Selling the Nation
The Racialization of International Trade
Diana Mutz, Edward Mansfield & Eunji Kim
Political Psychology, forthcoming
Despite their less vulnerable economic status, white individuals' attitudes toward overseas trade in the United States may have become more protectionist than those of economically disadvantaged minorities. We present results from five different studies examining two different ways in which trade may have become racialized. First, we examine the extent to which a person's racial identity is associated with levels of trade support. Second, we examine whether the predominant racial identity of a potential trading‐partner country influences people's willingness to trade with that country. Using various surveys and multiple survey experiments conducted over the past 12 years, we find that white individuals have become less supportive of trade than minorities and that whites are more likely than minorities to favor trade with highly similar countries. We suggest that minority support for trade is due to four well‐documented differences in the psychological predispositions of whites and minorities in the United States. Minorities have lower levels of racial prejudice, are lower in social dominance, and express less nationalism than whites. At the same time, there is evidence of rising ingroup racial consciousness among whites. Each of these characteristics has been independently linked to trade support in a direction encouraging greater support for trade among minorities. As the United States grows ever closer to becoming a “majority minority” nation, the racialization of trade attitudes may stimulate shifts in the likely future of America's trade relationships.
Tariffs As Electoral Weapons: The Political Geography of the US–China Trade War
Sung Eun Kim & Yotam Margalit
International Organization, Winter 2021, Pages 1-38
In response to President Trump instigating conflict over trade with China, the Chinese government countered by issuing tariffs on thousands of products worth over USD 110 billion in US exports. We explore whether China's tariffs reflected a strategy to apply counterpressure by hurting political support for the president's party. We also assess the strategy's impact on the 2018 midterm elections and examine the mechanism underlying the resulting electoral shift. We find strong evidence that Chinese tariffs systematically targeted US goods that had production concentrated in Republican-supporting counties, particularly when located in closely contested Congressional districts. This apparent strategy was successful: targeted areas were more likely to turn against Republican candidates. Using data on campaign communications, local search patterns online, and an original national survey, we find evidence that voters residing in areas affected by the tariffs were more likely to learn about the trade war, recognize its adverse impact, and assign the Republicans responsibility for the escalating dispute. These findings demonstrate how domestic political institutions can be a source of vulnerability in interstate disputes.
Trade Competition and Worker Compensation: Why Do Some Receive More than Others?
Sung Eun Kim & Krzysztof Pelc
International Studies Quarterly, forthcoming
Dealing with the distributional consequences of trade liberalization has become one of the key challenges facing developed democracies. Governments have created compensation programs to ease labor market adjustment, but these resources tend to be distributed highly unevenly. What accounts for the variation? Looking at the largest trade adjustment program in existence, the US’ Trade Adjustment Assistance (TAA), we argue that petitions for compensation are largely driven by legislative attitudes. When legislators express negative views of TAA, individuals in their districts become less likely to petition for, and receive, compensation. This effect is especially pronounced in Republican districts. An underprovision of TAA, in turn, renders individuals more likely to demand other forms of government support, like in-kind medical benefits. We use roll-call votes, bill sponsorships, and floor speeches to measure elite attitudes, and we proxy for the demand for trade adjustment using economic shocks from Chinese import competition. In sum, we show how the individual beliefs of political elites can be self-fulfilling.
A world fit for money laundering: The Atlantic alliance’s undermining of organized crime control
Mary Alice Young & Michael Woodiwiss
Trends in Organized Crime, March 2021, Pages 70–95
This is the untold history of how prominent civil servants in the UK tailored US-devised anti-money laundering (AML) policies in ways that suited the needs of Britain’s financial services industry. In the aftermath of these initial compromises in 1987, criminal money managers in both the US and the UK were able to continue to operate in an environment that easily allowed them to hide and use dirty money. The researchers analysed six months of previously unseen personal correspondence and documents exchanged between various actors in the UK Government during 1987. From this they conclude that the core of the current, global AML regime, was not the destruction of drug money laundering and banking secrecy, nor the ending of criminal financial enablers and with it hot money; rather it was the protection and leverage of national trading interests on both sides of the Atlantic. And the drive to protect these interests would see crime control laws made, amended and changed to cater for the interests of the US and UK banking and finance industries. The file had been classified as secret and held by the UK Treasury until it was released to the public in 2017 as an archive document transferred to The National Archives in accordance with The Public Records Act and the Freedom of Information Act.
The puzzling change in the international transmission of U.S. macroeconomic policy shocks
Ethan Ilzetzki & Keyu Jin
Journal of International Economics, forthcoming
We demonstrate a dramatic change over time in the international transmission of US monetary policy shocks. International spillovers from US interest rate policy have had a different nature since the 1990s than they did in post-Bretton Woods period. Our analysis is based on the a panel of 21 high income and emerging market economies. Prior to the 1990s, the US dollar appreciated, and ex-US industrial production declined, in response to increases in the US Federal Funds Rate, as predicted by textbook open economy models. The past decades have seen a shift, whereby increases in US interest rates depreciate the US dollar but stimulate the rest of the world economy. Results are robust to several identification methods. We sketch a simple theory of exchange rate determination in face of interest-elastic risk aversion that rationalizes these findings.
