Trade Disputes and Non-State Actors: New Institutional Developments and the Privatization of...
Transcript of Trade Disputes and Non-State Actors: New Institutional Developments and the Privatization of...
TRADE DISPUTES AND NON-STATE ACTORS 473
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Trade Disputes and Non-state
Actors: New Institutional
Arrangements and the Privatisation
of Commercial Diplomacy
Richard Sherman1 and Johan Eliasson2
1Leiden University, The Netherlands, and 2East Stroudsburg University, Pennsylvania
1. INTRODUCTION
IN the United States and the European Union (US and EU), important aspects
of commercial diplomacy are undergoing a gradual process of privatisation.
Both the US and the EU now have petition processes that allow private parties to
request the initiation of interstate negotiations intended to reduce foreign trade
barriers (Section 301 in the US,1 the Trade Barriers Regulation in the EU2). Trade
negotiators on both sides of the Atlantic have developed mechanisms for consul-
tation with industry; the EU also conducts formal consultations with civil-society
groups. The Transatlantic Business Dialogue (TABD), a group of chief executive
officers of American and European multinationals, began conducting private (com-
pany-to-company) negotiations on trade liberalisation and regulatory reform in
1995 with the blessing of their respective governments. Since then the TABD has
developed extensive ties with trade and regulatory authorities, submitted annual
lists of proposals for trade-related regulatory reforms, and held biennial meetings
attended by US and EU officials. The ‘dialogue’ model is being replicated in
other international arrangements, including the Asia-Pacific Economic Coopera-
tion Forum (APEC) and the discussion over the Free Trade Area of the Americas
(FTAA).
Institutional avenues have long been in place for industries seeking relief
from foreign competition in their home markets (anti-dumping, safeguards and
1 Public Law 93-618; 19 U.S.C. §2411.2 Council Regulation 3286/94.
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anti-subsidy measures). Section 301 and the TBR differ from these protectionist
measures in that they offer private actors access to the machinery of coercive
diplomacy. A case under either measure sets in motion a negotiation process
in which the target state is called upon to make unilateral concessions or else
face trade sanctions, a formal dispute in the World Trade Organisation (WTO),
or both. Similarly, industry has long lobbied government for favourable trade
and regulatory policy changes, but the institutionalisation and internationalisa-
tion of lobbying and access represented by the TABD – itself a result of an
initiative by the late US Commerce Secretary Ron Brown3 – represent substantial
changes from traditional trade-policy practices. Together with formal processes
in the US and the EU in which government consults with industry groups on
agenda items for multilateral trade negotiations, these institutional innovations
expand the variety of access points through which industry can influence trade
policy.
The purpose of this paper is to examine the origins of these institutional
innovations, present evidence on the patterns of industry use of the dispute-
petition processes, and engage in theory-building on the theme of comparative
policy substitutability for private-sector actors. When governments open new
access points for interest groups, three key questions are: Why? How do interest
groups respond? And with what consequences? We approach these questions by
examining evidence from a dataset on Section 301, the TBR and WTO disputes,
as well as interviews with EU Commission officials and leading members of the
TABD and other business associations.4 Since government consultation with in-
dustry and the TABD in particular has become controversial in some quarters,5
our analysis also considers some of the normative issues connected with granting
industry formal avenues for influence over trade policy.
Section 301 has been examined in a large number of studies, from legal/
normative analyses6 to political-economy-theoretic studies7 to research focused
3 See Transatlantic Business Dialogue (n.d.); Cowles (2001, p. 161).4 The research here is part of a larger research project for which interviews and data collection areongoing. The interviews referred to here were semi-structured interviews conducted during summer2002 and 2003. Since interviewees were assured of anonymity, they are referred to by date andinstitutional location.5 See, e.g., Public Citizen (n.d.), which describes the TABD as ‘perhaps the most extreme exampleof “corporate rule”, because it is an organization specifically designed to “privatize” public policydecision-making and put it in the hands of big business’, and Corporate Europe Observer (1999),which argues that ‘the politicians responsible for this corporate-state alliance act on the absurd,harmful and deeply undemocratic premise that corporate priorities should be the basis of tradepolicies and political decision-making in general’.6 Hudec (1990), Bhagwati (1990) and Abbott (1996).7 Ryan (1995), Noland (1997), Sherman (2002), Elliott and Richardson (1997) and Bayard andElliott (1994).
