Foreign Corporate Lobbying and WTO Disputes

• In Event: Lobbying and Firm Influence

Abstract

The influence of foreign corporate lobbying on American politics have resulted in various political speculations. While it is widely assumed that trade disputes incentivize firms to increase lobbying efforts to tackle ongoing tariff issues, this is not always the case. Using firm level data of Global Fortune 500 firms' lobbying in the US between 1999 and 2017, this paper examines the effect of WTO disputes among the US, home, and host countries of multinational corporations on foreign corporate lobbying. The empirical results show that foreign firms increase their lobbying efforts when the US initiates a trade dispute against their home governments. This could either be a response to their national government's political requests or due to custom problems. Foreign firms also increase lobbying efforts when their host governments initiate a dispute against the US in order to be able to access the US market. On the contrary, the liability of foreignness reduces lobbying to the US government when home governments sue the US. In cases where the US initiates a dispute against their host governments, preexisting foreign direct investments in the host country reduce the incentives for market opening, which in turn decreases foreign corporate lobbying.

Authors

• Randall W. Stone, University of Rochester

• Gyu Sang Shim, University of Rochester