Regional Trade Agreements and Cross-border Lobbying: Empirical Evidence from the Canada-US Free Trade Agreement Negotiations

This paper documents participation of special interest groups in negotiations of the Canada-US Free Trade Agreement. Using data on the tariff reduction schedules mandated by the agreement, it shows that industries represented by strong lobby groups were faced with more favorable tariff reduction paths in both countries: phase-out periods were longer at home and shorter in the partner country. This result provides evidence on the involvement of industry lobbying in negotiation of regional trade agreements and suggests that countries negotiating trade agreements are responsive to the interests of lobbying groups from across the border. Both results provide important implications for the political economy theory of trade agreements.