Empowering Exporters: Reciprocity, Delegation, and Collective Action in American Trade Policy.
Although the field of international political economy (IPE) studies economic behavior and economic policy, it has largely eschewed the mathematical tools of contemporary economics. With Empowering Exporters, Michael Gilligan joins a growing group of scholars who seek to change this. The hook develops formal models of producer lobbying, congressional delegation, and reciprocity to account for American success in reducing trade barriers since the 1934 Reciprocal Trade Agreements Act (RTAA).
Gilligan explains U.S. trade policy as follows. First, reciprocity gives exporters an incentive to lobby for liberalization. Without reciprocity, the costs of protection are concentrated in import-competing industries, while the benefits of liberalization are diffuse. In contrast, a reciprocal trade agreement yields foreign liberalization, the benefits of which are concentrated in export industries. Second, to obtain these concentrated benefits for exporters, Congress delegates trade negotiation authority to the president, who has the sole power to negotiate with foreign governments, and whose preferences generally favor more liberalization. Third, exporter lobbying for reciprocal agreements causes legislators' preferences to shift in favor of greater liberalization. This encourages further delegation to the president.
This analysis of the RTAA will be familiar to many readers, but Empowering Exporters makes the case more convincingly than others. Simply by synthesizing existing work, Gilligan makes a contribution. His synthesis also helps clear up some puzzles in the congressional delegation literature. He rightly argues that delegation does not insulate Congress from constituency pressures because it retains the ultimate power over delegation and the renewal of negotiation authority. This means that liberalization depends in part on shifting congressional preferences. Exporter lobbying not only lowers Congress's ideal tariff but also changes the relative weighting of home and foreign tariffs in each member's utility function, which changes the shape of their indifference contours. In contrast to some other theories, Gilligan argues that delegation does not insulate Congress from constituency pressures but instead transforms those pressures to include a much greater voice for liberalization. Although other scholars also h ave attributed continual American liberalization to changing preferences, Gilligan does this as a logical outgrowth of his model and not in an ad hoc way.
Gilligan's analysis also explains why Congress chose delegation rather than other ways to avoid logrolled tariffs that grant protection to all industries. Several other authors have forcefully argued that delegation avoids the universal logroll, but Gilligan rightly notes that other fixes were available. He argues that Congress wanted not to avoid the logroll but to reduce foreign barriers alongside American tariffs because this would encourage exporter lobbying.
In contrast to this puzzle-solving in the delegation area, Empowering Exporters does not really answer any puzzles in the collective action literature. Gilligan analyzes the incentives for lobbying within a standard Ricardo-Viner model of the economy, focusing on interindustiy variation in the incentives to lobby for reciprocity or protection. Because of several assumptions made for technical reasons, industries do not differ with respect to their position on wages or attitude toward labor, and labor does not appear as an actor distinct from industry interests. The modeling choices here prevent Gilligan from exploring labor's ability to build coalitions on trade policy with some industries but not others, which was an important part of New Deal politics. By the same token, the model does not help us think about organized labor's lobbying, which is an important part of contemporary trade politics.
Gilligan's model of collective action may be problematic for other reasons. The author correctly notes that modern theories have shown, contra Olson, that concentration does not explain variation in the provision of public goods when these are a continuous variable. Yet, Gilligan reintroduces a dichotomous dependent variable by modeling the probability that a given lobbying contribution will be decisive in changing the policy outcome. Contributions are decisive when roughly equal forces are arrayed on both sides of an issue. As exporter contributions rise due to reciprocity, the probability of a proliberalization policy increases, making it more likely that any actor will be pivotal. In response, everyone on both sides of the trade issue will increase contributions. If this analysis is correct, then reciprocity should lead to more divisive political struggles than do unilateral trade policies. But reciprocal trade acts have generally received overwhelming majorities in Congress. This suggests that they are m uch less divisive than the closer and more partisan votes of unilateral tariffs.
Gilligan allots two chapters to testing his model statistically. His evidence suggests that making trade policy reciprocal substantially increases the likelihood that members of Congress will vote in favor of liberalization. Ideology also plays an important role in congressional votes, especially in the Senate, and it seems to soak up any effects of party. Bill-specific dummy variables have a substantively large and statistically significant effect on voting, although it is hard to know how to interpret this fact.
Surprisingly, the economic characteristics of states appear not to explain votes very well. This result stands in contrast to other studies on voting behavior in the United States and on parliamentary divisions in Great Britain from the 1820s to the 1920s. This outcome may stem from Gilligan's choice to control for a state delegation's past voting behavior, a variable that may stand in for many differences in economic structure across the states.
In sum, Empowering Exporters is a well-rounded book whose strengths include a well-developed model and a thorough quantitative analysis of votes on trade bills over the last century. Gilligan's synthesis, however, requires a level of formalization that will discourage many readers. Skeptics of the rational choice approach will be disappointed that this mathematics-intensive synthesis yields relatively few new hypotheses about American trade policy. In contrast, those within the rational choice paradigm will find the book an invaluable point of departure for future research.
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|Publication:||American Political Science Review|
|Article Type:||Book Review|
|Date:||Sep 1, 1999|
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