The Trade Policy of Emerging Powers

© Laura Carsten Mahrenbach 2013

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v

Contents

List of Tables vii

Acknowledgments ix

List of Abbreviations x

1 Empirical Puzzle, Arguments, and Research Design 1 Introduction 1 EPs in global governance: Theoretical and empirical debates 3 The argument 8 Operationalizing the arguments 18 Structure of the book 36

2 Brazil: Context and Trade Liberalization 37 Introduction 37 The Brazilian context 38 Trade liberalization 55 WTO mini-ministerial negotiations, Geneva, July 2008 56 FTAA negotiations 63 Conclusions for Brazilian trade policymaking (so far) 72

3 Brazil: Dispute Settlement and Conclusions 74 Introduction 74 Dispute settlement 75 DS267: Brazil v. US Upland Cotton 75 Brazil–Argentina licensing dispute 85 Brazil DSU reform 94 Discussion 104 Conclusion 108

4 India: Context and Trade Liberalization 111 Introduction 111 The Indian context 112 Trade liberalization 127 WTO mini-ministerial negotiations, Geneva, July 2008 127 India-ASEAN free trade agreement 135 Conclusions for Indian trade policymaking (so far) 144



5 India: Dispute Settlement and Conclusions 146 Introduction 146 Dispute settlement 146 DS246: EC-tariff preferences 147 SAFTA implementation dispute 156 India DSU reform 165 Discussion 175 Conclusion 181

6 Conclusions, Revised Framework and Implications 183 Introduction 183 Main findings 184 Alternative explanation: Partner choice determines

forum choice? 188 Revised analytical framework 190 Theoretical and empirical implications 195

Appendix: Interest Groups Arranged by Country and Sector 207

Notes 211

Bibliography 218

Author Interviews 237

Index 239

vi Contents



1

1Empirical Puzzle, Arguments, and Research Design

Introduction

Emerging power (EP) states like Brazil and India have benefited quite a bit from their membership in the World Trade Organization (WTO). Participation in the WTO and its predecessor, the General Agreement on Tariffs and Trade (GATT), has facilitated access to new markets and stimulated domestic economic growth by integrating these countries more deeply into the global trading system. The principles of non- discrimination and reciprocity in the GATT and the WTO, for example, not only ensure access to a broad variety of markets. Rather, they addi-tionally ensure access to key markets, like the European Union (EU) or the United States (US), thus helping create and maintain some of the most important trade relationships in both Brazilian and Indian trade policy. Further, by using the WTO’s Dispute Settlement Body (DSB) to enforce global trade rules, Brazil and India have taken advantage of an opportunity to ensure the economic gains resulting from all of these trade relationships are protected (Davey 2005, 2009).

In addition, membership and participation in the WTO and GATT has provided diverse leadership opportunities for these EPs. For example, Brazil and India took the lead in establishing the trade G20, a group of developing countries founded at the WTO’s ministerial meeting in Cancún in 2003 to negotiate the end of developed country agricultural subsidies. Leadership opportunities like this, in turn, have boosted them into even more elite groups. These include the Group of Five Interested Parties (with the US, the EU, and Australia), which was responsible for preparing the “July Package” in 2004 (Deese 2008, 153), and, later, the G4 (with the US and the EU), which met to help re- launch the Doha Round in Potsdam in 2007 (Blustein 2009, 241–245). In other words,



2 The Trade Policy of Emerging Powers

participation in the WTO and the GATT has allowed EP governments to expand their global economic and political ambitions.

Such benefits, however, do not necessarily ensure Brazil and India will always pursue trade policy goals within the framework of the WTO. Technically, all WTO member governments, including EP govern-ments, face three alternatives when determining their strategic behavior vis-à-vis the WTO. The first and most obvious is simple use. This involves using the WTO as it was intended to be used, that is, for settling con-flicts with trade partners and for further liberalizing global trade in a non- discriminatory manner. The second strategic choice is to advocate for reform within the WTO. For example, governments may attempt to alter decision- making or agenda- setting procedures in order to make the WTO more capable of fulfilling valued trade policy goals. The third strategic choice is to use activities outside the WTO to accomplish tasks otherwise accomplished within the WTO. For example, governments may turn to interregional, regional, bi- or trilateral, or unilateral tools of their own creation to settle specific trade disputes or to achieve specific trade liberalization goals.

How do these strategies compare to one another in the potential strategic calculations of EP governments? Research has shown that institutional creation—a frequent variant of substitution strategies—is generally a more expensive strategic choice, economically and politi-cally, than using an already existing forum (Jupille and Snidal 2005, 37; Goldstein and Keohane 1993, 5). Given the “pragmatic,” goal- oriented nature of the Brazilian and Indian governments in recent years (discussed in the next section), one would expect these governments to prefer the WTO as the most cost- effective forum for pursuing trade policy goals. Similarly, research has also shown that states often experience “political inertia” once they begin to benefit from an institution (Lake 2000, 45). In other words, a history of benefits within an institution should pro-voke institutional loyalty from governments wishing to ensure those benefits continue. Given the economic and political goals which India and Brazil have achieved through their participation in the WTO and the GATT, one would consequently expect high levels of political inertia from these governments vis-à-vis the WTO.

Overall then, government actors in these states should prefer the first two strategies over the third: maximizing their gains via simple use when possible and seeking reform when they perceive the WTO as is cannot provide the desired benefits. Doing so would produce two benefits for EP states. First, it would minimize risk and costs in pursuit of particular trade policy goals. Second, given the protection and rules



Empirical Puzzle, Arguments, and Research Design 3

of the institution, doing so would ensure that any gains made by these states would stick around for quite a while.

The reality, however, is quite different from these expectations. Since the start of the Doha Round in 2001, the Indian and Brazilian govern-ments have increasingly included substitution as a major element of their trade policy program. During this time period, substitution efforts have taken several forms. Sometimes they appeared via the creation of new bodies—like the India–Brazil–South Africa Trilateral Forum (IBSA)—which focus on cooperation in many policy fields, including trade. At other times, substitution strategies focus on establishing new partnerships, like the BRICS,1 or on deepening old(er) ones, such as Mercosur.2 At yet other times, substitution efforts are less broadly cooperative, for example, in decisions to accept unfavorable trade situ-ations or resolve them bilaterally rather than approaching the WTO for resolution. Whatever the form, the inclusion of substitution strategies into Brazilian and Indian trade policy seems counterintuitive. Why undermine a sure thing via the inclusion of riskier, potentially more expensive alternatives? That is to say, what factors can explain the strategic variation in EP trade policy choices since the start of the Doha Round?

This book will answer this research question by examining the domes-tic foundations of EP strategic trade policy decisions in two democratic EP states. As such, it offers an alternative approach to the international- level analyses at the heart of current debates about these states and their (future) role in global governance. The next section sketches these debates, pointing out their weaknesses in identifying the conditions under which EP governments choose specific forums for their trade policy pursuits. The following section sets out the approach used in this book, which empirically tests theoretical arguments by focusing on the connection between domestic and international policy behavior. The section after that provides the tools necessary to do this, first presenting the relevant variables and then summarizing how they will be opera-tionalized in the empirical chapters. Finally, the chapter concludes by briefly outlining the structure of the rest of the book.

EPs in global governance: Theoretical and empirical debates

What does pragmatism imply for EP global governance behavior?

The empirical debate raging in the emerging power and emerging markets (EP/EMs) literature related to global governance starts from a common assumption. Specifically, authors characterize the nature of




EP states as “pragmatic” (Miller 2005, 52; Hirst 2008, 152–154) or “conservative” (Gratius 2008, 15). EP states are said to be rational actors who, aware of their growing but nonetheless limited political and economic resources, seek strategies which minimize their costs and risks while simultaneously maximizing their gains from participation in global governance institutions. This is where the EP debate begins since the implications of this rational behavior are diverse. Scholars disagree as to the motivations and goals of EP states as well as about which factors affect EP government decisions about both of these. Further, they are divided regarding the nature of the relationship between EP motivations, activities, and goals on one hand and the performance of EP states within global governance institutions like the WTO on the other. For example, which factors determine whether or not they will be successful in reaching their goals? Under which conditions do specific motivations lead to specific activities in global governance? And what does the increased activity of EP states within global governance institu-tions mean for the institutions themselves?

Under the scope of these debates, the EP/EM literature can be divided into two groups: case studies on single or small groups of EP states and literature which addresses EPs and EMs collectively. Each of these strands of the literature corresponds to a different empirical interpreta-tion of EPs and their behavior along the dimensions identified above. In addition, each is embedded largely within a different theoretical framework of international relations (IR).

Starting with the collective EP/EM literature strand, authors in this group see pragmatism as implying a concentration of state resources on the strategic forum expected to best safeguard state interests. Theoretically, this literature aligns with the insights of neoliberal institu-tionalism. According to institutionalists, institutions enable long- term, mutually beneficial cooperation by lowering the transaction costs of cooperation and increasing the availability of credible information. This process builds trust through the experience that comes with increased cooperative iterations, through the creation of rules which apply equally to all members, by defining cheating, and via the enforcement of relevant rules (Keohane 1984; Fearon 1988, 298–299; Koremenos, Lipson, and Snidal 2001, 781–782; Hall and Taylor 1996, 939). From this perspective, for example, the information gained from regular trade policy reviews of member states’ trade policies combined with the strong enforcement of trade rules by the DSB and the experiential gains stemming from multiple rounds of trade negotiations should all help facilitate stable trade cooperation within the WTO.




Rule- making is particularly important for EPs at the WTO. First, by establishing rules which align with their own long- term trade policy preferences, EPs ensure the material conditions which have facilitated their economic and political rise will continue to be supported in the future. Second, even should their relative position in the broader global system diminish, the rules which they will have institutionalized in the WTO would continue to allow them to exert influence on governance of world trade.

Thus, given the positive benefits India and Brazil have gained from their membership in the WTO and GATT until now, institutionalists would expect simple use of the WTO to continue to be EP states’ pri-mary trade policy strategy. For example, in relation to trade dispute settlement, they may focus on Brazil’s legal victories over the US and the EU in the DSB in reference to agricultural subsidies, or on India’s success in challenging the European Community’s application of the generalized system of preferences (GSP). This successful enforcement of institutional rules should reinforce trust between institutional partners and encourage EPs to continue to focus their trade policy strategies on the WTO. In addition, the successful, albeit non- traditional, use of the DSB for rule- making underlines the variety of means which EP states can use to institutionalize their trade policy preferences within the WTO. For example, whereas the trade G20’s approach to agricultural rules was partly to blame for the dramatic end to trade negotiations at the WTO ministerial meeting in Cancún in 2003 (Bhagwati 2004), Brazil’s legal victory at the DSB in the cotton case addressed similar issues and received a definitive ruling against American agricultural subsidies. Institutionalists, thus, would predict exclusive strategies of simple use, at least in terms of dispute settlement.

