Abstract: Growing literature examines when states exit international institutions and why. International agreements, however, differ in how easy it is for signatory states to withdraw from them. Why do some states sign treaties that are difficult to terminate, while others prefer treaties that are easy to withdraw from? We investigate this question in the context of international investment agreements, exploiting variation in the flexibility of their exit clauses. We argue that the strictness of treaty commitments depends on the extent of domestic-level uncertainty and the severity of the international-level commitment problem.  Capital exporting democracies face a dilemma: they have to balance between constraining capital importers and maintaining flexibility for themselves. They resolve the dilemma by adjusting their demands for treaty-strictness based on the commitment problem of their partner states, demanding exit clauses that require longer commitment periods when dealing with autocratic importers, while allowing more flexibility with democratic importers. To test our argument, we construct an original dataset of termination features in over 2,500 international investment treaties, conduct elite interviews with treaty negotiators, and find supporting evidence for our theory. This study contributes to the understanding of durability in international institutions, as well as negotiations over economic agreements.

Moderator: Federica Genovese