Hostname: page-component-cd9895bd7-dzt6s Total loading time: 0 Render date: 2024-12-24T05:21:00.716Z Has data issue: false hasContentIssue false
  • English
  • Français

The Domestic Politics of Preferential Trade Agreements in Hard Times

Published online by Cambridge University Press:  22 September 2017

EDWARD D. MANSFIELD  and
HELEN V. MILNER
EDWARD D. MANSFIELD*
Affiliation:
University of Pennsylvania, USA
HELEN V. MILNER
Affiliation:
Princeton University, USA
*
*Email: [email protected]
Get access Rights & Permissions [Opens in a new window]

Abstract

There is evidence that some countries negotiate trade agreements during economic downturns. Why would a leader do this? We argue that political leaders can gain from such agreements because of the signals they send to their public. The public are less likely to blame leaders for adverse economic conditions when they have implemented sound economic policies, such as signing agreements designed to liberalize trade and prevent a slide into protectionism. In hard economic times, leaders – especially those in democratic environments – may find that trade agreements are a useful way to reassure the public. Since majorities in many countries around the world view trade favorably, leaders may see agreements that prevent them from adopting protectionism as a way to maintain support. We evaluate this argument by analyzing preferential trade agreements (PTAs) formed since 1962. We find that, on average, democratic countries are more likely to form PTAs during hard economic times. We also find that democratic leaders who sign PTAs during downturns enjoy a longer tenure than their counterparts who do not sign such agreements.

Type
Review Article
Information
World Trade Review , Volume 17 , Issue 3 , July 2018 , pp. 371 - 403
Copyright
Copyright © Edward D. Mansfield And Helen V. Milner 2017 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Footnotes

Earlier versions of this article were presented at the 2015 annual meeting of the American Political Science Association and at conferences held at Georgetown University, McGill University, Princeton University, and Stanford University. For helpful comments and suggestions, we are grateful to participants in these events, two anonymous reviewers, and to Mark Brawley, Marc Busch, Christina Davis, Dorothy Kronick, Marc Meredith, Lauren Peritz, Michael Tomz, and L. Alan Winters. For research assistance, we are grateful to Dominic De Sapio, Raymond Hicks, and Rumi Morishima.