Empirical arguments in the collective EP/EM literature group reinforce these theoretical arguments. These studies focus on EP institutional activism, which is seen as a means of both advancing EP interests gen-erally and constraining the institutionalized “Great Powers” (Hurrell 2006; Gratius 2008; Woods 2010, 56). Groups like BRICSAM (Brazil, Russia, India, China, South Africa, and Mexico) or the trade G20 serve both as “engines for institutional engagement” of these states in global governance (Cooper 2010, 74–75) and as a mechanism for ensuring EP concerns are taken seriously within WTO negotiations (Narlikar and Tussie 2004). However, the arguments in this literature group are quick to point out that international economic institutions like the WTO will only retain their usefulness—as well as the patronage of EPs—if they actively integrate EPs into decision- making structures (Armijo 2007;




Narlikar 2010; Garten 1997). As Drezner (2007, 4) notes, for example, without incorporation of EPs into positions of prominence within inter-national institutions, the “future of these international regimes will be uncomfortably uncertain.”

As is evident, such institutionalist arguments underline the impor-tance of external factors in influencing policy preferences in EP states. Not only is the weight of these states in the world economic system said to be crucial for understanding their preferences and policy behavior. Rather, these arguments also underline the strong desire by EP states to have their position acknowledged in their international activities.

The strand of the EP/EM literature focused on case studies of single or small groups of EPs delivers quite a different interpretation of the implications of EP pragmatism. In this strand, pragmatism implies that EP states minimize risk and costs not by automatically retreating into the institutional fold but, rather, by diversifying their strategies. In so doing, they are said to be “strategically hedging to maximize their national interests” (Bava 2008, 11). These arguments often fall within the theoretical framework of neorealism.

Competition between existing Great Power states and challengers (like the EPs) stands at the center of neorealist explanations of international affairs. In relation to EPs and trade, neorealists argue that economic achievements, such as an increase in EPs’ relative share of world trade, represent gains in capabilities for these states. These, in turn, cause EPs to alter their trade policy behavior more broadly (Wissmann 2007). As a result, the improved relative position of EP states within the WTO in recent years (Narlikar 2010) simply reflects acknowledgment of the relatively greater capabilities of these states in the global trading system ( Echeverri- Gent and Armijo 2005, 16). At the same time, how-ever, neorealist skepticism vis-à-vis the WTO (as well as all other global governance institutions) makes total reliance on the WTO—despite these gains in relative position within that institution—unlikely. After all, EP states simultaneously pursuing greater influence and consistent policy autonomy (Sennes 2001, 84) are unlikely to stick around should a better—or quicker—trade policy opportunity present itself outside the bounds of the WTO. Thus, neorealist theoretical arguments would pre-dict continued diversification of EP trade strategies as a means of best advancing EP power pursuits within the international system.

In line with these theoretical predictions, empirical work in the case study strand of the EP/EM literature focuses on EP activities inside and outside institutions like the WTO. Additionally, it explores the burgeoning relationship between these two types of activities (Lima




and Hirst 2006; Lechini 2007). For example, some authors argue EP foreign policy is a “holding game” (MacFarlane 2006, 57): EP states operate within global governance to maximize their gains from the current system and its institutions while simultaneously working to ensure their international status and preferences are recognized in any future world order (Foot 2006; Ikenberry 2008). Others emphasize the importance of extra- institutional activities in facilitating institutional influence (Hirst 2008) and maximizing EP gains. These scholars focus on traditional neorealist capabilities, including relative power or status gains within the international system (Zhuplev 2008; Goh 2006).

Once again, such arguments primarily focus on the systemic motivations of EP policy goals, for example, relative status or relative market share. However, the case study literature, unlike the collective EP/EM literature and despite its neorealist tendencies, additionally acknowledges the impact of non- international factors on EP behavior in global governance. For example, strategic diversity in general foreign policy may also be affected by cultural factors (Lima 2008a; Tymoshenko 2007; Nayar and Paul 2003), by interest group pressure (Yadav 2008), or by the impact of regime style on state decisions (Faro Castro and Valladão de Carvalho 2003).

The weaknesses of the existing EP/EM literature

As is evident from the summary above, despite valuable contributions to the literature, neither the collective group nor the case study group of EP/EM literature is capable of determining the conditions under which multiple EP states choose specific trade policy strategies vis-à-vis the WTO. On one hand, the collective group’s prediction that EP state interests would be best served via a continued focus on the WTO as its primary forum of trade policy fails to acknowledge the strategic diversity which has been evident in at least Brazilian and Indian trade policy since the start of the Doha Round. Further, its adherence to international- level analysis ignores that various domestic groups may be affected differently by state strategic decisions on the international level and, as a result, may organize to minimize the negative (or maximize the positive) effects of those decisions. As a result, lobbying pressures within EP states aimed at strategic diversification of trade policy activi-ties may exert an impact on strategic decisions prior to that exerted by the information, trust, and rule- making effects within the WTO on the international level. Thus, neither the theoretical tools nor the existing empirical focus of the collective EP/EM literature group seems able to determine the conditions which may lead EP states to choose specific trade policies vis-à-vis the WTO in specific situations.




On the other hand, the case study literature shows more promise. Despite its emphasis on the international motivations of EP foreign policy, it nonetheless includes work which acknowledges the influ-ence of non- international factors on EP government decisions. These explanations, however, are also inadequate. Although comprehensive for the subject of the individual case studies, the explanations devel-oped do not necessarily apply in the broader context of EP behavior due to their specificity. Further, the general absence of comparative case studies makes it hard to identify common characteristics within EP states, which may lead their governments to make similar strategic choices. As a result, this also makes it impossible to determine whether any analytical connection exists between “emerging power-dom” and specific strategic choices vis-à-vis global governance institutions like the WTO.

This book seeks to fill this gap. I will argue that, to understand the trade policy decisions made by democratic EP states like Brazil and India, it is necessary to look at the domestic foundations of EP government decisions. This is particularly important in the field of trade policy. Government strategic trade decisions impact both specific sectors (via their impact on trade rules and production) and voters more generally (via product prices and availability). Given this broad impact, it is cru-cial to consider the link between the preferences of relevant domestic groups and the decisions made by government actors in pursuing trade policy goals on the international level. This approach will be presented in more detail in the next section.

The argument

This book joins a burgeoning literature (Conceiçã o- Heldt 2011; Schirm 2010; Pedersen 2008) which focuses attention from the international- level debates about EP motivations and behavior in global governance down to the domestic level. Doing so highlights common domestic conditions within EP states which may exert an influence on their behavior in global governance just as relevant as that exerted by inter-national factors, such as a desire to increase relative capabilities or participate in institutional rule- making. This, in turn, provides a means of broadening the insights gained from individual case study analysis. Specifically, this book undertakes theoretically guided, systematic empirical analysis of two EP states in two trade policy fields. This section will present the theoretical framework within which the main arguments have been developed as well as the arguments themselves.




Before doing so, however, please note: The explanation for Brazilian and Indian strategic trade policy choices offered here does not exclude the validity of other, especially international- level, approaches. Rather, it seeks to complement them by addressing factors which these analyses ignore. In so doing, I hope to broaden analytical understanding of the factors which motivate EP states like Brazil and India to sometimes simply use, sometimes substitute, and sometimes attempt to reform the WTO in pursuing trade policy goals.

Theoretical framework: The societal approach

This book combines the insights of liberalism (Moravcsik 1997, 2008) and the societal approach (Schirm 2009, 2011) in order to identify factors which influence Brazilian and Indian government decisions to pursue trade policy goals in specific forums. Key elements which these approaches share include their focus on the domestic sources of government decisions, their inclusion of a variety of domestic actors within their analytical scope, as well as their assumption that decision- makers respond to powerful groups of voters within their state. Whereas Moravcsik’s liberalism underlines the theoretical impact national interests, ideas, and institutions may have on government decisions, Schirm’s societal approach moves a step beyond this. Specifically, the societal approach underlines the importance of testing the impact of these variables alone and in combination with one another in a variety of empirical settings. Additionally, the societal approach underlines the need to determine the conditions under which each variable dominates in a government’s policymaking situation. Given this book’s emphasis on empirical testing of theoretical premises in order to determine the conditions under which the Brazilian and Indian governments choose specific trade policy strategies vis-à-vis the WTO, the theoretical frame-work will henceforth be referred to as the societal approach, while acknowledging its many commonalities with Moravcsik’s liberalism.

The societal approach combines key insights from each of the IR theo-ries discussed above to provide a multidimensional theoretical tool capable of explaining a variety of international political occurrences. Like neorealism, the societal approach highlights relative power as important: The domestic groups with the most relative power are the ones most likely to see their preferences turned into policy. Unlike neorealism, the societal approach emphasizes relative power in a domes-tic, not an international, context as being decisive. Like institutionalism, the societal approach emphasizes the importance of rules for determin-ing policy domestically: Groups whose participation is institutionalized




within the policymaking process are certainly more likely to get their way than those who must waste resources simply trying to gain entry. Unlike institutionalism, however, rules in the societal approach do not focus on mutual gains and minimal uncertainty through cooperation. Rather, relative gains are more important in the societal approach since a single policy decision can only rarely incorporate the multiple and often contradictory policy preferences of domestic actors. Studying the domestic politics of Brazil’s and India’s trade policy decisions, thus, seems a good complement to these other approaches in terms of both explaining existing gaps in their arguments and adding nuances to pre- existing ones.

In addition, the societal approach seems an interesting approach since its major assumption—that domestic preferences are reflected in the decisions of government actors—is not an undisputed assertion in reference to the trade policymaking processes in Brazil and India. In fact, many authors emphasize the relative isolation of Brazilian and Indian policymakers from domestic groups (Veiga 2009; Martinez- Diaz and Brainard 2009, 10; Nayar and Paul 2003, 11). According to this argument, elites in these states orient both foreign and foreign economic policies to geopolitical purposes, attempting to maximize their international influence while minimizing limits to their autonomy of sovereign action (Ikenberry 2008, 119). Rios (2010), for example, notes Brazil’s preferential trade agreements (PTAs) are not made based upon the economic merit of the partnership but, rather, to support political purposes affiliated with these states’ “emergence” in interna-tional affairs. In contrast, other authors argue the Brazilian and Indian governments are increasingly responsive to domestic preferences, both from organized interest groups (Mancuso 2004, 524; Kale 2009, 59) and from voters more generally (Nel and Stephen 2008, 9; Schaffer 2010, 222). Some go even further, claiming governments are responsive to domestic preferences even when doing so may not make economic sense. Jawara and Kwa (2003, 98), for example, trace the Indian govern-ment’s stubbornness toward the opening of the Doha Round of trade negotiations in 2001 to the 25,000-person protest against the round held in New Delhi the week before the meeting in Qatar.

As a result, testing government responsiveness to domestic preferences in Brazil and India is considered one of the major contributions of this project. This is because it represents an opportunity to provide new insights into a major debate in the existing literature related to the poli-cymaking processes in both of these states. As will be explained at the end of this chapter, this will be done by correlating domestic preferences




for selected political ideas and economic interests with the presence of these independent variables in the position statements made by Brazilian and Indian government actors in the case studies. This not only provides an opportunity to test each individual government’s responsiveness to its own domestic groups. Rather, it will also help identify the degree of commonality or difference in these two EP governments’ responsiveness to domestic actors. This, in turn, will help flesh more meaning into the concept of “emerging powers” by highlighting similarities and differ-ences in their domestic policymaking processes.

