By: Hao Zhang
The following blog post is a summary of the research that won the Midwest Political Science Association’s Best Paper in International Relations Award for research presented at the 2023 MPSA Annual Conference. The award recognizes the best paper on the topic of international relations.
In early 2018, the United States initiated the trade war against China as well as its closest allies (e.g., the European Union). According to a recent review, the scope and magnitude of the proposed tariffs have surpassed all protectionist measures in the past century of U.S. trade policy. Analysis of the LobbyView database shows that Corporate America has increased its expenditure on trade lobbying to over a billion dollars since the trade war started. Trade now consistently ranks among the top four issues lobbied on Capitol Hill.
It is within this political context that we witness a salient rise of pro-trade coalitions among firms. These political coalitions are pervasive across the private sector, with concentrated benefits from trade motivating small groups of large, often monopolistic firms in almost every industry. More importantly, these coalitions are becoming more diverse, cutting across industrial boundaries. For instance, Trump’s tariff on Chinese footwear imports mobilized a wide range of non-footwear firms in the U.S. involved in the trade, including fashion designers, large retailers, logistic managers, and even software developers.
In my new working paper, “Commerce, Coalitions, and Global Value Chains,” I make one of the first efforts to track and explain these new coalitional dynamics in U.S. trade politics. Combining firm-to-firm supply chain datasets with the universe of lobbying reports (2004-2019), I present systematic evidence that U.S. firms connected with the same foreign firm through Global Value Chains (hereafter termed GVC partners) tend to coordinate their trade lobbying. One example is all of the above-mentioned non-footwear firms that rely on a Chinese footwear manufacturer, while another example is Intel and Qualcomm supplying key technologies to Chinese state-owned technology and telecommunications enterprise ZTE. The political coordination of these countless GVC partnerships serves as the microfoundation for new trade coalitions of our time.
How do these GVC partners collaborate to influence US trade policy? My analysis shows that trade lobbying is highly correlated among GVC partners. Firms would start lobbying and spend more on lobbying if their GVC partners lobbied in the previous year.
Furthermore, I delve into the instances where firms lobby on the same bill. Typically, only a few large firms would lobby on the same bill, and they tend to know and communicate with each other. For example, the Trade Security Act in early 2019 sparked huge debates in U.S. Congress, as it tried to retain presidential authority to impose punitive tariffs on steel and aluminum imports. U.S. firms dependent on Chinese metal producers, spanning upstream designers to downstream users, have reportedly worked together to oppose this particular provision. It also holds more generally that GVC partners tend to lobby on the same trade bill, especially those related to specific products.
I also find that GVC partners hire the same lobbyist to coordinate their political efforts. Firms with similar political objectives can approach the same lobbyist. For instance, there are many cases where a consortium of firms aiming to invest in “sensitive” industries (e.g., public transportation or semiconductor) turn to the same lobbyist to advocate for more favorable conditions. Lobbyists also play a proactive role in putting together coalitions to enhance political influence.
In addition to micro-level political coordination, GVC partners also mobilize larger platforms to resist the trade war. My interviews with trade associations confirm that large multinational corporations well-connected through GVCs often lead collective lobbying efforts. Needless to say, this process involves very intense inter-firm negotiations and bargaining. Statistically speaking, if more members of a given trade association are connected through GVCs, there is a higher likelihood of that trade association lobbying on trade.
Trade coalitions along the GVCs have demonstrated persistence and strength since the advent of this era of global production in the 1970s. The critical question now arises: will these political alliances not only endure but also resist the worldwide movements against trade and globalization in general? Based on my current data, GVC linkages between large firms have mostly remained stable despite notable political setbacks. The political pressures exerted by these coalitions on U.S. politicians have also persisted, even in the presence of ongoing punitive tariffs. The major policy impact of these coalition efforts is yet to be seen.