Trade. In: Oxford Handbook of International Political Economy, Jon Pevehouse & Leonard Seabrooke (eds.), Oxford University Press. 2021.
AbstractLarge and expanding flows of goods across borders are one of the core features of globalization. This chapter surveys the literature on the causes and effects of these trade flows. It examines first what drives these flows, next what moderates the costs and uncertainty firms face in making their export decisions, and lastly the self-perpetuating but inequality-creating impact of international trade. The chapter points out both existing connections and opportunities for further integration between the literatures in international political economy, economics, and comparative politics.
Constant Carbon Pricing Increases Support for Climate Action Compared to Ramping Up Costs Over Time (with Michael Bechtel and Kenneth Scheve). Nature Climate Change. 2020.
AbstractIntroducing policies that increase the price of carbon is central to limiting the adverse effects of global warming. Conventional wisdom holds that gradually raising the costs of climate action will maximize public support relative to other cost paths. Here we explore mass support for dynamic cost paths in four major economies (France, Germany, United Kingdom, and United States). We find that for a given level of average costs, increasing cost paths receive little support while a constant cost schedule is backed by majorities in all countries irrespective of whether those average costs are low or high. Experimental evidence indicates that constant cost paths significantly reduce opposition to climate action relative to increasing cost paths. Preferences for climate cost paths are related to individuals’ time horizons and the desire to smooth consumption over time.
Ratification Politics and Preferential Trade Agreements: Malaysia and the CPTPP (with Nikhar Gaikwad and Kenneth Scheve). Stanford Business School Case Study. 2019.
AbstractWhat does the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) mean for a country like Malaysia? This case investigates the far-reaching domestic ramifications of this type of “mega-regional agreement,” as well as how international agreements can be an important way to strengthen alliances and global standing. The case asks students to evaluate an important decision facing Prime Minister Mahathir Mohamad, a long-serving former prime minister who surprised everyone by winning Malaysia’s May 2018 election. Having come out of retirement to secure his legacy, Mahathir faces a complicated political choice. The previous administration had signed on to the CPTPP, and signatory countries must now pass the deal through their respective domestic approval processes. But Mahathir’s party and government are divided on the deal, which could bring new export and investment opportunities – but also would require Malaysia to make commitments to protect labor rights and intellectual property. These commitments, in turn, could prove politically unpopular at home. The case study asks students to advise on a decision that could alter Malaysia’s economic and political position in the world – should Malaysia ratify the CPTPP as it currently stands? Should Malaysia try to draw the United States back into this regional trade agreement, or push for China’s participation. Is there a way to renegotiate the deal to keep Malaysian businesses happy, but also address concerns by farmers, environmental groups, and human rights activists?
Is There a Future for Multilateral Trade Agreements? (with Judith Goldstein). In: Handbook of Global Trade Policy, Andreas Klasen (ed.), Wiley Blackwell. 2019.
AbstractThis chapter examines the World Trade Organization (WTO), its history and its relevancy today to our understanding of trade agreements. It examines the central norms of the system and compares trade liberalisation under the multilateral WTO with the more exclusive regional and/or preferential trade agreements. The chapter first addresses the political consequences of General Agreement on Tariffs and Trade/WTO membership, focusing both on the rules and norms of the regime and on the explanation for why they have become less functional over time. It then looks at its legislative success and compares that with agreements that have existed simultaneously, but have limited membership. The chapter also looks at the effectiveness of the WTO as a forum for dispute settlement. It further presents some general thoughts on the impact of a rise in populism and other stumbling blocks the WTO faces.
AbstractHundreds of preferential trade agreements (PTAs) exist side-by-side with a multilateral trading system founded on the principle of non-discrimination. While the General Agreement on Tariffs and Trade (GATT) does allow PTAs under specific circumstances, the relationship between the two remains subject to debate. What function do preferential agreements serve within the context of the GATT? Countries faced incentives to continue to engage in bargaining over trade agreements outside of the context of multilateral talks, but were constrained by GATT rules on the topic. Yet because these rules contained some amount of flexibility and ambiguity, countries were able to engage in institutional innovation and create space to form preferential agreements. This paper provides evidence for this interpretation based on detailed product-level tariff data from PTAs. I show that delays in the implementation of concessions gave countries a margin over which to engage in bargaining, that countries stuck closely to strict reciprocity in the value of their concessions, and that their continued protections were targeted to the products where liberalization would have the greatest impact. Overall, these results show we should neither assume that PTAs result in full liberalization nor that states are entirely unconstrained in their creation of PTAs.
AbstractWhen it comes to the role of interest groups in the formation of trade policy, the literature generally thinks of import-competing sectors as particularistic actors in search of protection for their industry. Exporting firms, meanwhile, can be relied upon to even the scales of interest group pressure and push in favor of reciprocal trade liberalization. Extensive empirical evidence shows that exporters are indeed active in ensuring the ratification of trade agreements. Yet exporters are not generically benefitted by all trade liberalization abroad; they are particularly interested in market access in the products they are seeking to export. I argue that during the negotiating phase of trade cooperation, we should expect exporting firms to ask their governments to pursue specifically those concessions from the agreement partner that are valuable to the exporter themselves. Using data on tariff concessions in preferential trade agreements, I show that countries are more likely to grant liberalization if the exporters in the negotiating partner are more politically powerful, when controlling for features of both the product and the partner country. This work contributes to a growing literature on the centrality of exporters in trade liberalization by pointing to the importance of incorporating exporters at not just the ratification but also negotiation stage. The findings also imply that the political structures of trade policy-making may further reinforce the firm concentration effects of liberalization.
AbstractCountries routinely implement policy barriers that make it harder for foreign investors to set up operations within their market, in order to capture rents or protect particular constituencies. However, doing so imposes negative externalities on foreign firms and their home countries, as they miss out on potential profits from the investments. The result is an international cooperation problem akin to the situation created by trade barriers. This paper examines the international politics of investment protectionism, asking when and how countries cooperate to reduce investment barriers. In practice, cooperative investment liberalization has been on the rise in the past few decades and has generally taken place through preferential trade agreements. I argue that the rise of global value chain production and an increase in firm concentration has led to greater political incentives for reciprocal investment liberalization. Bundling investment and trade into a single agreement both enables side-payments and allows states to take into account the strategic interactions between trade and investment barriers. I provide evidence for these arguments based on the creation and content of recent bilateral investment and preferential trade agreements, including a novel industry-level dataset on trade and investment concessions. This paper has implications for the literature on the international politics of investment, focusing on market access rather than expropriation as a major concern for states, and on the design of international cooperation, in thinking about the circumstances under which bundled agreements are attractive and successful.
What Determines Climate Policy Preferences if Reducing Greenhouse-Gas Emissions is a Public Good? (with Michael Bechtel and Kenneth Scheve)
AbstractA wide variety of international policy problems, including climate change, have been characterized as global public goods. This paper adopts this theoretical framework to identify the baseline determinants of public opinion about reducing greenhousegas emissions. We show formally that this model implies that support for climate action will be increasing in future benefits, their timing, and the probability that a given country’s contribution will be decisive while decreasing in expected costs. Utilizing novel data from original surveys in France, Germany, the United Kingdom, and the United States, we provide experimental and observational evidence that expected benefits, costs, and the probability of successful provision are critical for explaining variation in support for climate action. Surprisingly, we find no evidence that the temporality of policy benefits shapes support for climate action. These results suggest effective strategies for building public support for climate action and designing institutions that facilitate global public goods provision.
All About the Money? Regulatory Provisions and Trade Preferences (with Rebecca Perlman)