The main arguments

Two answers to the research question immediately come to mind. Each of these arguments links one independent variable—either economic interests or political ideas—with the dependent variable of the strate-gic trade policy choices chosen by EP governments since 2001. All of these variables will be defined in the following section. Previewing this, however, it is important to know now that this project operationalizes four economic interests (liberalization, protection, economic coopera-tion, and economic isolation); four political ideas (influence, neutrality, affiliation, and autonomy); and three strategic choices (substitution, reform, and simple use).

In addition, it is important to note that the relevant domestic actors differ in each of the two arguments. For the argument related to economic interests, the relevant domestic actors are the interest groups representing economic sectors within Brazil and India. For the argument related to political ideas, in contrast, the relevant domestic actors are voters.

Argument 1

The first answer suggested by the literature is that EP governments have been diversifying their trade strategies because they can. The high levels of economic growth experienced by these states in recent years, and especially since 2001, have improved EP governments’ bargaining positions vis-à-vis potential trade partners. As a result, the number of viable strategic choices in which EP governments are likely to achieve preferred trade policy goals has increased. EP governments hoping to liberalize trade, for example, are now capable of choosing between pursuing faster liberalization (via substitution) and pursuing more extensive liberalization (via simple use).

Thus the “pragmatic” EP is likely to have developed a more diverse strategic trade policy profile since 2001 than was the case for the same EP prior to that time. In line with the research question, Argument 1




focuses attention on the choices EPs make in pursuit of pre- determined trade policy goals and links that choice primarily to economic inter-est preferences. Put differently, it argues that the experience gained in previous usage of the WTO and the GATT combined with the economic benefits gained from the same have now enabled EPs to liberate them-selves from further exclusive use of that institution.3 In line with the existing EP/EM literature, government actors are assumed to be rational actors, evaluating the potential costs and benefits of each strategic choice in reference to each choice’s ability to fulfill the economic interest preferences of domestic actors.

So, how might each strategic choice be linked with the economic interest preferences of Brazilian and Indian interest groups? Starting with substitution, the variety of economic benefits offered by substitu-tion strategies as well as the relative speed with which these benefits can be obtained gives substitution several advantages over the other strategic choices in fulfilling demands of domestic interest groups. First, substitution offers potential benefits to government actors not necessar-ily available via simple use or reform. In the field of trade liberalization, for example, PTAs signed under the Enabling Clause4 allow government actors to simultaneously exclude sensitive sectors from liberalization commitments while pushing liberalization for the more competitive sectors which are eager to gain market access. In addition, they allow government actors to choose with whom they would like to liberalize trade. As such, they offer the possibility of simultaneously providing benefits to both more protectionist and more liberal domestic actors. Simple use of the WTO in the field of trade liberalization, in contrast, demands negotiation not only with more partners (given the 159 mem-ber states in the WTO) but also on more issues (given the broad scope of the Doha Round negotiations). This necessarily complicates the process of reaching agreement—a situation likely to please supporters of protectionism but displease supporters of liberalization. In this example, then, substitution in the field of trade liberalization theoretically creates a broader coalition of happy domestic actors.

Second, substitution is also often perceived as a quicker strategy for achieving various trade policy goals. Continuing the previous example, PTA negotiations are likely to be quicker in reaching agreement than is the case under the WTO’s Doha Round. This is because of the more limited issues involved as well as the fewer number of actors needing to reach agreement to seal the deal. Thus the benefits stemming from potential liberalization via PTAs are likely to reach domestic actors more quickly and, as a result, reflect more positively on government actors




in subsequent election cycles. Theoretically, then, it makes sense that a policymaking situation dominated by economic interests would lead to the strategic choice of substitution.

Simple use also offers benefits—albeit different ones—to government actors in policymaking situations dominated by economic interests. First, although the gains via simple use tend to take longer to achieve than those through substitution, they are also significantly larger in scope (Vamvakidis 1999). Successful multilateral trade liberalization should provide economic benefits not only for economically competi-tive sectors eager to liberalize but also for all voters via higher growth rates which should impact per capita income positively (Dollar and Kraay 2001). Further, government actors can credibly claim the interests fulfilled via simple use of the WTO for trade liberalization are likely to stick around, given the binding nature of the commitments made in WTO agreements. Thus, in this respect, simple use could provide long- term economic gains for which any politician would be happy to take credit in an election campaign.

Similarly, whereas dispute settlement in a substitution context may be quicker, the precedents created through substitution are less significant given their more limited scope (Busch 2005). In addition, the likelihood of success against many trade partners is limited. This is because preferential dispute settlement often lacks the benefit of a broad- rule framework and because the enforcement possibilities of unfavorable decisions in these preferential frameworks are even weaker than those available through the WTO (Leathley 2002, 2; Gehring 2010, 96–98). Thus, like multilateral liberalization, dispute settlement within the WTO provides another electoral stump speech for government actors seeking re- election in the form of long- term institutionalization of interest group trade preferences. As such, it seems plausible that a policymaking situation dominated by economic interests would lead to the strategic choice of simple use.

As for reform, the arguments linking this strategy with the predo-minance of economic interests are less convincing. For example, in principle, reform of the WTO seems well suited to providing a framework for economic cooperation. After all, reform negotiations could increase the information member states have about their trade partners and, if successful, create an institution which enabled broader or deeper coop-eration. Global governance reforms are notoriously difficult, however (Wohlforth 2009, 33–34; Schirm 2009), meaning establishing condi-tions favorable to economic cooperation is also likely to be difficult and time- consuming. Further, in a policymaking situation dominated




by this economic interest, speedy attainment of the interest is likely to matter. Thus, the more rational choice for government actors would be the pre- existing cooperative framework of the WTO as is (simple use) or the creation of a smaller cooperative framework in which the EP can quickly establish the type of cooperation preferred by domestic actors (substitution). Similarly, given reform’s focus on behavioral rules within the WTO, it is unlikely to capably and directly fulfill the interests of domestic actors seeking more or less market access outside the WTO. Thus a policymaking situation dominated by economic interests is unlikely to correspond to a strategic choice of reform.

Summing up, Argument 1 claims, when economic interests dominate the policymaking situation, EP governments will choose either substitution or simple use of the WTO. It is, of course, theoretically possible that the dominance of economic interests in a policymaking situation could lead to reform as well. However, the link between economic interests and the strategic choices of simple use and substitution appears more likely based upon the theoretical arguments presented above. The important concept here is not the frequency with which governments choose particular strategies, nor is it the intensity of their commitment to a specific strategy. Rather, the important concept is that these govern-ments are making use of the relatively new opportunity created by their improved economic and institutional capacity to make a choice at all rather than just passively accepting the policy forum offered to them.

Argument 2

A second answer springing from the EP/EM literature reviewed above would claim EP governments have been diversifying their trade strate-gies because they increasingly want to do so. This argument identifies valued political ideas as the driving force behind moves by Brazil and India to diversify their trade strategies. Sometimes, achieving these goals is best done outside the WTO. For example, trade strategy diver-sification could potentially lessen the restrictions the WTO places on trade policy behavior and thus increase EP governments’ policy autonomy. This would protect EPs’ highly valued right to sovereignty (Hurrell 2006, 4) by preventing deeper incursion into non- economic areas (for example, environmental policy) which have become increas-ingly prominent within WTO dispute settlement cases.5 In contrast, sometimes these goals are best achieved within the scope of the WTO. For example, an EP government wanting to underline its affiliation with the WTO while simultaneously lobbying for more influence within the WTO may attempt to reform that body.




As is evident, the demands of these political ideas may be contradictory in terms of appropriate forum choices. Thus, as before, this argument focuses attention on the choices EPs make in pursuit of domestically determined trade policy goals. By combining a variety of strategic choices vis-à-vis the WTO in their trade policies, EP governments can maximize the number of these goals which they achieve. Also like the first argument, Argument 2 assumes rational action by government actors when making strategic trade policy choices. Government actors are expected to evaluate the costs and benefits of each strategic choice in reference to how well each strategy fulfills the demands stemming from political ideas valued by domestic actors.

So, how might each strategic choice be linked with the political idea preferences of Brazilian and Indian voters? Starting with substitution, the presence of autonomy in the policymaking situation provides the strong-est argument linking political ideas with substitution. Governments will have more autonomy within a context they create or organize (substitu-tion) than in one created or organized by someone else (reform/simple use) (Pekkanen, Solís, and Katada 2007). Consequently, government actors interested in autonomy could sell substitution activities to domestic voters as a means of freeing their country from external restrictions imposed, for example, by WTO membership.

A similar relationship exists between the other three political ideas and substitution, though in substantially weaker forms. Government actors whose voters are interested in increased influence at the WTO, for example, could sell substitution activities to voters as solidifica-tion of external partnerships. Doing so should help achieve strategic goals within the WTO by demonstrating leadership ability outside the WTO. This argument corresponds to elements found in the EP/EM literature, which emphasize the desire of EPs to use partnerships to increase prestige (Hirst 2008; Lechini 2007). Similarly, a government whose voters favor the political idea of neutrality could substitute the WTO at leisure, not fearing any electoral consequences from damage to that EP’s position in the WTO itself as a result. Finally, government actors whose voters are interested in affiliation with the WTO have the hardest sell. These actors would be expected to sell substitution activities to voters as complementary activities which remedy faults at the WTO without injuring the effectiveness of the WTO itself. Such an argument would pick up on arguments in the existing literature which claim PTAs, for example, can function as testing grounds for processes which could later be incorporated into the WTO (Crump 2006).




Thus, all of the political ideas relevant to this project can feasibly result in EP governments choosing substitution. Acknowledging this, however, the case for governments trying to please voters interested in autonomy is clearly stronger than that for voters interested in affilia-tion, influence, or neutrality.

Similarly, it is theoretically possible to justify government actors’ decisions to attempt a reform of the WTO when they find themselves in a policymaking situation dominated by three of the four political ideas included here. The strongest relationship is between influence and reform. Governments whose voters strongly value influence in the WTO can point to reform as a way to change WTO rules, so they conform better to voters’ preferences. The institutionalization of the reforms would ensure whatever influence gains are made by the EP government in the reforms will stick around at least until the next round of reform nego-tiations is completed. At least theoretically, this should ensure domestic support for the government’s strategic choice when voters wish to see their government exerting more influence within the WTO. Similarly, govern-ment actors whose voters are interested in the political idea of affiliation could actually make the same argument, namely, that the government is trying to improve the WTO in light of voter preferences. The differ-ence here is that government actors interested in affiliation, unlike those interested in influence, should emphasize that any reforms will make the WTO even better than it is currently. In addition, these government actors should emphasize that reform efforts will in no way affect voters’ abilities to continue to receive their perceived benefits from the WTO.

The argument for the connection between autonomy and reform is quite different. Government actors seeking to please voters interested in autonomy from the WTO could argue, first, that reform efforts are likely to fail. This would further legitimize the pursuit of trade policy goals via substitution activities external to the WTO and, presumably, would also signal government support for minimizing institutional restrictions on trade policy choices. Second, government actors could argue that their participation in the reform negotiations would focus on decreasing the restrictions the WTO places on trade policy behavior. This would increase the EP’s autonomy from the WTO without abandoning it entirely.

