Economic Lawfare: The Logic and Dynamics of Using Law to Exercise Economic Power

Abstract

AbstractUnprecedented economic interdependence and the extensive legalization of international commerce have created unique opportunities for states to exercise power in world politics. Yet, while international relations (IR) scholars have revealed much about how interdependence conditions the ability of states to leverage economic relationships to influence other actors, the equivalent role of law has received less systematic attention. This article explains the logic and dynamics that inform how, why, and under what conditions states may use law as a sword or shield in the realm of international commerce. Drawing upon the IR literature on economic statecraft and the international law literature on lawfare, the article conceptualizes “economic lawfare” and uses it to elucidate how law may shape the use of economic power. It outlines a typology of pathways through which economic lawfare can be employed and their associated opportunities and constraints, before presenting a simple model of key dynamics that shape their use. That model's plausibility is probed and the pathways are empirically illustrated in two case studies of recent episodes in which the Chinese government has sought to manipulate international commerce for strategic purposes. The article clarifies the distinction between legal and nonlegal instruments of economic statecraft, offers a theoretically explicit account of key mechanisms through which law may condition the use of economic power, and provides new conceptual foundations for emerging research on how institutions shape the ability of states to intervene in markets to achieve strategic objectives.