678 International Organization The RTAA,the Parties,and Reciprocity An alternative thesis that also appears in most accounts of the RTAA and postwar U.S.trade policy concentrates more on the partisan character of U.S.trade politics in the 1930s.The basic argument involves recognizing the partisan origins of the RTAA in the long struggle by the Democrats,the traditional champions of free trade,to remove the protectionist edifice built during Republican political dominance in the period since the end of the Civil War.30 The Democrats had tried unilateral reductions of tariff protection when they briefly gained control of government in this period, passing the Wilson-Gorman Act in 1894 and the Underwood Tariff Act in 1913.The Republicans simply reinstated tariffs on returning to power in 1896 (the Dingley Tariff Act)and 1922(the Fordney-McCumber Act).In 1934,so the story goes,the Democrats tried again.But this time they tried to lock in the results by delegating to the executive branch the authority to negotiate reciprocal trade agreements. The key point in this argument is that the president was not delegated authority to set tariffs at any level,only to alter rates in response to the concessions made by other nations.31 Ordinarily,the odds are against export interests having much of an impact on trade politics.To organize for political action would require overcoming severe collective action problems:as long as domestic tariff cuts are not linked directly to market access for their products exporters,all share a general preference for lower tariffs (to avoid closure in foreign markets and to lower costs of inputs)and so the benefits of any political action are greatly dispersed.By instituting that policymaking proceed on the principle of reciprocity,the Democrats,in I.M.Destler's words, "shifted the balance of trade politics by engaging the interests of export producers, since tariff reductions could now be defended as direct means of winning new mar- kets for American products overseas."32 Michael Bailey,Judith Goldstein,and Barry Weingast develop this argument with the aid of a simple spatial model in which actors have preferences over foreign as well as domestic tariff levels.33 All actors in the domestic political scene are assumed to prefer that foreign tariffs are as low as possible to benefit exporters.But,in view of the historical positions of the two parties,the median Democratic legislator's ideal point is assumed to be less protectionist that the ideal point of the median Republi- can.From there the logic is simple.If the leadership of the Democratic majority in Congress(in 1934)is restricted to making unilateral reductions in tariffs,the best that can be done is to shift policy as close to the Democratic ideal as possible while still offering a proposal that the floor median will prefer to the status quo.But if a recipro- cal trade deal can be made with the foreign government,tariff reductions confer added benefits to all domestic actors by simultaneously reducing foreign tariffs.This opens up a range of outcomes closer to the low-tariff Democratic ideal that are now preferred by the floor median to the status quo.The Democratic leadership can thus 30.See Pastor 1980;and Schnietz 1994 31.Gilligan1997,12. 32.Destler1992,16. 33.Bailey,Goldstein,and Weingast 1997
678 International Organization The RTAA, the Parties, and Reciprocity An alternative thesis that also appears in most accounts of the RTAA and postwar U.S. trade policy concentrates more on the partisan character of U.S. trade politics in the 1930s. The basic argument involves recognizing the partisan origins of the RTAA in the long struggle by the Democrats, the traditional champions of free trade, to remove the protectionist edifice built during Republican political dominance in the period since the end of the Civil War.30 The Democrats had tried unilateral reductions of tariff protection when they briefly gained control of government in this period, passing the Wilson-Gorman Act in 1894 and the Underwood Tariff Act in 19 13. The Republicans simply reinstated ta7iffs on returning to power in 1896 (the Dingley Tariff Act) and 1922 (the Fordney-McCumber Act). In 1934, so the story goes, the Democrats tried again. But this time they tried to lock in the results by delegating to the executive branch the authority to negotiate reciprocal trade agreements. The key point in this argument is that the president was not delegated authority to set tariffs at any level, only to alter rates in response to the concessions made by other nations.31 Ordinarily, the odds are against export interests having much of an impact on trade politics. To organize for political action would require overcoming severe collective action problems: as long as domestic tariff cuts are not linked directly to market access for their products exporters, all share a general preference for lower tariffs (to avoid closure in foreign markets and to lower costs of inputs) and so the benefits of any political action are greatly dispersed. By instituting that policymaking proceed on the principle of reciprocity, the Democrats, in I. M. Destler's words, "shifted the balance of trade politics by engaging the interests of export producers, since tariff reductions could now be defended as direct means of winning new markets for American products overseas. "32 Michael Bailey, Judith Goldstein, and Barry Weingast develop this argument with the aid of a simple spatial model in which actors have preferences over foreign as well as domestic tariff levels.33 All actors in the domestic political scene are assumed to prefer that foreign tariffs are as low as possible to benefit exporters. But, in view of the historical positions of the two parties, the median Democratic legislator's ideal point is assumed to be less protectionist that the ideal point of the median Republican. From there the logic is simple. If the leadership of the Democratic majority in Congress (in 1934) is restricted to making unilateral reductions in tariffs, the best that can be done is to shift policy as close to the Democratic ideal as possible while still offering a proposal that the floor median will prefer to the status quo. But if a reciprocal trade deal can be made with the foreign government, tariff reductions confer added benefits to all domestic actors by simultaneously reducing foreign tariffs. This opens up a range of outcomes closer to the low-tariff Democratic ideal that are now preferred by the floor median to the status quo. The Democratic leadership can thus 30. See Pastor 1980; and Schnietz 1994. 31. Gilligan 1997, 12. 32. Destler 1992, 16. 33. Bailey, Goldstein, and Weingast 1997