Finally, the political idea of neutrality represents an exception. A rational government actor responding to domestic preferences for neu-trality would have difficulties explaining why that government should bother participating in reform negotiations. In fact, even the best argument—that the government was trying to further decrease that state’s influence within the WTO—seems an irrational one given that the EP




government would have to tell voters it was exerting influence to gain neutrality. Despite this, it is nonetheless theoretically possible for three of the four political ideas to point to reform as an EP government’s preferred strategic choice, thus justifying its inclusion in Argument 2.

In contrast, theoretical arguments are significantly less successful in connecting the dominance of political ideas with the strategic choice of simple use. A government interested in gaining more influence or more neutrality is unlikely to simply use the WTO as is. This is because doing so provides no opportunity for formally changing the rules and, thus, also no opportunity to increase or decrease that government’s influence. Additionally, a government seeking to gain autonomy from the WTO is unlikely to simply use it. This is because, by using the WTO, that government necessarily accedes to the restrictions to which it is subjected via WTO membership. Finally, the political idea of affiliation represents an exception. Certainly a government seeking to highlight its affiliation with the WTO in line with domestic preferences is most likely to do so via simply using the WTO. Despite the affiliation excep-tion, however, the three other political ideas fare poorly in predicting a government preference for simple use when political ideas dominate the policymaking situation.

Thus Argument 2 claims, when political ideas dominate the policymak-ing situation, EP governments will choose either substitution or reform of the WTO. As is evident above, it is of course possible once again to think of ways in which the dominance of political ideas in a policymaking situation could lead to the third strategic choice of simple use. Thus the second argument simply claims EP states like Brazil and India are likely to generally prefer substitution and reform strategies as a means of achieving political ideas over the strategy of simple use, not that they will always do so.

The gap between these two arguments

The gaping hole between these two arguments, of course, is the situation in which neither variable dominates the other in a policymaking situa-tion. In such a situation, three possible scenarios may develop. For the first two scenarios, a strategy fulfilling the goals of one independent vari-able differs from the strategy necessary to fulfill the goals of the other. As a result, government actors may choose to (a) prioritize attaining either interest- based or idea- based goals. Under these circumstances, either Argument 1 or Argument 2 would be applicable since the government would have chosen to prioritize one variable—either ideas or interests—over the other. In the second scenario, government actors could (b)




attempt to divide their resources between the two strategies and attain both goals. In this situation, no policy choice is made between strategies since states simply choose both and employ a mixed strategy. Finally, the third scenario is totally different. Here a single strategy does fulfill the goals implied by both independent variables. This results in (c) a single, rational, strategic choice for the government (which the govern-ment duly chooses).

In all three scenarios, either one of the two arguments can be applied ((a) and (c)) or no strategic choice, that is, choosing one strategy over another, is made (b). Thus, the empirical chapters which follow will exclusively examine policymaking situations where a particular inde-pendent variable dominates the state’s policymaking discussion. Such an investigation will necessarily include policy outcomes (a) and (c) from above. The mixed strategy outcome (b), although interesting, does not contribute to a better understanding of the motivations that result in EPs choosing specific trade strategies. As a result, it is of little use in explaining the empirical puzzle at the center of this book.

Operationalizing the arguments

In order to link these theoretical musings with the everyday realities of trade policy decisions in Brazil and India, I will focus on linking two independent variables—economic interests and political ideas—with three strategic choices EPs have vis-à-vis the WTO—substitution, simple use, and reform. Each of these will be briefly defined in the first two parts of this section, followed by a brief discussion of the control employed in the empirical case studies. Thereafter I will review the analytical steps and methodology used in the case studies.

Independent variables

Each of the independent variables has been divided into pairs of specific interests or ideas. These pairs were considered mutually exclusive in the case studies. This means, for example, if domestic or government actors strongly valued the idea of affiliation with the WTO, they could only weakly value its opposing idea of autonomy (or vice versa). This ensured even coverage of the ideas and interests determined to be relevant to EP governments’ strategic choices in each policymaking situation.

Economic interests

Economic interests are economic actions which, when implemented, generate benefits and costs for private actors as a result of government




decisions. In terms of trade liberalization, this process can occur both via the impact of these decisions on consumer prices and via their impact on the production conditions faced by specific sectors (Hillman 1982). As a result, sectors are assumed to lobby for their preferences, offering government actors both contributions and blocs of votes in exchange for adopting sectoral preferences (Grossman and Helpman 1994; Tullock 1967). In particular, under the theoretical scope of the societal approach, this definition assumes the interaction of different domestic actors’ interest preferences will ultimately determine which policy position the government subsequently projects to the rest of the world. Given the variety of goals and economic positions of domestic actors, the economic interest preferences of domestic actors are diverse and are affected differently by the government’s strategic decisions. Thus the economic interests of one domestic actor may and, often do, conflict with those of another. This, in turn, leads to a variety of policy outcomes based upon which domestic group most successfully impresses its interests on the government actors making the strategic decision (Moravcsik 1997, 530–533). The relevant domestic actors studied in relation to economic interests in the case studies are the organized interest groups within Brazil and India which represent vari-ous economic sectors in those countries.

Given that the WTO’s primary functional purposes are to liberalize trade through multilateral negotiation and resolve trade conflicts between WTO members (Crowley 2003), the relevant economic inter-ests for the empirical case studies are those thematically related to these purposes. Thus, two opposing dyads will be traced in the case studies: liberalization and protection, and economic cooperation and economic isolation. Market liberalization is defined as gaining access to new markets or maintaining given levels of market access. This includes low-ering tariff barriers and minimizing the role of non- tariff barriers (NTBs) in overall trade policy. Market protection is defined as preventing other states from gaining access to new markets or maintaining given levels of protection. This could involve raising tariffs or implementing NTBs vis-à-vis trade partners. Economic cooperation is the act of cooperating to affect trade flows either positively or negatively. Such cooperation can occur via narrow sectoral agreements or via formal, broad trade agree-ments. As a result, this definition also includes moves to integrate more deeply into regional or global economic systems more broadly. Finally, economic isolation is defined as the avoidance of cooperation which will affect trade flows.6 This involves minimizing national reliance on trade or trade partners. Similar to economic cooperation, this definition




of economic isolation also references global and regional economic integration. Unlike economic cooperation, however, isolation involves lessening or limiting a country’s degree of integration.

Political ideas

The political ideas featured in Argument 2 are a sub- section of the broader category of ideas which appears within the secondary literature as well as within the societal approach. According to Parsons (2002, 48), “ideas are subjective claims about descriptions of the world, causal relationships, or the normative legitimacy of certain actions.” As Schirm (2009, 504) notes, ideas are path- dependent and therefore change more slowly than do economic interests. In addition, ideas underline “core domestic social identities” (Moravcsik 2008, 240) and are made relevant to political actors by a high degree of commonality within a state (Schirm 2009, 504). Politics being essentially concerned with determining who or what should make which kinds of rules for whom, political ideas consequently address the appropriateness of potential interdependencies—in this case, vis-à-vis the WTO—for a domestic society’s perception of its own identity. This distinguishes political ideas from other types of ideas (for example, development or nuclear disarma-ment), which are less concerned with appropriate interdependencies and more with, say, appropriate general goals for policy initiatives.

Consequently, in democratic Brazil and India, the domestic actors relevant to determining domestic preferences toward political ideas are voters. Voters generally make their ideational preferences known to government actors through indirect means. These include commu-nication of ideational preferences via public opinion polls or through socialization processes in which government actors are also involved. Voters can be direct too, however. As Blyth (2003, 699) notes, voters are at least hypothetically able to set limits for possible government policies based upon their conceptions of the “right” policy choice. This is because voters measure which strategic choices are appropriate based on the degree to which each of these strategic choices corresponds to their own ideational preferences. They subsequently set limits by voting based upon the outcome of this calculation.

The political ideas traced in the empirical chapters have been chosen to maintain focus on the trade strategies of Brazil and India in reference to the WTO. In other words, the political ideas employed are ideas which reference institutions. As with economic interests above, there are four political ideas relevant to examining Brazilian and Indian stra-tegic trade policy choices. As before, these appear as mutually exclusive




pairs: affiliation and autonomy, and influence and neutrality. Autonomy is a state’s ability to pursue policy goals despite limitations imposed upon it through external constraints, such as the obligations which accompany membership in governance regimes. This definition does not necessarily exclude states participating in international institutions from seeking autonomy. Rather, governments may pursue autonomy in an issue- based way, seeking to achieve some goals within institu-tions and others outside of it. Affiliation, in contrast, is defined as a government’s association with and support for the rules, procedures, and goals of various governance regimes, regardless of the limitations these may impose on that state’s freedom of action. As with autonomy, government actors may pursue affiliation in an issue- based way.

The second pairing of political ideas is slightly more difficult to define. Influence, for example, can be either direct—shaping what others do (Riker 1964)—or indirect—shaping what they want (Nye 1990). On one hand, in the WTO, consensus- based decision- making means that making other governments want what you want is more important than in institutions with a more structured decision- making process. This is because, in the latter, only a limited coalition of supporters is required to implement policy proposals whereas, in the former, a state must, at a minimum, avoid a veto from every single participant to achieve its policy goals. Thus indirect influence seems more important in the WTO. On the other hand, outside the WTO, the lack of rules to regulate behavior suggests asymmetric bargaining advantages will be greater between trade partners (Keohane 1984). As a result, in these situations, the ability to shape what others do, or direct influence, may be more important. Thus, to cover all potential empirical situations which may appear, influence here is considered a combination of both direct and indirect influence. In addition, status is considered to be an important factor in determining the degree to which EP efforts to exert influence are successful at the WTO. For example, the relatively new inclusion of India and Brazil in small group meetings, such as the one in Potsdam in 2007, suggests perceived status plays a crucial role in even gaining entrance to key meetings at the WTO. Hence, a wish for improved status both within the WTO and outside of it will also be included in the concept of the political idea of influence.

Finally, neutrality is defined as the absence of a desire to exert one’s influence on the system itself as well as on the actors within that system. As with the idea of influence, the status question is also relevant to neutrality. For neutrality, however, this means a disregard for status, both within the WTO and outside of it.




A caveat

When separating these two independent variables from one another, a caveat must be acknowledged: Although employed as independent variables here, these political ideas and economic interests are not always independent of one another in the real world of trade policy. The relationship between the two variables may—and does—change based upon situational factors. Schirm (2009), for example, identifies specific conditions under which economic interests and ideas each dominate government preference formation toward the reform of global govern-ance. Further, this relationship between the variables may itself impact the strategic trade policy choice made by the EPs. As Goldstein and Keohane note (1993, 25), “ideas often become politically efficacious only in conjunction with other changes, either in material interests or in power relationships.”

Two possible relationships between the variables are possible. First, political ideas can reinforce economic interests and vice versa. An exam-ple here would be a desire to liberalize trade combined with a desire for more autonomy from the WTO. The logical consequence of this situation would be PTA negotiations, which simultaneously minimize institutional limits and maximize the efficiency of market gains. Thus the presence of both variables in government discourse may suggest a preference for substitution independent of which variable dominates the policymaking situation as hypothesized above. In the second possi-ble relationship, political ideas and economic interests contradict one another. For example, the presence of both liberalization and influence in a policymaking situation fails to point to any single, specific strategy. Whereas the theoretical arguments reviewed above suggest liberaliza-tion would correspond to a choice of either simple use or substitution, theoretical arguments related to the political idea of influence suggest it is likely to point toward reform. Thus no single strategic choice would appear obvious for an EP government in such a situation.

