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Industrial Crisis and the Open Economy: Politics, Global Trade, and the Textile Industry in the Advanced Economies.

Industrial Crisis and the Open Economy: Politics, Global Trade, and the Textile Industry in the Advanced Economies. By Geoffrey R. D. Underhill. New York: St. Martin's, 1999. 280p. $65.00.

The politics and process of trade policy formation have captured the research interest of many scholars. A growing number use formal models to examine the behavior of interests groups, institutions (e.g., Michael J. Gilligan, Empowering Exporters, 1997; Sharyn O'Halloran, Politics, Process, and American Trade Policy, 1994), and the interaction of these factors at the domestic and international level (e.g., Helen V. Milner, Interests, Institutions, and Information, 1997; Beth A. Simmons, Who Adjusts? 1994). Industrial Crisis takes a traditional approach to explain, in particular, the rise and decline of protection in the clothing and textile industry. Underhill's study is motivated by two principal questions: Why did the Multi-Fibres Arrangement (MFA) for the textile and clothing sector, signed in 1973, emerge during a period when liberalization of manufactured goods trade was generally expanding and increasing in scope? What factors explain why states that expended great efforts to secure international cooper ation on the MFA subsequently led the way to dismantle it during trade negotiations in the Uruguay Round? To answer these questions Underhill provides a detailed account of the textile industry that is an extensive case study, beginning in the early 1970s and extending roughly twenty years.

In response to the first question, Underhill explains the reasoning behind the policy preferences among textile and clothing interests. Not surprisingly, in the face of an industrial crisis that began to emerge in the early 1970s, inefficient clothing producers and textile manufacturers, unwilling or unable to adapt to a highly competitive, dynamic marketplace, demanded a variety of subsidies and import restrictions to ease the pain of adjustment. Both readers who are unfamiliar with and interested in the technical complexities of the textiles and clothing industry will be engaged from the beginning. Chapter 1 gives an intricate description of the complex web of interrelationships between producers of raw fibers and manufacturers who assemble clothes and related finished products. Although each stage of the process uses different technologies and has distinct factor mixes, Underhill convincingly demonstrates the interdependencies. Dislocation at any stage is shown to have negative repercussions on production and manufacturing in the entire sector, which forms the logical basis for the convergence in preferences among the various interests in this industry. Chapter 2 delves into the particulars of domestic demand for clothing and textiles in the French market. Within only ten years, demand for finished products dropped, growth slowed, and the level of foreign competition increased. As the analysis of the French case demonstrates, many firms were unwilling to take advantage of their competitive factor mixes or seize opportunities created by the changing market, hence the emergence of a crisis that unified the industry's demand for protection and the eventual passage of the MFA.

Although Underhill does a thorough job of establishing the basis for the policy preferences of textile firms, he falls short of demonstrating how these interests successfully organized and later interacted with institutions to influence policy. Chapter 3 examines the pattern of state-industry relations in France with the intended purpose of showing how the textile industry captured the domestic trade policy agenda, but unlike Mancur Olson's The Logic of Collective Action (1968) and the works cited above, there is no convincing account for the logic associated with these interests organizing. Instead, Underhill describes the sector's development in postwar France in an effort to elicit its economic and political salience to the overall economic well-being of the state. Although the regional distribution of the industry was concentrated in particular communities, this alone does not translate into effective political pressure or sufficiently explain the responsiveness of policymakers. Missing in the details of the French experience is a framework that effectively delineates the formation of coalitions, political pressure, and responsiveness by policymakers, all of which can be generalized to the experience of other states.

Important textile groups in Britain and the United States are discussed in some detail, but the extent of their influence is demonstrated through a series of interviews with people involved in the MFA negotiations. Noticeably absent is a sense of how these groups successfully infiltrated the policymaking agenda. This is important because a number of manufacturing interests were competing to influence the trade policy agenda in favor of liberalization. For example, manufacturing exporters in the United States, which had gained political power over time, were able to influence the passage of the 1962 Trade Expansion Act and other trade policies designed to increase free trade. Their success was due in part to the 1934 Reciprocal Trade Agreement Act and its various extensions, which served to lower the costs to these interests associated with collective action and create the conditions necessary to shift legislative preferences away from protection toward liberalization. These arguments have recently been expre ssed by Gilligan (Empowering Exporters, 1997) and Michael Bailey, Judith Goldstein, and Barry Weingast ("The Institutional Roots of American Trade Policy: Politics, Coalitions, and International Trade," World Politics 49 [1997]: 309-38). In light of this work, Underhill is unable to answer sufficiently a principal question motivating his research.

Underhill extends his conjecture in chapter 4 to the activities of a transnational coalition of textile interests and their purported capture of the policy agenda in the international domain. One might expect a discussion about the dynamics of bargaining at both the domestic and international level, but there is little explanation of either the formation of an international coalition (e.g., the mobilization of these groups across states) or how it could exert political pressure on policymaking in multilateral institutions. In this sense, one strength of this book becomes one of its greatest weaknesses. Most of the discussion centers on France. Although this provides immense detail about the variety of actors and interests involved in the policymaking process associated with the MFA, it is not clear how gencralizable the conjectures are to other states involved in the bilateral negotiations. For example, although Britain and the United States are democratic states, they have different political institutions. How interest groups forge linkages and exert political pressure on policymaking varies among the states in Underhill's study. As expressed by Milner (Interests, Institutions, and Information, 1997) and by George Tsebelis ("Decision-Making in Political Systems: Veto Players in Presidentialism, Parliamentarianism, Multicameralism and Multipartyism," British Journal of Political Science 24 [1995]:289-325), variations in constitutional authority, electoral incentives, and the distribution of political authority affect decision making on policy across variable political systems.

Although Underhill does not adequately appreciate how variations in political institutions across states influence the formation of trade policy, Industrial Crisis and the Open Economy amply illustrates that explanations of policy focusing solely on structural determinants are inadequate. This is demonstrated time and again by Underhill's thorough analysis of interests associated with the French textile and clothing industry.
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Title Annotation:Review
Author:Bennett, Sherry L.
Publication:American Political Science Review
Article Type:Book Review
Date:Mar 1, 2000
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