References

Ai, C. and Norton, E. C. (2003), ‘Interaction Terms in Logit and Probit Models’, Economics Letters, 80: 123–129.Google Scholar
Allee, T. and Elsig, M. (2016), ‘Why Do Some International Institutions Contain Strong Dispute Settlement Provisions? New Evidence from Preferential Trade Agreements’, Review of International Organizations, 11(1): 89–120.Google Scholar
Angrist, J. D. and Pischke, J. (2009), Mostly Harmless Econometrics: An Empiricist's Companion, Princeton, NJ: Princeton University Press.Google Scholar
Baccini, L. and Urpelainen, J. (2015), Cutting the Gordian Knot of Economic Reform: When and How International Institutions Help, New York: Oxford University Press.Google Scholar
Bagwell, K. and Staiger, R. W. (2003), ‘Protection and the Business Cycle’, Advances in Economic Analysis & Policy, 3(1): Art. 3, 1–43.Google Scholar
Baier, S. L. and Bergstrand, J. H. (2004), ‘Economic Determinants of Free Trade Agreements’, Journal of International Economics, 64(1): 29–63.Google Scholar
Beck, N. and Katz, J. N. (2001), ‘Throwing Out the Baby with the Bath Water: A Comment on Green, Kim, and Yoon’, International Organization, 55(2): 487–495.Google Scholar
Beck, N., Katz, J. N., and Tucker, R. (1998), ‘Taking Time Seriously: Time-Series-Cross-Section Analysis with a Binary Dependent Variable’, American Journal of Political Science, 42(4): 1260–1288.Google Scholar
Berry, W. D., DeMeritt, J. H. R., and Esarey, J. (2010), ‘Testing for Interaction in Binary Logit and Probit Models: Is a Product Term Essential?’, American Journal of Political Science, 54(1): 248–266.Google Scholar
Bohara, A. K. and Kaempfer, W. H. (1991), ‘A Test of Tariff Endogeneity in the United States’, American Economic Review, 81(4): 952–960.Google Scholar
Box-Steffensmeier, J. M. and Jones, B. S.. (2004), Event History Modeling: A Guide for Social Scientists, New York: Cambridge University Press.Google Scholar
Brambor, T., Clark, W. R., and Golder, M. (2006), ‘Understanding Interaction Models: Improving Empirical Analyses’, Political Analysis, 14(1): 63–82.Google Scholar
Bueno de Mesquita, B., Smith, A., Siverson, R. M., and Morrow, J. D. (2003), The Logic of Political Survival, Cambridge, MA: MIT Press.Google Scholar
Carter, D. B. and Signorino, C. S. (2010), ‘Back to the Future: Modeling Time Dependence in Binary Data’, Political Analysis, 18(3): 271–292.Google Scholar
Cassing, J., McKeown, T., and Ochs, J. (1986), ‘The Political Economy of the Tariff Cycle’, American Political Science Review, 80(3): 843–862.Google Scholar
Chaudoin, S. (2014), ‘Audience Features and the Strategic Timing of Trade Disputes’, International Organization, 68(4): 877–911.Google Scholar
Cheibub, J. A., Gandhi, J., and Vreeland, J. R. (2010), ‘Democracy and Dictatorship Revisited’, Public Choice, 143(1–2): 67–101.Google Scholar
Conybeare, J. A. (1983), ‘Tariff Protection in the Developed and Developing Countries’, International Organization, 37(3): 441–467.Google Scholar
Cruz, C., Keefer, P., and Scartascini, C. (2016), ‘The Database of Political Institutions 2015’, Washington, DC: Inter-American Development Bank (Updated version of G. Clark, A. Groff, P. Keefer, and P. Walsh (2001), ‘New Tools in Comparative Political Economy: The Database of Political Institutions’, World Bank Economic Review, 15(1): 165–176.)Google Scholar
Davis, C. L. (2012), Why Adjudicate?: Enforcing Trade Rules in the WTO, Princeton NJ: Princeton University Press.Google Scholar
Davis, C. L. and Pelc, K. J. (2017), ‘Cooperation in Hard Times’, Journal of Conflict Resolution, 61(2): 398–429.Google Scholar
de Mestral, A. (2006), ‘NAFTA Dispute Settlement: Creative Experiment or Confusion?’ in Bartels, L. and Ortino, F. (eds.), Regional Trade Agreements and the WTO Legal System, New York: Oxford University Press.Google Scholar
Duch, R. and Stevenson, R. (2008), The Economic Vote: How Political and Economic Institutions Condition Electoral Results, New York: Cambridge University Press.Google Scholar
Dür, A., Baccini, L., and Elsig, M. (2014), ‘The Design of International Trade Agreements: Introducing A New Dataset’, Review of International Organizations, 9(3): 353–375.Google Scholar
European Commission (2016), Eurobarometer Survey 2015, Brussels: European Commission.Google Scholar
Fearon, J. D. (1994), ‘Domestic Political Audiences and the Escalation of International Disputes’, American Political Science Review, 88(3): 577–592.Google Scholar
Freund, C. and Ornelas, E. (2010), ‘Regional Trade Agreements’, Annual Review of Economics, 2(1): 139–166.Google Scholar
Gawande, K., Hoekman, B., and Cui, Y. (2015), ‘Global Supply Chains and Trade Policy Responses to the 2008 Crisis’, World Bank Economic Review, 29(1): 102–128.Google Scholar