A Turbulent Silk Road: China's Vulnerable Foreign Policy in the Middle East and North Africa
Andrea Ghiselli & Pippa Morgan
China Quarterly, forthcoming
The nexus between China's human and economic presence abroad and its security policy is increasingly important. Within this nexus, this study statistically explores whether and to what extent Chinese contractors reduce the number of Chinese nationals they send to work in North Africa, the Middle East and the Horn of Africa when the security situation in host states worsens. We find no significant evidence that either warnings from Chinese embassies and consulates to leave host countries or expert perceptions of host stability influence the number of Chinese workers. Worker numbers appear to decrease significantly only in the aftermath of large-scale violent events. These findings suggest that Chinese companies are relatively acceptant of security risks and uncertainties, despite the decade-long regulatory efforts of the Chinese government to make them more security-conscious overseas and, thus, to reduce pressure to use diplomatically and economically expensive military means for their protection.
“Exit” vs. “Voice”: Global Sourcing, Multinational Production, and the China Trade Lobby
Business and Politics, forthcoming
This paper examines the influence of three different forms of global economic engagement on the lobbying behavior of US businesses with regard to trade relations with China: (a) input sourcing; (b) downstream export; and (c) vertical foreign direct investment. It will be hypothesized that firms involved in all three forms of global economic activities should have incentives to lobby over China-related trade issues in order to maintain unimpeded access to sources of supply or markets and to ensure the smooth operation of the entire supply chain. Going further, drawing on the exit-voice framework developed by Albert Hirschman (1972), it will be argued that compared to firms in those industries mainly involved in input sourcing from China, American multinational corporations that have verticalized their production should have even stronger incentives to engage in lobbying activities and “voice” their policy preferences due to their greater “sunk costs” and hence the higher cost of “exit.” Statistical analysis of the China trade-related lobbying activities of US firms between 2006 and 2016 lends substantial support to these conjectures.
Trade Rage: Audience Costs and International Trade
Don Casler & Richard Clark
Journal of Conflict Resolution, forthcoming
Politicians frequently issue public threats to manipulate tariffs but only sometimes follow through. This behavior theoretically ought to generate audience costs. We therefore test the validity of audience costs in trade war settings through a vignette-based survey experiment. The vignettes describe a hypothetical situation involving the U.S. and a second country (China, Canada, or unspecified) with whom the U.S. has a trade deficit. The president (Democrat, Republican, or unspecified) either maintains the status quo, threatens to impose tariffs and backs down, or threatens to impose tariffs and follows through. Our findings highlight differences between security and trade conflict when it comes to audience costs and presidential approval. While Americans sanction the president for issuing a threat to raise tariffs, they generally support backing down. Regression modeling and text analysis of a free response question from our surveys suggest this is because consumers are wary of paying the costs of tariffs.
Challenged in Geneva: WTO Litigation Experience and the Design of Preferential Trade Agreements
Simon Wüthrich & Manfred Elsig
Business and Politics, forthcoming
What explains the design of international institutions? Existing research has largely neglected how experience in cooperation in one set of international institutions impacts on design choices made by states in other globally-oriented institutions. We contribute to this evolving debate by analyzing spillovers in experience in international trade. We argue that countries' track record of interaction in multilateral trade disputes affects the design of their preferential trade agreements (PTAs). If a country participates in a complaint against a prospective PTA partner at the World Trade Organization (WTO), the challenge in Geneva alerts the defendant's import-competing industries with respect to potential challenges under the planned PTA. As a result, these industries exert pressure on their government to preserve leeway under the future treaty, leading to increased flexibility and a lower level of enforcement in the PTA. We find support for our hypotheses in an empirical analysis of 347 PTAs concluded post 1990.
War and trade in the peaceful century: The impact of interstate wars on bilateral trade flows during the first wave of globalization, 1830–1913
Lars Karlsson & Peter Hedberg
Economic History Review, forthcoming
This article examines the impact of war on trade between 1830 and 1913, that is, during the so‐called first wave of globalization. It has been argued that one of the main reasons for the rapid integration of commodity and factor markets that took place during this period was the peaceful character of the post‐Napoleonic nineteenth century. However, little research has been conducted on the actual impact of wars on international trade during this period. Previous research on the link between war and trade in general has found that war reduces trade both between belligerents and between belligerents and third parties (or neutrals). Apart from a handful of country case studies, this research has focused almost exclusively on the period before or after the peaceful nineteenth century. Our results show that, in the nineteenth century, the negative influence of war on trade was mainly limited to the belligerent economies, while belligerent–neutral trade was either unaffected or even increased during times of war. Also, in contrast to the findings of research on twentieth‐century wars, we find that nineteenth‐century wars had a strictly contemporaneous impact on trade, with a return to normalcy ensuing shortly after the cessation of hostilities.