Institutional Reform and Trade Liberalization 679 achieve a more liberal outcome by linking tariff cuts at home to tariff cuts abroad and delegating negotiating power to the president. But how could such a simple maneuver have lasting effects in the face of changes in government,given what we know about the powerful interests(still largely back- ing Republicans)that were opposed to liberalization?Bailey,Goldstein,and Wein- gast argue that the RTAA liberalization was self-sustaining for two broad reasons:an inherent"durability"and its "long-term effects."The first leg of the argument states that the RTAA would last as long as the Republicans did not win back unified control of government or,more importantly,in the event they did,as long as the floor medi- an's ideal point did not shift too much in favor of protection.The second leg states that the RTAA had long-term effects because increasing levels of trade reduced the political weight of import-competing interests and increased the political weight of export interests.Bailey,Goldstein,and Weingast go so far as to suggest that many industries facing import competition simply disappeared and so dropped out of the political calculus.34 As a consequence,they argue that the ideal points of all the political actors (Democrat and Republican alike)shifted toward lower levels of protection. There are several problems with this partisan-reciprocity story.First,under the given assumptions about party preferences,a subsequent Republican victory would imply a significant shift in the floor median toward the Republican median prefer- ence for higher protection-and thus we should expect that the Republican leader- ship could then defeat the delegation tariff with a high tariff proposal.Bailey,Gold- stein,and Weingast fall back on the notion that a Republican president might be an internationalist with preferences closer to the Democrats,with the implication that, for a Republican victory to reverse the RTAA equilibrium,floor preferences would have to shift far enough to be able to defend a high tariff proposal from a presidential veto.However,given the highly protectionist track record of Republican administra- tions up to 1934,such an assumption could not have been a reasonable basis for the RTAA gambit.Republican presidents had been ardently protectionist. Worse perhaps,it is simply not true that industries facing import competition dis- appeared from the political scene:on the contrary,they dug in and fought for excep- tions from trade agreements,often with tremendous success (in the form of nontariff barriers).Destler rightly notes that the very success of trade reform actually acted as a "multiplier"of trade pressures and generated an increased number of producers adversely affected by foreign competition.Studies of legislative votes on trade bills from periods both before and after 1934 indicate that lobbying by import-competing industries has actually become more important in determining voting decisions.35 It 34.Ibid,329. 35.See Gilligan 1997;and Hiscox 1997.Hathaway's study of changes in the footwear,textile,and apparel industries since the 1950s indicates that tariff reductions may have led ultimately to a decline in protectionist pressure by the 1990s,though only after decades of hard-fought political battles.Hathaway 1998.It is quite true that if political resistance to liberalization is unsuccessful,adjustment-in the form of downsizing or exiting an industry,investment in new technology,or investment in production abroad-can lead to a long-term decline in protectionist pressure in an industry.Destler's point is broader,of course: liberalization and the expansion of international trade makes it more likely that a greater range of firms and industries in the local economy will face competition from foreign imports
Institutional Reform and Trade Liberalization 679 achieve a more liberal outcome by linking tariff cuts at home to tariff cuts abroad and delegating negotiating power to the president. But how could such a simple maneuver have lasting effects in the face of changes in government, given what we know about the powerful interests (still largely backing Republicans) that were opposed to liberalization? Bailey, Goldstein, and Weingast argue that the RTAA liberalization was self-sustaining for two broad reasons: an inherent "durability" and its "long-term effects." The first leg of the argument states that the RTAA would last as long as the Republicans did not win back unified control of government or, more importantly, in the event they did, as long as the floor median's ideal point did not shift too much in favor of protection. The second leg states that the RTAA had long-term effects because increasing levels of trade reduced the political weight of import-competing interests and increased the political weight of export interests. Bailey, Goldstein, and Weingast go so far as to suggest that many industries facing import competition simply disappeared and so dropped out of the political calculus.34 As a consequence, they argue that the ideal points of all the political actors (Democrat and Republican alike) shifted toward lower levels of protection. There are several problems with this partisan-reciprocity story. First, under the given assumptions about party preferences, a subsequent Republican victory would imply a significant shift in the floor median toward the Republican median preference for higher protection-and thus we should expect that the Republican leadership could then defeat the delegation tariff with a high tariff proposal. Bailey, Goldstein, and Weingast fall back on the notion that a Republican president might be an internationalist with preferences closer to the Democrats, with the implication that, for a Republican victory to reverse the RTAA equilibrium, floor preferences would have to shift far enough to be able to defend a high tariff proposal from a presidential veto. However, given the highly protectionist track record of Republican administrations up to 1934, such an assumption could not have been a reasonable basis for the RTAA gambit. Republican presidents had been ardently protectionist. Worse perhaps, it is simply not true that industries facing import competition disappeared from the political scene: on the contrary, they dug in and fought for exceptions from trade agreements, often with tremendous success (in the form of nontariff barriers). Destler rightly notes that the very success of trade reform actually acted as a "multiplier" of trade pressures and generated an increased number of producers adversely affected by foreign competition. Studies of legislative votes on trade bills from periods both before and after 1934indicate that lobbying by import-competing industries has actually become more important in determining voting decision^.^^ It 34. Ibid., 329. 35. See Gilligan 1997; and Hiscox 1997. Hathaway's study of changes in the footwear, textile, and apparel industries since the 1950s indicates that tariff reductions may have led ultimately to a decline in protectionist pressure by the 1990s, though only after decades of hard-fought political battles. Hathaway 1998. It is quite true that if political resistance to liberalization is unsuccessful, adjustment-in the form of downsizing or exiting an industry, investment in new technology, or investment in production abroad+an lead to a long-term decline in protectionist pressure in an industry. Destler's point is broader, of course: liberalization and the expansion of international trade makes it more likely that a greater range of firms and industries in the local economy will face competition from foreign imports