Firm-Level Politics of Trade

Session Submission Type: Full Paper Panel

Session Description

This session explores various firm-level interests intertwined with trade politics. Numerous recent studies have found that firms are the major drivers in shaping trade policy outcomes. All five papers in this session, using original datasets, strongly attest to such argument that firms engage in various political channels in an effort to have trade policies aligned to their preferences as close as possible.

The first paper argues that multinational corporations support preferential trade agreements because they are high-productivity firms that engage in significant related-party trade, and they seek to shape the terms of such agreements to limit competition and enhance their own competitiveness. An original firm-level dataset capturing the number of news search hits pertaining to trade agreements that mention particular Fortune 500 firms and their lobbying activities supports the theory.

The second paper introduces a new explanation of the source of privileged treatment for firms from their home government. With a particular focus on anti-dumping petitions in the US, the paper finds that position of a firm within the economy is a key determinant of successful petitions. To test this argument, the authors match data on anti-dumping petitions from the US with data on linkages between firms in the domestic economy. The evidence shows that firms are more likely to see petitions accepted for products that draw on a larger set of suppliers, thus extending the benefits of protectionist policy across firms.

The third paper theorizes that business groups strategically engage in informational lobbying to shape government policies and governments are most responsive to the groups' information provision when they receive consistent signals, and when they come from strategically important actors. The author tests the theory by examining public comments submitted to the Special 301 annual review of intellectual property rights (IPR) protection in the United States. The results suggest that consistency of information provision across business interests – repeated mentions of specific countries that violate IPR standards – is associated with increased likelihood of being targeted by the US Trade Representative (USTR).

The fourth paper delves into the determinants of individual preferences for trade liberalization, using survey experiment. The paper focuses on addressing the concern of selection issue that the observed effect of firms on individual trade opinion is driven entirely by unobserved individual characteristics, because employees select into companies. Another interesting finding is that less-productive firms may be more successful at mobilizing employees in support of their preferred policies. This is because individuals find losses more displeasing than they find similar gains attractive and such sense of loss aversion leads individuals to take greater risks to avoid losses from trade liberalization than to achieve gains.

The last paper captures how firms shift policymaking decisions by supplying key sources of information tendered to their own private interests. Using novel text data from approximately 1,500 oral history interviews with former diplomats—covering 166 states and comprising over 34M words—the author shows that the opening of a new American Chamber of Commerce branch, which is a private interest group composed of U.S. firms that operates in specific host states, causes a shift in diplomatic attention towards economic and commercial policy at the bilateral level.

Sub Unit

• Division 16: International Political Economy

Individual Presentations

• The Pro-Trade Lobby: MNCs and PTAs - Jihye Park, University of Geneva; Randall W. Stone, University of Rochester

• Production Networks and US Anti-Dumping Petitions - Timm Betz, LMU Munich; Leonhard Hummel, Technical University of Munich

• US Corporations and Extraterritorial Intellectual Property Regulation - Siyao Li, University of Pittsburgh

• When Do Employees Align with Their Companies? - Haillie Na-Kyung Lee, Seoul National University

• Informational Lobbying and Commercial Diplomacy - Calvin Thrall, Columbia University

Chair

• In Song Kim Massachusetts Institute of Technology

Discussants

• In Song Kim Massachusetts Institute of Technology

• Rachel Wellhausen University of Texas at Austin