Gawande, K., Krishna, P., and Olarreaga, M. (2009), ‘What Governments Maximize and Why: The Viewfrom Trade’, International Organization, 63(3): 491–532.Google Scholar
Ghosn, F. and Palmer, G. (2003), Codebook for the Militarized Interstate Dispute Data, Version 3.0, http://cow2.la.psu.edu.Google Scholar
Gilpin, R. (1987), The Political Economy of International Relations, Princeton, NJ: Princeton University Press.Google Scholar
Gleditsch, N. P., Wallensteen, P., Eriksson, M., Sollenberg, M., and Strand, H. (2002), ‘Armed Conflict 1946–2001: A New Dataset’, Journal of Peace Research, 39(5): 615–637.Google Scholar
Goemans, H. E., Gleditsch, K. S., and Chiozza, G. (2009), ‘Introducing Archigos: A Dataset of Political Leaders’, Journal of Peace Research, 46(2): 269–283.Google Scholar
Gowa, J. and Mansfield, E. D. (1993), ‘Power Politics and International Trade’, American Political Science Review, 87(2): 408–420.Google Scholar
Grossman, G. and Helpman, E. (1994), ‘Protection for Sale’, American Economic Review, 84(4): 833–850.Google Scholar
Gruber, L. (2000), Ruling the World: Power Politics and the Rise of Supranational Institutions, Princeton, NJ: Princeton University Press.Google Scholar
Gurr, T. R., Jaggers, K., and Moore, W. H. (1989), Polity II: Political Structures and Regime Change, 1800–1986, Ann Arbor, MI: Inter-University Consortium for Political and Social Research.Google Scholar
Gurr, T. R. and Jaggers, K. (1995), ‘Tracking Democracy's Third Wave with the Polity III Data’, Journal of Peace Research, 32(4): 469–482.Google Scholar
Hainmueller, J., Mummolo, J., and Xu, Y. (2016), ‘How Much Should We Trust Estimates from Multiplicative Interaction Models? Simple Tools to Improve Empirical Practice’, SSRN Electronic Journal, http://www.ssrn.com/abstract=2739221.Google Scholar
Harbom, L., Strand, H., and Nygård, H. M. (2008), UCDP/PRIO Armed Conflict Dataset Codebook Version 4-2008, Uppsala: Uppsala Conflict Data Program, Centre for the Study of Civil Wars, International Peace Research Institute.Google Scholar
Head, K., Mayer, T., and Ries, J. (2010), ‘The Erosion of Colonial Trade Linkages after Independence’, Journal of International Economics, 81(1): 1–14.Google Scholar
Heckman, J. J. and Snyder, J. M. (1997), ‘Linear Probability Models of the Demand for Attributes with an Empirical Application to Estimating the Preferences of Legislators’, The RAND Journal of Economics, 28: S142–S189.Google Scholar
Henisz, W. J. (2000), ‘The Institutional Environment for Multinational Investment’, Journal of Law, Economics and Organization, 16(2): 334–364.Google Scholar
Henisz, W. J. (2002), ‘The Institutional Environment for Infrastructure Investment’, Industrial and Corporate Change, 11(2): 355–389.Google Scholar
Herrmann, R. K., Tetlock, P. E., and Diascro, M. N. (2001), ‘How Americans Think About Trade: Reconciling Conflicts among Money, Power, and Principles’, International Studies Quarterly, 45(2): 191–218.Google Scholar
Heston, A., Summers, R., and Aten, B. (2011), Penn World Table Version 7.0, Philadelphia: Center for International Comparisons of Production, Income and Prices at the University of Pennsylvania.Google Scholar
Hollyer, J. R. and Rosendorff, B. P. (2012), ‘Leadership Survival, Regime Type, Policy Uncertainty, and PTA Accession’, International Studies Quarterly, 56(4): 748–764.Google Scholar
Hyde, S. D. and Marinov, N. (2012), ‘Which Elections Can Be Lost?’, Political Analysis, 20(2): 191–210.Google Scholar
Jo, H. and Namgung, H. (2012), ‘Dispute Settlement Mechanisms in Preferential Trade Agreements: Democracy, Boilerplates, and the Multilateral Trade Regime’, Journal of Conflict Resolution, 56(6): 1041–1068.Google Scholar
Jones, D. M., Bremer, S. A., and Singer, J. D. (1996), ‘Militarized Interstate Disputes, 1816–1992: Rationale, Coding Rules, and Empirical Patterns’, Conflict Management and Peace Science, 15(2): 163–213.Google Scholar
Kee, H. L., Neagu, C., and Nicita, A. (2013), ‘Is Protectionism on the Rise? Assessing National Trade Policies During the Crisis of 2008’, Review of Economics and Statistics, 95(1): 342–346.Google Scholar
King, G. (2001), ‘Proper Nouns and Methodological Propriety: Pooling Dyads in International Relations Data’, International Organization, 55(2): 497–507.Google Scholar
King, G. and Zeng, L. (2001), ‘Logistic Regression in Rare Events Data’, Political Analysis, 9(2): 137–163.Google Scholar
Kurian, G. T. (1992), Encyclopedia of the Third World, 4th edn. Vol. 1–3, New York: Facts on File.Google Scholar
Laks-Hutnick, J.A. (2013), ‘Learning by Doing or Learning from Others? Diffusion of Information in International Trade Dispute Settlement Mechanisms’, paper prepared for the annual meeting of the International Studies Association, San Francisco, CA, April 4-6.Google Scholar
