Endogenous protection and trade negotiations

Research on the political economy of trade policy shows that a country's level of protection responds to variation in macroeconomic conditions and partisan control of government. Research on trade negotiations poses a challenge to the market-for-protection account provided by endogenous protection theory. Negotiations motivate exporters to lobby for domestic tariff cuts as a means of gaining reciprocal access to foreign markets. Responding to identical forces in the macroeconomy, import-competing industries and exporters lobby for opposite policy changes. As a result, the causal processes identified in endogenous protection theory are weakened or even reversed. I demonstrate that the incentives of exporters to lobby for tariff cuts are sharper than the corresponding incentives facing protectionist interests and that elected officials have reason to abandon some protectionist constituencies in order to cater to exporters. In a set of empirical tests, I show that tariffs do not respond to macroeconomic and partisan conditions as predicted by endogenous protection theory; instead, tariffs in the major trading states respond to the tariffs of their main negotiating partners.