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Free trade, fair trade, strategic trade, and protectionism in the U.S. Congress, 1987–88

Published online by Cambridge University Press:  22 May 2009

Stanley D. Nollen  and
Dennis P. Quinn
Stanley D. Nollen
Affiliation:
Professor in the School of Business, Georgetown University, Washington, D.C.
Dennis P. Quinn
Affiliation:
Associate Professor in the School of Business, Georgetown University, Washington, D.C.
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Abstract

What conditions led the One Hundredth Congress of the United States to enact fair trade and strategic trade policies into law during 1987-88? Political partisanship is an important force, with Democrats supporting and Republicans opposing all types of trade intervention. Otherwise, the coalitions of support for and opposition to the various trade policies differ, particularly in the Senate. In that body, international business is associated with support for fair trade policies and with opposition to classical protectionism, while domestic U.S. business is associated with support for classical protectionism. Liberalism is strongly associated with support for fair and strategic trade policies but is not associated with classical protectionism. In the House of Representatives, the long-standing protectionist coalition remains an influence. Few forces in support of free trade remain in U.S. politics. Changing international market conditions rapidly affect the making of U.S. trade policy.

Type
Research Article
Information
International Organization , Volume 48 , Issue 3 , Summer 1994 , pp. 491 - 525
Copyright
Copyright © The IO Foundation 1994

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References

1. The various types of trade policy proposals in Congress are reviewed in Library of Congress, Congressional Research Service, U.S. Trade Policy: Free Trade-Fair Trade and Their Discontents (Washington, D.C.: U.S. Government Printing Office, 23 04 1992)Google Scholar. The main pieces of trade legislation enacted into law during this period were the 1988 U.S.-Canada Free-Trade Agreement, the 1988 Omnibus Trade and Competitiveness Bill and its numerous amendments, and the U.S. First amendment to the Strategic Defense Initiative Research and Development Amendment to the 1987 Defense Authorization Act (Senate vote no. 250, 1987; House vote no. 114, 1987; see Appendix B).

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28. The U.S. Midwest is the most diversified region economically, and comparisons of regional effects will use the voting behavior of Midwestern members of Congress as the point of comparison.

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35. See Porter, Michael, Competitive Strategy (New York: Free Press, 1980)Google Scholar; and Salorio, Eugene M., “Trade Barriers and Corporate Strategies: Why Some Firms Oppose Import Protection for Their Own Industry,” D. B. A. diss., Graduate School of Business Administration, Harvard University, 1992Google Scholar.

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37. Grenzke, Janet M., “Shopping in the Congressional Supermarket: The Currency is Complex,” American Journal of Political Science 33 (02 1989), pp. 1–24CrossRefGoogle Scholar. See also Collie, Melissa P., “Voting Behavior in Legislatures,” in Loewenberg, G., Patterson, S., and Jewell, M., eds., Handbook of Legislative Research (Cambridge, Mass.: Harvard University Press, 1985)Google Scholar; and Evans, Diana, “PAC Contributions and Roll-Call Voting: Conditional Power,” in Cigler, Allan and Loomis, Burdett, eds., Interest Group Politics (Washington, D.C.: CQ Press, 1986)Google Scholar.

38. See Hall, Richard L. and Wayman, Frank W., “Buying Time: Moneyed Interests and the Mobilization of Bias in Congressional Committees,” American Political Science Review 84 (09 1990), pp. 797–820CrossRefGoogle Scholar; and Quinn, Dennis P. and Shapiro, Robert Y., “Business Political Power: The Case of Taxation,” American Political Science Review 85 (09 1991), pp. 851–74CrossRefGoogle Scholar.

39. Magee, , Brock, , and Young, , Black Hole Tariffs and Endogenous Policy Theory, pp. 194–201Google Scholar. See also Ferguson, “From Normalcy to the New Deal.” Destler reports that House Republicans voted 127 to fourty-three to kill the 1962 Trade Expansion Act, while House Democrats voted 210 to fourty-four in its favor. See Destler, , American Trade Politics, p. 174Google Scholar.

40. See, for example, Milner, Resisting Protectionism; and Goldstein, “Ideas, Institutions, and American Trade Policy.” Both works omit partisanship as a variable, but Milner's work focuses on industry preferences, not on policymaking per se. Both studies are reviewed in Odell, “Understanding International Trade Policies.” An important study that treats partisanship as a central variable is Ferguson, “From Normalcy to the New Deal.”

41. Hibbs, Douglas A. Jr, The American Political Economy: Macroeconomics and Electoral Politics (Cambridge, Mass.: Harvard University Press, 1987)Google Scholar.

42. Quinn, Dennis P. and Shapiro, Robert Y., “Economic Growth Strategies: The Effects of Ideological Partisanship on Interest Rates and Taxation,” American Journal of Political Science 35 (08 1991), pp. 656–85CrossRefGoogle Scholar.

