different categories of compliance theory in a comprehensive model of compliance as outlined in the following section.