ABSTRACT
In this chapter, the author analyzes the North American Free Trade Agreement (NAFTA) in the context of a broader project examining the causes and consequences of the legalization of world politics. The European Community treaty—the charter of the European Union—employs a different legalization formula than employed by NAFTA or the World Trade Organisation agreement. The high level of precision in NAFTA is coupled with a moderate level of delegation to regional institutions for ex postfacto decision making. The author also analyzes NAFTA and explains the preference for using hard law in international economic arrangements. He suggests that hard law reduces intergovernmental transaction costs associated with trade and investment, reduces private risk premiums associated with trade and investment, promotes transparency and provides corollary participation benefits, tends to restrain strategic political behaviors, and may increase the range of integration effects by encouraging private actions to enforce intergovernmental obligations.