43. Discriminating between these versions of partisanship is difficult. One way is to examine the effects of party in light of the effects of economic variables. Because unemployment, export employment, region-based factor proportions, and producer interests are directly modeled in the analysis, estimates of the effects of class partisanship should be diminished by the economic variables and vice versa: that is, these variables should be collinear. If the party variable and most or all of the economic variables are strongly significant, however, then ideological partisanship is likely to be the partisan effect at work.

44. See the discussions in Hansen, “The International Trade Commission and the Politics of Protectionism”; and Shepsle, Kenneth and Weingast, Barry, “Uncovered Sets and Sophisticated Voting Outcomes with Implications for Agenda Institutions,” American Journal of Political Science 28 (02 1984), pp. 49–74CrossRefGoogle Scholar.

45. Whalen and Whalen, Trade Warriors.

46. See Oleszek, Walter J., Congressional Procedures and the Policy Process, 3d ed. (Washington, D.C.: Congressional Quarterly Press, 1989)Google Scholar; and Whalen and Whalen, Trade Warriors.

47. Whalen and Whalen, Trade Warriors.

48. See Davidson, Roger H. and Oleszek, Walter J., Congress and Its Members, 3d ed. (Washington, D.C.: Congressional Quarterly Press, 1990)Google Scholar; and Fenno, Richard F. Jr, Congressmen in Committees (Boston: Little Brown, 1973)Google Scholar.

49. Jacobson, Gary C., The Electoral Origins of Divided Government: Competition in U.S. House Elections, 1946–1988 (Boulder, Colo.: Westview, 1990)Google Scholar.

50. Oleszek, , Congressional Procedures and the Policy Process, pp. 23–29Google Scholar.

51. See Bauer, Raymond, Pool, Ithiel de Sola, and Dexter, Lewis A., American Business and Public Policy (Chicago: Aldine Atherton, 1963)Google Scholar; Pastor, Robert A., Congress and the Politics of U.S. Foreign Economic Policy, 1929–1976 (Berkeley: University of California Press, 1980)Google Scholar; Poole, Keith T., “Recent Developments in Analytical Models of Voting in the U.S. Congress,” Legislative Studies Quarterly 13 (02 1988), pp. 117–33CrossRefGoogle Scholar; and Lenway, Stefanie, The Politics of International Trade (Boston: Pitman, 1985)Google Scholar.

52. McArthur, John and Marks, Steven V., “Constituent Interest Versus Legislator Ideology. The Role of Political Opportunity Cost,” Economic Inquiry 25 (07 1988), pp. 15–25Google Scholar. Compare Goldstein and Lenway, “Interests or Institutions.”

53. See Nollen, Stanley D. and Iglarsh, Harvey, “Explanations of Protectionism in International Trade Votes,” Public Choice 67 (08 1990), pp. 137–53CrossRefGoogle Scholar; and Marks, Stephen V., “Economic Interests and Voting on the Omnibus Trade Bill of 1987,” Department of State Planning and Economic Staff working paper no. 90/18, U.S. Department of State, 1990Google Scholar.

54. See Blinder, Alan S., Hard Heads, Soft Hearts: Tough Minded Economics for a Just Society (Reading, Mass: Addison Wesley, 1987)Google Scholar; and Okun, Arthur M., Equality and Efficiency: The Big Tradeoff (Washington, D.C.: Brookings Institution, 1975)Google Scholar. See also the discussion of unidimensionality below.

55. In cases where members “paired for” or “announced for” a type of trade intervention, we entered a score of 1; in cases where members “paired against” or “announced against,” we entered a score of 0. We omitted from the analysis of a bill those members who either abstained or voted“present.”

56. See Hall, Richard L. and Grofman, Bernard, “The Committee Assignment Process and the Conditional Nature of Committee Bias,” American Political Science Review 84 (12 1990), pp. 1149–66CrossRefGoogle Scholar; and Stratmann, Thomas, “The Effects of Logrolling on Congressional Voting,” American Economic Review 82 (12 1992), pp. 1162–76Google Scholar.

57. VanDoren, Peter M., “Can We Learn the Causes of Congressional Decisions from Roll Call Data?” Legislative Studies Quarterly 15 (08 1990), pp. 311–40CrossRefGoogle Scholar.

58. Widespread vote trading is less likely on trade votes than on narrower bills, such as the dairy, sugar, peanut, wheat, and tobacco amendments to the 1985 Farm Bill examined by Stratmann in “The Effects of Logrolling on Congressional Voting.” Thirty-eight of the trade bills we studied were settled by wide vote margins, which Stratmann notes limits vote trading and logrolling.