In the empirical chapters which follow, I will use economic interests and political ideas separately in the name of analytical parsimony. However, the possibility that their combination is critical for determining which trade policy forum these two EPs choose in any given situation will be addressed again in Chapter 6. At that time, and building on the results from the empirical chapters, I will further specify theoretical Arguments 1 and 2 by considering not only the link between specific ideas or interests and specific strategic choices, but also the connection between combinations of interest and ideas and EP strategic decisions.




Dependent variables

As mentioned previously, all actors in this project are assumed to be rational actors. In reference to government actors, this means, first, that they have the power to control and dispose of their resources as they deem fit. Second, it means they use those resources to evaluate a variety of policy options against each other and against the costs of implementing each (Breiner 1996, 106–107). Ultimately, they are expected to select the option which brings the most benefits at the least cost. This references the idea of policy “substitutability” introduced by Most and Starr (1984): Since all policy options are evaluated by the same, rational cost- benefit analysis, then any strategic choice can, at least theoretically, be substituted for any other in a given policymaking situation. The three strategic choices employed as dependent variables in this project are substitution, reform, and simple use.

Substitution strategies seek to use means outside the WTO to perform the functions normally accomplished within this institution. In so doing, governments do not seek to substitute all functions of an insti-tution at once. Rather, they choose one function at a time. Negotiating a PTA outside the WTO, for example, does not necessarily imply the governments involved in the negotiations would necessarily avoid using the adjudication offered by the WTO’s DSB when a trade partner’s policy negatively impacts that state’s trade.

Further specifying substitution, it is important to note that the scope of substitution strategies are different from the simple use functions of the WTO they aim to replace. Whereas simple use occurs multilaterally, substitution takes place through interregional, regional, bi- and trilat-eral, and even unilateral means. This leads many scholars to argue that there are, in fact, no substitutes for the WTO in terms of either trade liberalization (Bhagwati 2008; Hoekman and Kostecki 2001) or dispute settlement (Busch 2005). Rather, governments undertaking strategies classified as substitution in this project are, in fact, seeking simply to complement the functions of the WTO with ones they expect to pro-vide different types of benefits. This dynamic will be addressed in more detail later in this section.

Reform strategies involve changing institutional rules and procedures to better suit the policy goals of the government actors attempting the reform. Only formal reform negotiations will be considered as case studies in the empirical chapters. Formal reform negotiations are ones resulting from institutional agreements and conducted within the frame-work of the institution itself. For example, in terms of the reform of the




WTO’s Dispute Settlement Understanding (DSU), these negotiations are a result of the clause in WT/MIN(01)/DEC/1, Item 30 calling for “nego-tiations on improvements and clarifications of the Dispute Settlement Understanding” (2001). Further, they have been conducted within special sessions of the WTO’s DSB and are linked further to the WTO institutional structure via regular reports to the WTO’s Trade Negotiations Committee.

As the literature notes, however, reforms of the WTO are often informal, occurring as part of the bargaining dynamics in the liber-alization negotiations (Hurrell and Narlikar 2006, 416) or as a result of the decisions in the DSB (Stokes 2010; Gehring 2010). So why exclude informal reforms? Primarily, these reforms were excluded to maintain the analytical differentiation between the strategies of simple use and reform. As is depicted in the literature cited above, the dynamics of using the WTO itself can sometimes lead to changes to institutional rules and procedures. Some of these changes are intended by member states while others develop throughout a given negotiation process. Participation in a formal reform process, in contrast, does not happen by chance and, consequently, can be attributed to a choice made by government actors. Since this book focuses on determining the conditions under which Brazilian and Indian government actors make specific strategic choices, informal reforms such as those highlighted above must be excluded from the definition of reform.

A second reason for excluding informal reforms deals with EP governments’ expected perception of formal versus informal reforms. Specifically, successful, formal reforms of the WTO should be more highly valued by EP government actors than their informal counterparts. This is because formal changes to WTO rules and procedures must be signed by all member states. As such, they become semi- permanent and, if in favor of EP government preferences, ensure that the institutional framework of the WTO supports those preferences for many years to come. Informal reforms, in contrast, do not require this broad validation by all WTO member states. As a result, informal reforms are always in danger of being reversed should something change within the WTO, among its members, or in the world economic system as a whole.7 Thus for both methodological and empirical reasons, reform strategies here refer strictly to formal reforms attempted or implemented to alter the WTO’s rules and procedures.

Simple use strategies involve pursuing trade policy goals within the scope of the WTO. This means participating in multilateral trade negotiations to liberalize trade. In addition, it means consulting the




DSB when a trade conflict arises between trade partners as well as subsequently adhering to the panel findings from both the DSB and the WTO’s Appellate Body.

The question then arises, why simple use? Hypothetically one could perceive of complex use of the WTO. For example, the informal reforms addressed above could be characterized that way. From this perspective, although the presumed purpose of EP participation in the Doha Round would be to liberalize trade, the actual purpose of EP governments could be to use bargaining advantages won in the process of negotiating liberalization to impact their institutionalized position in the WTO more broadly. This, in turn, would represent a reform of the WTO.

Including such usage of the WTO in the strategic categorization built here, however, faces several problems. First, it echoes the problem faced in the decision about whether to include case studies related to both formal and informal reform attempts; namely, doing so would make it impossible to differentiate the different strategies from one another. In addition, finding evidence proving the “real” motivations of EP governments in their trade policy activities are different from those implied by the actual strategy chosen seems unlikely due to the democratic nature of these two governments. After all, no rational government actor will explain to voters that the government is wast-ing resources pursuing a specific trade strategy purely on the off chance that strategy may present an opportunity to attain some other valued policy goal at some point in the future. Thus the strategies chosen by EP governments in the empirical chapters are taken at face value. If a government chose to participate in the Doha Round negotiations, it was presumed that government did so for the purpose of achieving the purpose of the Doha negotiations (which, in this case, would be liberalization of world trade).

Control: The nature of trade policy activities outside the WTO

The moves of EP states toward increased strategic diversity in their trade policies tap into larger debates about the implications of such strategic diversity for future governance of world trade via the WTO. The stepping stone–stumbling block debate in reference to PTAs—a substitution strategy—is a prime example. Whereas some authors argue PTAs are stepping stones toward more effective governance of global trade and are, thus, supportive of the WTO (Crump 2006; Crawford and Laird 2000; Baldwin 2006), others characterize them as hindrances to global trade governance via the WTO (Bhagwati 2008; Decker and Mildner 2006; Dieter 2009).




Similarly, whether or not EP governments consider their trade policy activities outside the WTO as substitutes for, rather than complements to, their trade policy activities within the WTO has significant implications for global governance of trade as a whole. For the WTO, complementary EP behavior is less threatening than substitution. This is because charac-terizing these activities as complements implies fundamental acceptance of the WTO’s role in governing world trade as well as the principles under-lining that governance. In other words, complementary behavior seeks to efficiently achieve a single state’s trade policy goals within the global trading system without necessarily endangering the principles via which that system is currently governed. Successful substitution of the WTO, in contrast, is more threatening. Not only does substitution broaden the range of viable options for achieving trade policy goals and, in so doing, undermine the “focalness”8 of the WTO in the global trading system. In addition, substitution does this by violating the basic principles of that system—particularly the principle of non- discrimination among WTO member states. Thus, complementary behavior is a weaker rejection of the WTO’s effectiveness and/or appropriateness for governing global trade than would be the case were the same activities characterized as substitution.

For these reasons, it seems appropriate to test the assumption that EP governments consider trade policy activities outside the WTO as substitutes for, rather than complements to, their trade policy activities within the WTO. Complementing the WTO is defined as parallel pursuit of trade policy goals within and outside of the WTO. A complementary nature thus emphasizes the possibility of mutually and equally focusing on multiple trade forums to fulfill policy goals related to trade liberalization and dispute settlement. Substituting the WTO, in contrast, means pursuit of trade policy goals outside the WTO replaces pursuit of the same goals within the WTO. Thus a substitutive nature emphasizes the inability to mutually and equally focus on mul-tiple trade forums to fulfill policy goals related to trade liberalization and dispute settlement. The nature of EP trade policy activities outside the WTO was traced throughout the case studies to determine how the Brazilian and Indian governments themselves conceptualize these policies.

Methodology

The empirical chapters feature five case studies per country. These were selected to display variation on the dependent variable by exploring cases of substitution, reform, and simple use in both states. Table 1.1




displays these cases organized by country as well as by identification with the dependent variable.

As is evident, for each country, there are two cases related to trade liberalization while there are three included in the field of dispute settlement. Why is this? As discussed previously, this analysis limits itself strictly to cases of formal reform negotiations in order to maintain the analytical distinction between its dependent variables. Since no such formal reform negotiation process exists at the WTO in the field of trade liberalization, a case study addressing this was impossible. I argue, however, that the two reform case studies included will nonetheless provide valuable information in cross- country, if not cross- issue, com-parison. Further, I expect contextualizing the findings from these two cases within the cross- country analysis will provide a more comprehen-sive answer to the question of under what conditions EP governments make different strategic choices vis-à-vis the WTO.

For each country, the analysis has been divided into four steps. These, as well as the methods used within them, will be presented briefly below. Overall it should be noted that the analysis combines three primary qualitative methods—discourse analysis, the analysis of public opinion polls, and expert interviews—to produce data and conclusions which are both reliable and valid.

Table 1.1 Empirical case studies

Dependent variable categorization

Emerging power state

Brazil India

Trade liberalization

Simple use WTO mini- ministerial negotiations (July 2008)

WTO mini- ministerial negotiations (July 2008)

Substitution Free Trade Area of the Americas (2001–2005)

India–ASEAN Free Trade Agreement (2004–2012)

Dispute settlement

Simple use DS267: United States—Subsidies on Upland Cotton (2002–2010)

DS246: EC—Tariff Preferences (2002–2004)

Substitution Brazil–Argentina licensing dispute (2008–2011)

SAFTA implementation dispute (2006–2012)

Reform DSU reform negotiations (2001–2012)

DSU reform negotiations (2001–2012)




Step 1: Specifying the variables to each empirical context

The first step in the analysis involved specifying the independent variables identified and defined earlier in this chapter to the context of each individual EP state. For the variables this meant determining which economic interests and which political ideas were most likely to appear within each EP context.

For economic interests the analysis first consulted economic data on each country’s trade policy. This data was gathered primarily from Trade Policy Reviews (TPRs) performed by the WTO for Brazil and India, and reflected the trade context of each state since (at least) 2001. This data was then combined with the findings presented in secondary literature. The goal was not only to identify the most important interests in each empirical context, but also to shed some light on the various processes through which domestic interest groups in each EP state communicate their prefer-ences to the government. Additionally, doing so highlighted the relative degrees of success the different groups supporting or opposing each inter-est have in impacting policy within their own national context.

