Global Value Chains and Trade Politics: China, Japan, and the U.S. Compared

• In Event: Political Economy of East Asia

Abstract

During the 1990s, the nature of globalization began to change. Fragmentation of manufacturing led to the development of global value chains (GVCs) by multinational corporations, and it has become common practice for different stages of manufacturing production to be located in different countries. GVCs based intra-industry trade requires a different kind of rule-making for international trade, and it has changed the political economy of domestic response to international trade agreements. Domestic politics of foreign economic policy differs depending on the state’s domestic political and economic institutions as well as the nature of the international economic agreement. Interestingly, the free trade agreements for GVCs based trade such as the Trans-Pacific Partnership, now the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, tend to be intrusive, which require the signatories to commit to politically sensitive domestic economic reforms, such as the state-owned enterprise reform in China. This paper explores how the spread of GVCs has changed political economy of domestic response to international trade. Its scope is limited to an analysis of China, Japan, and the United States, as lessons from these three countries could translate to other countries.

Author

• Hiroki Takeuchi, Southern Methodist University