Latinobarómetro (2001), Latinobarómetro 2001, Santiago, Chile: Latinobarómetro Corporation.Google Scholar
Latinobarómetro (2015), Latinobarómetro 2015, Santiago, Chile: Latinobarómetro Corporation.Google Scholar
Leeds, B. A., Ritter, J., Mitchell, S., and Long, A. (2002), ‘Alliance Treaty Obligations and Provisions, 1815–1944’, International Interactions, 28(3): 237–260.Google Scholar
Lewis-Beck, M. S. and Nadeau, R. (2011), ‘Economic Voting Theory: Testing New Dimensions’, Electoral Studies, 30(2): 288–294.Google Scholar
Lohmann, S. (2003), ‘Why Do Institutions Matter? An Audience-Cost Theory of Institutional Commitment’, Governance, 16(1): 95–110.Google Scholar
Maggi, G. and Rodriguez-Clare, A. (1998), ‘The Value of Trade Agreements in the Presence of Political Pressures’, Journal of Political Economy, 106(3): 574–601.Google Scholar
Maggi, G. and Rodriguez-Clare, A. (2007), ‘A Political-Economy Theory of Trade Agreements’, American Economic Review, 97(4):1374–1406.Google Scholar
Manger, M. (2009), Investing in Protection: The Politics of Preferential Trade Agreements between North and South, New York: Cambridge University Press.Google Scholar
Mansfield, E. D. and Milner, H. V. (2012), Votes, Vetoes, and the Political Economy of International Trade Agreements, Princeton, NJ: Princeton University Press.Google Scholar
Mansfield, E. D., Milner, H. V., and Rosendorff, B. P. (2002), ‘Why Democracies Cooperate More: Electoral Control and International Trade Agreements’, International Organization, 56(3): 477–513.Google Scholar
Mansfield, E. D. and Reinhardt, E. (2003), ‘Multilateral Determinants of Regionalism: The Effects of GATT/WTO on the Formation of Preferential Trading Arrangements’, International Organization, 57(4): 829–862.Google Scholar
Marshall, M. G. and Jaggers, K. (2009), ‘Polity IV Project: Political Regime Characteristics and Transitions, 1800–2009’, Integrated Network for Societal Conflict Research (INSCR) Program, and Center for Systemic Peace (CSP).Google Scholar
Martin, L. L. (2000), Democratic Commitments: Legislatures and International Cooperation, Princeton, NJ: Princeton University Press.Google Scholar
Mitra, D. (2002), ‘Endogenous Political Organization and the Value of Trade Agreements’, Journal of International Economics, 57(2): 473–485.Google Scholar
Nye, J. S. (1988), ‘Neorealism and Neoliberalism’, World Politics, 40(2): 235–251.Google Scholar
Organisation for Co-operation and Development (OECD) (2010), ‘Trade and Economic Effects of Responses to the Economic Crisis’, OECD Trade Policy Studies, Paris: OECD.Google Scholar
Pelc, K. J. 2013 ‘Googling the WTO: What Search-Engine Data Tell Us about the Political Economy of Institutions’, International Organization, 67(3): 629–655.Google Scholar
Pew Research Center (2002), Global Attitudes Survey Project: Summer 2002 Survey Data, Washington, DC: Pew Research Center.Google Scholar
Pew Research Center (2007), Pew Global Attitudes Project: Spring 2007 Survey – Survey of 47 Publics, Washington, DC: Pew Research Center.Google Scholar
Pew Research Center (2008), Global Attitudes Survey Project: Spring 2008 Survey Data, Washington, DC: Pew Research Center.Google Scholar
Pew Research Center (2009), Global Attitudes Survey Project: Spring 2009 Survey Data, Washington, DC: Pew Research Center.Google Scholar
Pew Research Center (2010), Global Attitudes Survey Project: Spring 2010 Survey Data, Washington, DC: Pew Research Center.Google Scholar
Pew Research Center (2011), Global Attitudes Survey Project: Spring 2011 Survey Data, Washington, DC: Pew Research Center.Google Scholar
Pew Research Center (2014), Global Attitudes Survey Project: Spring 2014 Survey Data, Washington, DC: Pew Research Center.Google Scholar
Rosendorff, B. P. (2015), ‘Domestic Politics and International Disputes’, in Martin, L. L. (ed.), The Oxford Handbook of the Political Economy of Trade, Oxford: Oxford University Press.Google Scholar
Staiger, R. W. and Tabellini, G. (1999), ‘Do GATT Rules Help Governments Make Domestic Commitments?’, Economics and Politics, 11(2): 109–144.Google Scholar
Tomz, M. (2007), ‘Domestic Audience Costs in International Relations: An Experimental Approach’, International Organization, 61(4): 821–840.Google Scholar
Tsebelis, G. (2002), Veto Players: How Political Institutions Work, Princeton, NJ: Princeton University Press.Google Scholar
Vandenbussche, H. and Viegelahn, C. (2011), ‘European Union: No Protectionist Surprises’, in P. Bown, C. (ed.), The Great Recession and Import Protection: The Role of Temporary Trade Barriers, London: CEPR and World Bank.Google Scholar
Yarbrough, B. V. and Yarbrough, R. M. (1992), Cooperation and Governance in International Trade: The Strategic Organizational Approach, Princeton, NJ: Princeton University Press.Google Scholar