ABSTRACT
The motives of national governments for entering into and adhering to internationally agreed commitments and obligations are accordingly at the centre of any analysis of the relationship between foreign trade policy and foreign trade law. The literature on trade theory specifies some exceptions to the general free trade position which makes it possible for a country to appropriate welfare gains at the expense of countries sticking to the liberal trade rule. Governments' actions in foreign trade policy and in international diplomacy reveal an implicit understanding of a prisoners' dilemma situation. Political actions of governments cannot be explained directly by a pay-off function expressed in terms of national welfare. Governments have taken over broad responsibilities for specific social and economic goals, and to achieve these, they have been bestowed with encompassing discretionary power to intervene into voluntary exchange transactions. The conceptualization offers new insights into the general discussion on constitutional reform as well as for the understanding of international trade negotiations.
