Trade 301it onto the trade liberalization agenda. The Uruguay Round did make substantial
progress on many fronts, including services and agricultural trade; the primary
exception, from the American point of view, was entertainment products, such
as films, which were excluded from the final agreement at the insistence of the
European Union.
While tariffs have been declining and trade increasing, however, new threats
have emerged to the free-trade regime. With the success of trade liberalization,
more and more industries have been exposed to increased international competition.
Industry demands for some form of protection have multiplied in nearly all countries,
and increasingly, governments have sought to satisfy these demands for protection
through nontariff barriers to trade (NTBs). The most important of these NTBs are
voluntary export restraints, in which exporters agree to restrain or limit their sales
in the importer’s market. Current estimates suggest that almost 20 percent of all
goods imported into the European Union, for instance, enter under some type of
NTB.^2 Although the Uruguay Round agreement has helped to bring their growth
under control and even produced reductions in some areas, NTBs remain an
important threat to free trade and a source of concern to observers of the international
economy.
The readings in this section address the causes and implications of trade policy.
Cletus C.Coughlin, K.Alec Chrystal, and Geoffrey E.Wood (Reading 19) review
the classic economic argument for free trade and survey explanations for protection.
The remaining articles use economic insights to address the politics of international
trade. Ronald Rogowski (Reading 20) examines how changing exposure to
international trade influences political cleavages within states. In this international
economic perspective, political coalitions are a product of a country’s position
within the international division of labor and of exogenous changes in the costs
of trade. Building on the insights offered by Rogowski and then extending their
analysis to other models of trade policy, James E.Alt and Michael Gilligan (Reading
21) synthesize domestic societal and domestic institutional theories into a broad
explanation of trade policy.
Richard B.Freeman (Reading 22) then examines what is sometimes referred to
as the “trade and wages” debate. In theory, less skilled labor in the United States
and Europe should have been harmed by increasing international trade, and real
wages have fallen for such workers. Nonetheless, identifying the independent effects
of international trade remains quite difficult, and as Freeman concludes, trade
probably accounts for only a fraction of the decline. Edward D.Mansfield and
Marc L.Busch (Reading 23) explain the cross-national pattern of nontariff barriers
to trade through a combination of domestic societal and “statist” variables, with
the latter covering both international political factors related to relative size and
domestic political institutions. Finally, regional trade agreements have proliferated
in recent years. The North American Free Trade Agreement (NAFTA) is perhaps
the best known, but similar trade pacts have grown, both within and between,
developed and developing country regions. Again illustrating the importance of
domestic societal factors, Ronald W.Cox (Reading 24) explains business support
for such agreements.