To determine the relevant political ideas, in contrast, the analysis began by consulting general public opinion poll data for each country. This poll data was not specific to any trade situation, any trade forum, or to any trade partner. As a result, it reflected preferences related to political ideas which were considered equally relevant to every case study included in this book—at least as a starting point. The poll data was then combined with the findings from the secondary literature. Again, as with interests, each idea was considered to determine its rel-evance both to domestic actors and to government actors. This helped determine the likelihood of individual political ideas appearing in the trade policymaking case studies which follow.

For both of these analyses, expert interviews guided the arguments made in the contextualization sections. Expert opinions improved these analyses in two ways. First, based on their extensive experience with the Brazilian or Indian trade policymaking contexts, experts indicated the direction of domestic and government preferences regarding indi-vidual interests or ideas. Second, they helped identify the limitations of economic data, polls, as well as secondary literature in reflecting the “real” context of Indian or Brazilian policymaking as observed by these experts in their professional experience.

Having specified the independent variables, I then used the findings from these analyses to specify the theoretical arguments proposed at the beginning of this chapter into sub- arguments relevant to each national context. The purpose here was to take a first step toward




narrowing down the relationships posed in the general theoretical arguments. Remember that Arguments 1 and 2 link the dominance of one independent variable in a given policymaking situation with two strategic choices. The sub- arguments, in contrast, link either individual interests or ideas, or combinations of specific interests or ideas, with a single strategic choice. Each of these specifications reflects not only the findings regarding the most relevant interests and ideas for each context but also the knowledge gained from the literature and the expert interviews regarding the trade policymaking processes of these governments overall. The sub- arguments which find empirical support in the case studies will subsequently be compared and combined in the final chapter of this book to identify definitive pathways which predict, or at least categorize ex post, which interests and ideas in EP trade policymaking situations correspond to EP government decisions to simply use, to substitute, or to reform the WTO.

Step 2: Identifying domestic preferences

As reviewed in previous sections, the theoretical framework of this project assumes competition between domestic actors for influence on the government determines which preferences are institutionalized in government policy. Also as shown, however, the literature discussing Brazilian and Indian trade policy is divided as to whether and to what extent this process actually occurs in these states. As a result, in addition to testing the theoretically based arguments in the empirical chapters, it was necessary to test the validity of this (fundamental) theoretical assumption as well. Thus the natural second step in the analysis was to determine domestic preferences vis-à-vis the ideas and interests exam-ined here for each individual case study. This was done in two different ways, based on which variable was being considered.

Domestic interest preferences were determined via discourse analysis of interest group commentary in the time leading up to, during, and shortly following the relevant negotiations. The statements analyzed stem from the industry and agricultural associations representing the economic sectors expected to be affected positively or negatively by the policy at hand in each case study as well as from officials representing these associations. In most cases, which sectors were relevant was determined based on a review of government and media statements related to the negotiations as well as by reviewing the negotiation documents them-selves when available. Exceptions to this are noted and explained at the beginning of each affected case study. As per the definition of inter-est groups offered by Beyers, Eising, and Maloney (2008, 1106–1107),




all of the industry and agricultural associations consulted were organ-ized, sought to influence policy outcomes, and were generally not interested in holding office themselves. As such, these terms will be used interchangeably throughout this book.

In addition to statements from interest groups representing individual sectors, statements stemming from apex industry or agricultural associations were also used to determine domestic interest preferences in each case study. These associations have the difficult task of finding a compromise position between sectors with very different interests. As a result statements from the apex associations not only reflect intersectoral compromise positions. Rather, they also indicate which group of supporters or opponents was best able to ensure their position became “the” voice of domestic sectors in the negotiations when no compromise position could be found among domestic actors. Thus statements from these apex groups are an appropriate means of identifying the relevant economic interest preferences of domestic actors in each negotiation scenario. A complete list of these sectoral and apex associations arranged by sector and country appears in the Appendix.

Interest group discourse was taken from statements and publications issued by industry or agricultural associations as well as from statements and publications issued by apex associations, often posted on their various homepages. In addition, legitimate news sources citing spokes-people for these groups were consulted. These sources were gathered primarily through systematic searching of the LexisNexis media database. All of the sources from which statements were taken were publicly available in their original, published form. Consequently, the use of these sources underlines a transparency of information which corresponds to the link between domestic preferences and government positions examined here.

In contrast, domestic ideational preferences were determined through application to several types of sources, and focus on the preferences of voters, who are assumed likely to oust politicians or parties whose policies do not conform to voters’ preferred ideas. For each country, general poll data was first combined with secondary literature and expert interviews to determine the voters’ ideational preferences within the broader, national, foreign (economic) policy context. Specific poll data was then used when available to refine these findings for the specific forum (for example, the WTO versus a preferential trade agree-ment), specific issue (for example, trade liberalization versus dispute settlement), or specific partner (for example, regional rivals versus major trading partner) at hand in the case study.




Polls were taken only from respected, professional polling organizations within India, Brazil, and abroad. Polls financed by or run by, for example, political parties or interest groups were excluded to avoid potential biases in the results. Further, sample size and composi-tion were examined for each poll to ensure adequate representation of all geographical areas of the country and all socio- economic divisions. This included, for example, rural versus urban populations as well as various income levels. In general, polls which did not fulfill these requirements or for which this information was not available were not included in the empirical chapters.9

As is clear above, the relevant actors for the independent variable of economic interests are different from the relevant actors for the inde-pendent variable of political ideas. Whereas domestic interest groups are considered to be a source for domestic interests, voters in general are considered to be the source for domestic ideas. Clearly, interest groups may have strong opinions related to political ideas just as voters may have strong opinions related to economic interests. However, the two types of domestic actors were nonetheless separated in relation to the two different independent variables for the following reasons. First, doing so provides analytical clarity. Establishing specific and distinct pathways for the transmission of domestic ideas and domestic interests to government actors allows for transparent testing of both arguments. Additionally, it supports the assumption of (potential) government responsiveness to domestic preferences.

Second, the type of domestic actor linked to each independent variable is the most obvious choice according to the definitions of these variables offered in this chapter. For example, economic interests are defined in relation to the benefits and costs government decisions create for private actors. One of the major purposes of establishing an interest group is to coalesce like- minded actors into a group. In any given situation, the like- minded actors in industry or agricultural associations are likely to be united by similar positions vis-à-vis the impact of a potential government policy on their own economic position. As a result, the conveyance of these interest preferences to government actors becomes the central activ-ity of these interest groups. Thus it seems most sensible to look at interest groups to determine domestic interest preferences. Given the democratic nature of governance in both Brazil and India, a similar argument could be made for general voters and ideational preferences based on the definition of political ideas employed. For these reasons, then, these two types of actors will be kept analytically separate as sources of domestic ideational and interest preferences in the empirical chapters which follow.




Step 3: Identifying the variables present in government positions

Identifying the relative weight of the independent variables within government positions taken during trade negotiations is important for two reasons. First, doing so indicates the degree of correlation between the domestic preferences determined in Step 2 and government positions. Although a strong level of correlation is inadequate to establish a definitive causal relationship between domestic preferences and the posi-tions taken by the government (Yee 1996, 72), it is enough in most cases to make claims regarding the government’s responsiveness to domestic preferences.10 Admittedly, lobbying efforts or media publication of poll data themselves may not motivate government actors to take specific positions. Similarly, the domestic preferences identified in these sources may not reflect the real motivations of government actors in taking these positions. Even if both of these circumstances are true, however, the correlation nonetheless represents an acknowledgment of domestic pref-erences by government actors and, more importantly, an attempt by the same to at least frame their decisions in terms amenable to voters (Schirm 2009, 507). As a result, this will help shed light on the trade policymaking process in both of these EP states and speak to the longstanding debate about what impact domestic actors have within that process.

Second, identifying the relative weight of the variables within govern-ment positions is crucial to answering the research question about the conditions under which EP states use, substitute, and reform the WTO. Analyzing governmental policymaking situations in ten case studies, two countries and across two policy issues will provide ample empirical evidence to test Arguments 1 and 2 relating economic interests and political ideas with these three strategic choices.

The relative presence of the independent variables was identified through discourse analysis and referenced the framework of likely ideas and interests determined in Step 1 for each country. The analysis was performed on statements made by elected and appointed government officials who play prominent roles in the trade policymaking process of each state. This includes the economic and foreign ministers of each country as well as each country’s head of government.11 The statements span the time frame leading up to the negotiations under review in each case study, throughout the negotiations themselves, and a relatively briefer time frame following the conclusion of the negotiations. In this manner, the discourse analysis of government statements should provide a comprehensive and accurate representation of government positions throughout the negotiations and, consequently, also an accurate picture of the factors at play in each government’s policymaking situation.




Governmental discourse was taken from statements and publications of elected or appointed officials in the relevant ministries, many of which were accessed on the relevant ministry’s homepage. For India, these ministries included the Ministry of External Affairs (MEA) and the Department of Commerce (DoC). For Brazil, research focused on the Ministério das Relações Exteriores (Ministry of External Relations; MRE or Itamaraty) and the Ministério do Desenvolvimento, Indústria e Comércio Exterior (Ministry of Development, Industry and Foreign Trade; MDIC). Additionally, government statements were taken from legiti-mate news sources citing these actors, once again accessed primarily via systematic searching of the LexisNexis media database. Most of the statements made by heads of government which appear in the discourse corpuses were accessed in this manner.

As with all methodologies, discourse analysis has a number of weak-nesses. Given that the findings from the discourse analysis are central to both the claims I make about EP government responsiveness and those related to the arguments tested in the case studies, a brief com-ment about how these weaknesses were addressed seems vital. The standard methodological criticism of discourse analysis is also the most obvious: One can find a statement to support any given position, espe-cially in politics. Actors—and particularly government actors—whose discourse was reviewed in this project were consequently chosen to maximize the credibility of their statements. By limiting government actors to elected or appointed officials, I underline the link between domestic preferences and government positions postulated within the societal approach. For the same reason, statements by other govern-ment actors, for example, experts, were excluded from the discourse analysis.

A second concern notes that government and domestic actors are often inconsistent in their statements, making it difficult to draw legitimate conclusions from these statements. This concern was addressed by employing the saturation point method of corpus con-struction. This process involves choosing a preliminary selection of texts (the preliminary corpus), analyzing it, and using the preliminary findings to choose another selection. These steps are then repeated until the saturation point of the analytical corpus is reached. At the saturation point, the inclusion of any more texts or statements into an analytical corpus will not substantially alter the conclusions drawn based upon the existing corpus (Mautner 2008, 35).12 This process consequently neutralizes criticisms about inconsistent discourse by incorporating any statements—similar or different—made by actors into the same analysis.




Finally, the results of the discourse analysis were proofed via a combination of data sources and qualitative methods. This was intended to increase the plausibility of the results by contextualizing them within the existing literature, available empirical material, as well as expert opinion. Contextualization within the literature and empirical material made it possible to point to the new and innovative contributions of the study while simultaneously ensuring conclusions drawn were plausible within the policy and research fields which are addressed in this study. Similarly, contextualization within expert opinion via interviews provided insider tips about where to look, with whom to talk, and how to interpret specific empirical material within the analytical corpuses. In addition, interviews provided an opportunity to test the plausibility of the conclusions drawn here within the context of these experts’ considerable experience with the issues and in the countries discussed.