59. Nine Senate committees drafted the Senate version of the 1988 Omnibus Trade Bill, and nearly two hundred conferees representing twenty-three House and Senate committees participated in the House-Senate conference on the 1987 Omnibus Trade Bill. On the 1988 bill, see Whalen and Whalen, Trade Warriors; on the 1987 bill, see Oleszek, , Congressional Procedures and the Policy Process, p. 246Google Scholar.

60. The rule passed by a vote of 305 to 111, and the Textile and Apparel Trade Act passed by a vote of 263 to 156. Forty-nine Democrats voted for the rule but did not vote for passage of the act.

61. A full appendix, which lists all the bills and offers a short description of each, is available from the authors.

62. For a more general discussion of ideology in U.S. politics, see Poole, Keith T. and Rosenthal, Howard, “On Dimensionalizing Roll Call Votes in the U.S. Congress: A Controversy,” American Political Science Review 85 (09 1991), pp. 955–60CrossRefGoogle Scholar.

63. Jackson and Kingdon, as well as VanDoren, make the theoretical point that using ideology measures drawn from previous roll call votes to explain other roll call votes is biased. See Jackson, John E. and Kingdon, John W., “Ideology, Interest Group Scores, and Legislative Votes,” American Journal of Political Science 36 (08 1992), pp. 805–23CrossRefGoogle Scholar; and VanDoren, “Can We Learn the Causes of Congressional Decisions from Roll Call Data?” We believe that we should not omit this important variable and so continue to use the ideology measure but supplement the measure with a second proxy measure of ideology (see Table 1). An objection to the ADA measure is raised by McArthur and Marks, “Empirical Analyses of the Determinants of Protection.” They offer evidence that the liberalism rating compiled by the National Journal is a (slightly) better predictor of members' votes on trade and economic issues than is the ADA rating. In their studies the coefficient of the National Journal rating was larger and more significant than that of the ADA rating, and the percentage of votes correctly predicted either did not change or increased by 1 or 2 percent when the National Journal rating was used. We use the ADA rating nevertheless for two reasons. First, we wish to compare our findings to previous studies of trade votes, most of which use the ADA rating as the measure of ideology. Second, we are persuaded by the studies that find unidimensionality of policy space, which suggests that members' ideological views on economic issues and social issues may not be separated; see Poole and Rosenthal, “On Dimensionalizing Roll Call Votes in the U.S. Congress.” If ideology is one construct, then the ADA measure, which is broader than the National Journal measure, is appropriate.

64. For a discussion of the errors that result from failing to control for “unobservables,” see Jacobson, Robert, “Unobservable Effects and Business Performance,” Marketing Science 9 (Winter 1990), pp. 74–95CrossRefGoogle Scholar. See also Stratmann, “The Effects of Logrolling on Congressional Voting.”

65. For the Senate, we used the bill to forbid the use of imported cement in U.S. federal highway projects and for the House, we used the (contested) rule vote for the Omnibus Trade Bill to calculate this variable. On the stability of congressional voting patterns, see Asher, Herbert B. and Weisberg, Herbert F., “Voting Changes in Congress,” American Journal of Political Science 22 (05 1978), pp. 391–425CrossRefGoogle Scholar.

66. Of course, this result is shaped by several votes on protectionist amendments to the textile import quotas bill, which were of special interest to the South and the Northeast. In another Congress, this result might not occur, though protectionist groups tend to join together in logrolling.

67. One variable—membership on the third House subcommittee, the Subcommittee on International Development, Finance, Trade, and Monetary Policy—did not influence trade votes.

68. We should caution that the causal relationship between roll call votes and PAC contributions is not established, as these results are consistent both with the belief that PAC dollars buy members' votes and with the belief that business PAC contributions go to members as rewards for their previous support of PAC interests.

69. Marks and McArthur noted that the partisanship finding has been robust across many studies but were concerned, as are we, that “the link between congressional voting and campaign contributions or party affiliation is not totally clear in theoretical terms.” See Marks, and McArthur, , “Empirical Analyses of the Determinants of Protection,” pp. 120–21Google Scholar.

70. For the theoretical development of the argument and a number of tests of the theory, see Quinn and Shapiro, “Economic Growth Strategies.”

71. Whalen andWhalen, Trade Warriors.

72. One clue as to a relationship is from Marks, and McArthur, , “Empirical Analyses of the Determinants of Protection,” p. 125Google Scholar. The National Journal rating of liberalism, when compared with the ADA rating of liberalism, has the strong effect of diminishing the probit coefficients of party by more than 65 percent. The National Journal rating is an economic ideology measure, so perhaps it captures some of the force of beliefs about macroeconomic policies that is manifested in ideological partisanship.

73. See Destler, , American Trade Politics, “A Less Protected Congress,” pp. 65–104Google Scholar.