Step 4: Testing the arguments and determining responsiveness correlations

This step combines the findings from Steps 2 and 3 for two purposes. First, those results were used to test the theoretical arguments. This was done by determining whether the links proposed in each argument between the independent variables and specific strategic choices were verified by the evidence. Central to these conditions in both arguments is the con-cept of the “dominance” of either economic interests or political ideas over the other independent variable within the policymaking situation. Dominance here is defined as one variable being roughly twice as present in statements as the other independent variable. The presence of each independent variable was determined based upon the percentages deter-mined during the discourse analysis of government statements in each case study. In situations where the evidence did not comply with this definition—for example in a situation in which one variable appears more prominently but not twice as prominently as the other—dominance was determined based on other qualitative indicators within the case study. These indicators include answers to questions like the following (though the list is not exhaustive):

Do statements primarily stem from the economic ministries, or do they stem from the foreign ministries?Are there contextual factors which underline the relative importance of one variable over the other?Are statements featuring one variable more prominent within government statements than statements featuring the other?

•

•

•




Once dominance was successfully determined, the accuracy of the arguments was then determined based on this information.

For the sub- arguments, the situation was a little different. Although the definition of dominance defined above remained the same, sub- arguments in the empirical chapters also address situations in which a combination of interests or ideas dominates the policymaking situations.13 In such situations, the first step was to determine whether one interest or one idea, according to the dominance rule above, was roughly twice as present in government statements as all other indi-vidual interests or ideas. Should no single interest or idea satisfy this rule, the two most prominent interests or ideas were combined and the dominance rule applied again: Were the two of these interests or ideas together twice as present in government statements as every other indi-vidual interest or idea, respectively? In this manner, it was determined which sub- argument was to be tested in that particular case study.

The second use for the findings from Steps 2 and 3 was to determine degrees of government responsiveness to domestic preferences. This was done slightly differently for each of the two independent variables. For interests, the domestic preferences determined from the discourse analy-sis of the interest group statements were compared to the appearance of these particular interests in government statements. Comparisons were made both based on the numbers (Does the relative presence of interests in the interest group statements align with the relative presence of the same interests in government statements?) and according to content (Does the content of specific interest statements align with how govern-ment statements featured the same interest?). Based upon the answers to each of these questions, the degree of correlation between government and domestic interest- based preferences was identified. A high degree of correlation was determined when both content and numbers showed a high degree of correlation. A medium degree of correlation occurred when content and numbers both showed a medium degree of correlation or when one showed a high degree and the other a low degree of correla-tion. Finally, a low degree of correlation was determined when content and numbers both showed a low degree of correlation.14

For ideas, the steps were basically the same, only domestic ideational preferences were determined not from commentary but, rather, via the combination of general and specific poll data. The relevance of each idea to voters was coded as being strong, moderate, or weak based on the extent to which voters supported each idea in the polls. A strong preference meant clear and consistent support for an idea or interest. A moderate preference generally meant ambivalence between two opposing ideas or




interests (for example, between liberalization and protection or between influence and neutrality). Finally a weak preference meant a lack of support for an idea or interest. These distinctions were combined with the results from the discourse analysis of the government statements to determine the degree of correlation between domestic preferences and government positions based, as before, on both numbers and content.

Given the qualitative nature of this study, decisions about certain issues—for example, the relative weight of content or numbers in deter-mining degrees of correlation—are at times less transparent than is the norm in quantitative studies. This is because these decisions are based not only on empirical indicators but also on the sum of my experience with the specific topic at hand, which I attempt to use in the case studies to more thoroughly and accurately explain the empirical situations. A good example of this is the question of whether correlations represent simply that—correlations—or whether these represent government attempts to frame policy decisions in a way appealing to a broad coalition of voters, thereby incorporating domestic preferences into policy. In each case study, this decision was based on a combination of empirical indicators. For example, how mobilized were domestic actors in the particular negotiations under review? And how often were their interests or ideas mentioned in government statements? Additionally, however, this decision was based on qualitative judgments which reflected contextual research about the negotiations and the specific EP policymaking proc-esses. Careful attention was paid in the empirical chapters that follow to making such situations as transparent as possible.

Structure of the book

The rest of this book is organized as follows. Chapters 2 and 3 present the empirical findings related to the Brazil case. Chapter 2 focuses on the Brazilian context and presents the case studies related to trade liberaliza-tion. Chapter 3 includes the Brazilian case studies related to trade dispute settlement and concludes by discussing the two chapters’ findings as well as their significance for the research puzzle (and arguments) of this book. Chapters 4 and 5 repeat this process for the Indian case, with the former presenting the Indian context and trade liberalization case studies, and the latter the dispute settlement cases and a discussion of the results. Finally, Chapter 6 summarizes and builds on the results of the analysis. This includes developing a revised analytical framework which could serve as a basis for further research on the trade policy processes of Brazil, India, and potentially even that of other EP states. The book concludes with a discussion of the theoretical and empirical implications of its findings.



239

Index

Aaffiliation, 15–17, 192–4, 197–8,

203–5, 217n4in Brazil, 50–5, 59–61, 68–9, 81, 89,

91, 100, 102, 107–8definition, 21in India, 123–6, 130, 132–3, 140–1,

151, 153, 160, 162–3, 169, 171–2, 179, 185

Amorim, Celso, 60–1, 81, 99tAssociation of Southeast Asian

Nations (ASEAN), 135–7, 216n10, 217n9

see also India- ASEAN free trade agreement

Associated Chambers of Commerce and Industry of India (Assocham), 129, 161

autonomy, 10, 15–17, 22, 185, 196, 202

“autonomy through participation”, 42, 51, 53–4, 107

in Brazil, 50–5, 59, 61, 68–9, 81, 89, 100

definition, 21in India, 123–4, 126, 132–3, 140–1,

151, 153, 169, 171–2Azevêdo, Roberto Carvalho de, 217n8

BBrazil

barriers to trade, 39contextualization of economic

interests, 38–43contextualization of political ideas,

48–52dispute settlement, 75

see also Brazil- Argentina licensing dispute; DS267 (United States – Subsidies on Upland Cotton); Dispute Settlement Understanding (DSU), reform negotiations

domestic impact on trade policy decisions, 10, 40–1, 66, 69–70, 78–9, 82, 89, 91–2, 98, 100–1, 104–5, 109, 185–7, 213n4

import substitution industrialization, 41, 212n2

nature of trade policy activities outside the WTO, 62, 71, 83, 92, 94, 102, 107–8, 187–8

see also complement; substituteregional context, 37, 65, 86, 92,

199–201see also Free Trade Agreement of

the Americas (FTAA); Brazil- Argentina licensing dispute

trade profile, 38–9 Brazil- Argentina licensing dispute,

85–94domestic involvement in resolving,

85regional rival argument, 86, 92,

186–7summary of events, 85–6

Brazilian Business Coalition (CEB), 64, 67

Brazilian Confederation of Agriculture and Livestock (CNA), 58, 76, 99

Brazilian Foreign Trade Association (AEB), 58, 60

BRICS (Brazil, Russia, India, China, South Africa), 3, 205–6, 211n1, 217n2, 217n10

BRICSAM (Brazil, Russia, India, China, South Africa, Mexico), 5

CCancún ministerial negotiations

(2003), 1, 5, 57–8, 71, 77China, 37, 39, 46, 56, 88, 90, 116,

120, 136–7, 140–1, 201, 217n7Confederation of Indian Farmers

Associations (CIFA), 129



240 Index

Confederation of Indian Industry (CII), 117, 139, 152

Confederation of National Industry (CNI), 40, 60

Common Market of the South, see Mercosur

complement, 23, 25–6, 62, 71, 83, 92–4, 102, 107–8, 134, 143, 154, 164, 173–4, 178–80, 187–8, 196, 203–5

see also Brazil or India, nature of trade policy activities outside the WTO

cooperation, see economic cooperation

cotton case, see DS267 (United States – Subsidies on Upland Cotton)

Dda Silva, Luiz Inácio Lula (Lula), 49,

60t, 61, 67t, 69, 80t, 82–3, 86, 90t

and South- South cooperation, 47and trade liberalization, 40, 44, 55

Department of Commerce, India (DoC), 33, 217n6

discourse analysisof government statements, 32–3of interest group statements, 29–30quality control, 33–4

dispute settlement, 5, 13, 27t, 204, 214–15n6

see also Dispute Settlement Body (DSB); Dispute Settlement Understanding (DSU); Brazil or India, dispute settlement

Director- General, see under individual names

Dispute Settlement Body (DSB), 1, 4, 24, 46, 78, 180, 214n2

distinction between DSB and DSU, 214–15n6

Dispute Settlement Understanding (DSU), 24

amicus curiae briefs, 95t, 165, 166tdistinction between DSB and DSU,

214–15n6reform negotiations, 94–104,

165–75

Brazilian preferred reforms, 95tIndian preferred reforms, 166tmethodological difficulties with,

96–7, 167–8summary of events, 94, 96, 165,

167sequencing, 95t, 96, 166t, 167,

214n2Doha Round, 3, 10, 12, 44, 57–8,

119–20, 128, 131, 133, 213n4, 213n6, 217n5

potential economic gains/costs, 57, 119–20, 128

see also trade G20; World Trade Organization (WTO)

domestic politics approach, see societal approach

dominance, 34–5DS246 ( EC- tariff preferences), 147–56,

177impact on domestic representation

in India, 148–9summary of events, 147–8

DS267 (United States – Subsidies on Upland Cotton), 75–85, 104, 189

impact on domestic representation in Brazil, 76–7

relationship with Doha Round, 77summary of events, 75–6

DSB, see Dispute Settlement BodyDSU, see Dispute Settlement

Understanding

Eeconomic cooperation, 13–14, 188,

213n5in Brazil, 41–3, 45–8, 59, 60t, 65–6,

67t, 70, 72t, 78, 80t, 88–9, 90t, 98, 99t, 106

definition, 19in India, 115–18, 120, 129, 131t,

138, 139t, 159, 161t, 168–9, 170t, 215n7

North- South cooperation, 45–7, 59, 66, 79, 116, 151, 188–90, 205

South- South cooperation, 42–3, 45–8, 59, 66, 79, 116, 188–90

economic integration, 20, 177



Index 241

global, 40and Brazil, 40, 43, 59, 117and India, 111, 116–17

regional, 177and Brazil, 42–3, 60, 67t, 85and India, 116–17, 138, 139t, 40,

159, 160, 177see also Mercosur; SAFTA

economic interests, 11–14, 18–20, 22, 28, 100, 184, 190–4, 199, 202–3, 212–3n3

definition, 18–19identification of preferences for,

29–30, 32–3relevant domestic actors, 31see also economic cooperation;

economic isolation; market liberalization; market protection; Brazil or India, contextualization of economic interests

economic isolation, 211n6, 212n3in Brazil, 41–3, 46, 58–9, 60t, 66,

67t, 78, 80t, 88, 90t, 98, 99t, 107

definition, 19–20in India, 115–18, 129–30, 131t,

137–8, 139t, 150–1, 152t, 159–60, 161t, 168–9

emerging markets, see Emerging Powers

emerging powers (EPs), 201–3democracy and, 8, 20, 25, 31, 182–3,

200–1and pragmatism, 2, 3–7, 11, 106,

162, 176–7, 202–3relationship to challenger states,

193, 195types of, 202–3see also Brazil; China; India; Russia

Enabling Clause, 12, 44–5, 118–19, 148, 211n4

European Communities, 5, 45–6, 147–56, 216n2

see also Generalized System of Preferences (GSP)

European Union, 1, 48, 56–7, 61, 71, 116, 165, 213n5, 217n5

sugar dispute with Brazil, 5, 75, 82

and trade with Brazil, 39, 44, 46, 61, 80, 214n11

and trade with India, 46, 113, 116, 180, 190, 215n8, 216n2

expert interviews, 27, 29, 179list of, 236–7use in contextualization, 28, 34

FFederation of Indian Chambers

of Commerce and Industry (FICCI), 131t, 139t, 161t, 170t

Federation of Industries of São Paulo (FIESP), 40, 67t, 80t, 85, 90t, 99t

forum shopping, 2–3, 15, 23, 203Free Trade Agreement of the Americas

(FTAA), 56, 63–72, 189impact on domestic representation

in Brazil, 63relationship with Doha Round,

70–1summary of events, 63–4 three- track negotiating strategy, 64,

71, 189

GG4, 1, 52, 125, 205

see also Potsdam G4 ministerial (2007)

G20, 211–12n 7see also trade G20

General Agreement on Tariffs and Trade (GATT), 1–2, 5, 12, 41, 211n3–4

Generalized System of Preferences (GSP), 5, 149

Drug Arrangements, 147–8, 216n2

see also DS246 ( EC- tariff preferences)

Geneva mini- ministerial negotiations (2008)

Brazilian participation in, 56–63impact on the Doha Round, 56–7Indian participation in, 127–35summary of events, 56, 127–8

global governance, 3–8, 13, 26, 50, 194, 203–6



242 Index

government responsiveness to domestic preferences, see Brazil or India, domestic impact on trade policy decisions

Great Power, 5–6, 196GSP, see Generalized System of

Preferences (GSP)

HHonk Kong ministerial negotiations

(2005), 128

IIBSA (India, Brazil, South Africa), 3,

116ideas, see political ideasIndia

barriers to trade, 113–14competition with China, 136–7composite dialogue with Pakistan,

156–7, 163–5contextualization of economic

interests, 112–18contextualization of political ideas,

121–4dispute settlement, 146–7

see also DS246 ( EC– tariff preferences); SAFTA implementation dispute; Dispute Settlement Understanding (DSU), reform negotiations

domestic impact on trade policy decisions, 10, 114–15, 117, 122, 129, 132–3, 140–2, 151, 153, 160, 162, 169, 172–3, 185–7, 231n3

agricultural sector, 112, 119, 121, 215n2

textile sector, 148–9nature of trade policy activities

outside the WTO, 134, 143, 154, 164–5, 173–4, 178–80, 187–8

see also complement; substituteregional context, 136–7, 156–8,

162–3, 177, 186–7, 189, 200–1, 216–17n7–9

see also SAFTA implementation dispute

relationship between trade and foreign policy, 116–17

trade profile, 112–14 India- ASEAN free trade agreement,

135–43, 144t, 162, 175–6, 216n11

Framework Agreement with India, 135

summary of events, 135–6infant industry, 59, 98, 129–30, 150,

213n10influence, 6–7, 14–17, 185, 193,

196–8, 202, 204–6in Brazil, 48–50, 52–5, 59–61,

68–9, 79, 81, 84t, 89, 100–1

definition, 21in India, 121–3, 125–6, 130,

132–3, 140–1, 144t, 151, 153, 160, 163, 169, 171–2, 175

and status, 21institutionalism, see neoliberal

institutionalisminterests, see economic interestsinterest groups, 28–31

apex interest groups, 30identification of relevant sectoral

interest groups, 29list of, 207–10lobbying, 7, 19, 32, 82, 100, 104–5,

177see also Brazil or India, domestic

impact on trade policy decisions

International Monetary Fund (IMF), 50, 123, 213n8

Itamarty, see Ministry of External Relations, Brazil (MRE)

JJuly Package, 1, 57, 94

LLafer, Celso, 51, 67t, 69Lamy, Pascal, 56–7, 217n8



Index 243

liberalism, 9, 198see also the societal approach

liberalization, see market liberalization

lobbying, see under interest groups; lobbying

Lula, see da Silva, Luiz Inácio Lula

MMaran, Murasoli, 172market liberalization, 12–13, 19,

191–2, 204 in Brazil, 38–41, 44–5, 47, 58–9,

60t, 65–6, 67t, 78–9, 80t, 87–8, 90t, 98, 99t, 100

definition, 19in India, 112–15, 118–21,

129–30, 131t, 137–8, 139t, 150–1, 152t, 159–60, 161t, 168–9, 170t, 178

market protection, 12–13, 19in Brazil, 39–41, 44–5, 47–8, 58–9,

60t, 65–6, 67t, 78–9, 80t, 88–9, 90t, 98, 99t, 100

definition, 19in India, 114–15, 119–21, 129–30,

131t, 137–8, 139t, 140, 150–1, 152t, 159–60, 161t, 168–9, 170t, 178

Mercosul, see MercosurMercosur, 3, 42–5, 59, 60t, 64,

86–7, 90t, 107, 201, 211n2, 213–14n11

mini- ministerial meetings, see under location of meeting

ministerial meetings, see under location of meeting

Ministry of Development, Industry and Foreign Trade, Brazil (MDIC), 33, 51, 67t, 69, 76, 86, 214n3

Ministry of External Affairs, India (MEA), 33, 158, 161t

Ministry of External Relations, Brazil (MRE), 33, 51, 217n6

Most Favored Nation (MFN), 45, 120, 156–7, 162, 216n4

Mumbai terrorist attack (2008), 156, 158–9, 175–6

NNath, Kamal, 127–8, 131t, 133, 141–2,

152t, 153neoliberal institutionalism, 4, 9–10,

196–8assumptions, 4 rule- making and EPs, 5theoretical implications of results

for, 196–8neorealism, 6–7, 9, 194, 196

assumptions, 6challenger states, 6, 194, 196theoretical implications of results

for, 194, 196neutrality, 15–17, 217n4

in Brazil, 48–9, 59, 61, 68–9, 79, 81, 89, 100–1

definition, 21in India, 121, 123–4, 130, 132,

140–2, 151, 153, 160, 169, 171Northern states, 45–7, 59, 65–6, 79,

88, 105, 116, 138, 149–51, 169, 176, 188–90, 205–6, 213n5

Oopinion polls, see public opinion

polls

PPakistan, 147, 150, 152t, 156–65,

176–7, 189, 198, 216n2, 216n4 and 216n8

composite dialogue with India, 156, 163–4

see also Mumbai terrorist attack (2008); SAFTA implementation dispute

political ideas, 14–18, 20–2, 28, 105–6, 175–8, 184–5, 197–8, 202, 217n4

definition, 20identification of preferences for,

30–3relevant domestic actors, 11, 31see also affiliation; autonomy;

influence; neutrality; Brazil or India, contextualization of political ideas

poll data, see public opinion polls



244 Index

Potsdam G4 ministerial (2007), 1, 21, 57

protection, see market protectionpublic opinion polls, 20, 35, 186,

212n9, 213n8general, 28, 30quality control, 31specific, 30

Rreform, 2, 13–17, 27, 27t, 52–5, 125–6,

175, 184, 193definition, 23formal, 23and influence, 22, 52–3,

124–6informal, 24, 211–12n7see also Dispute Settlement

Understanding (DSU), reform negotiations

regional integration, see economic integration

responsiveness, see Brazil or India, domestic impact on trade policy decisions

Rousseff, Dilma, 47, 49Russia, 116, 201, 211n1

SSAFTA implementation dispute,

156–65link to non- trade disputes, 156,

158, 163regional rival argument, 158–9,

162–3, 175–7, 187summary of events, 156–7see also Mumbai terrorist attack

(2008)South Asian Free Trade Area (SAFTA),

156see also SAFTA implementation

disputesimple use, 2, 5, 12–15, 17–18,

23–5, 27t, 44–6, 52–5, 118–20, 179, 184, 189, 192–4, 197, 203

definition, 24–5see also DS246 ( EC- tariff preferences);

DS267 (United States – Subsidies

on Upland Cotton); Geneva mini-ministerial negotiations (2008)

Singh, Manmohan, 112, 139t, 152t, 216n8

Single Undertaking, 119societal approach, the, 9–11, 124–5,

159, 177, 188, 197–9assumptions, 9–10theoretical implications of results

for, 198–9South Africa, 3, 5, 46, 117, 211n1Southern states, 42, 45–7, 59, 66, 79,

88, 105, 116–17, 137, 149–50, 169, 176, 188–9, 205, 213n5

spaghetti bowl effect, 204, 217n9strategic choices, 23–5

and partner choice, 188–90and risk, 196–8see also reform; simple use;

substitutionsubstitute, 25–6, 62, 71, 83, 92, 94,

102, 107–8, 134, 143, 154, 164, 173, 178–80, 187–8, 203

see also Brazil or India, nature of trade policy activities outside the WTO

substitution, 2–3, 12–17, 27t, 184, 190–4, 197

and Brazil, 44–7, 53, 62, 70, 83, 87, 91–4, 102, 106–8

definition, 23, 26and India, 118–20, 125–6, 134,

142–3, 154–5, 157, 162–4, 173, 176

link to stepping stone- stumbling block debate, 25

and partner choice, 188–90relationship with political ideas, 22see also Brazil- Argentina licensing

dispute; Free Trade Agreement of the Americas (FTAA); India- ASEAN free trade agreement; SAFTA implementation dispute

Ttrade G20, 5, 42, 52, 57, 205

Brazilian and Indian leadership of, 42, 49, 149



Index 245

in the Doha Round, 71, 77and EP influence, 1, 42, 49

Trade Policy Reviews (TPRs), 4of Brazil, 39–41of China, 217n7of India, 112–15, 117, 215n2–3,

217n7use for specifying economic

interests, 28

UUnited States, 1, 80, 105, 116, 211n5

in the Doha Round, 56, 61, 217n5and trade with Brazil, 39, 45–6, 48,

61, 64, 68, 71, 75–85, 188, 213–14n11–12, 214n3

and trade with India, 113, 116, 127see also DS267 (United States –

Subsidies on Upland Cotton)

WWorld Bank, 50, 123World Trade Organization (WTO),

1–3Article XXIV, 119, 211n4basic principles, 44, 120, 147, 162,

204implications of results for trade

governance in the WTO, 203–6

ministerial and mini- ministerial meetings, see under location of meeting

see also Dispute Settlement Body (DSB); Dispute Settlement Understanding (DSU); Doha Round Most Favored Nation (MFN); Single Undertaking; trade G20

WTO, see World Trade Organization



The Trade Policy of Emerging Powers

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