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more directly on issues of policy substitutability.8 The TBR has been studied from
the point of view of political economy9 and international law,10 and the TABD
has been the focus of research on changing patterns of interest-group representa-
tion in Europe.11 Ours is the first study to consider these institutional develop-
ments together as elements of a move toward institutionalisation of private-sector
influence on trade policy. This approach allows us to engage in cross-polity and
cross-institutional comparison, assessing the reactions of private-sector actors to
the availability of new access points and of governments to the changing environ-
ment of international trade. We draw on rational-choice institutionalism to
account for the origins of formalised private influence on trade policy and for
differences in the use of the dispute-petition processes in Europe and America.
Our subject matter requires a certain theoretical eclecticism, however, and we
point out connections between institutions for private influence on trade policy
and theoretical traditions including two-level games, transnationalism and liberal
intergovernmentalism.
It is worth calling attention to the logical boundaries around our subject.
The institutional arrangements under investigation here were deliberately created
by government; they give industry new access points to influence policy; and
they permit industry to raise issues not chosen by government. In this way the
TABD is distinct from business lobbying groups such as UNICE, the European
Roundtable of Industrialists, the American Chamber of Commerce, etc., which
are instances of industrial self-organisation rather than creatures of government
policy. The dispute-petition processes are distinct not because industry takes the
lead in raising complaints about trade barriers, but because private access to the
dispute process is institutionalised due to policy decisions taken by government.
And while the private-sector consultative groups consulted by the US and EU
during WTO negotiating rounds are ad hoc advisory groups convened to elicit
private-sector opinion on specific instances of policymaking, the TABD is an
ongoing forum for industry to generate its own coordinated agenda for policy
change.
In Section 2 we begin by briefly discussing the origins of the dispute-petition
processes and the TABD. In Section 3 we turn to a comparative analysis of
the dispute-petition processes in the US and EU, along with an examination of
the TABD’s effectiveness. Section 4 introduces data on the patterns of industry
use of the dispute-petition processes. Section 5 concludes by addressing some
remaining theoretical and normative issues.
8 Zeng (2003).9 Garcia (1999).
10 Bronckers and McNelis (2001) and Lalumière (2002).11 Cowles (2000, 2001) and Devereaux, Lawrence and Watkins (2003).
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2. ORIGINS
Section 301 of the Trade Act of 1974 allows ‘any interested party’ to petition
for the initiation of negotiations with foreign governments intended to remove
trade barriers to US exports.12 Section 301 envisions two types of barriers – those
that violate international agreements and those that, while not prohibited by
treaty, are ‘unreasonable or discriminatory’ in the view of the Special Trade
Representative (after 1979, the US Trade Representative (USTR)). If the USTR
finds that the foreign barrier is in violation of an agreement, retaliation is manda-
tory unless negotiations with the target state produce a satisfactory result (these
are Section 301-A cases); if the trade barrier is not in violation of an agreement,
retaliation is at the discretion of the USTR (Section 301-B cases). The law was
amended in 1984 to allow the USTR to initiate investigations at its own discre-
tion (i.e. without a petition from an interested party) and strengthened in 1988
with the ‘Super 301’ provisions requiring the USTR to maintain a list of foreign
country practices whose elimination would have the greatest potential to increase
US exports; investigation of any such practices was mandatory.13
In 1983, the European Commission proposed a European response to Section
301, and in 1984 the New Commercial Policy Instrument (NCPI) became law.14
The NCPI closely mirrored the provisions of Section 301, allowing both industry
and member states to petition the Commission to initiate investigations into for-
eign trade barriers. Much like Section 301, the NCPI allowed complaints alleging
violation of an international agreement as well as those that were not in violation
but went against ‘generally accepted rules’. The NCPI was redrafted as the Trade
Barriers Regulation in 1994 and included as part of the European implementing
legislation for the Uruguay Round of GATT negotiations. Unlike the NCPI, the
TBR restricted complaints to those violating specific treaty obligations and to
multilateral agreements (violations of EU bilateral agreements are handled under
separate provisions).15 In 1995 the measure became law, and the Directorate-
General for Trade began an informational campaign to encourage industry to
make use of the new measure.16
Section 301 and the NCPI/TBR were outgrowths of a number of features
of the international trading system of the 1970s–1980s. A surge in protectionist
12 For background on Section 301, see Bayard and Elliott (1994).13 Parallel procedures for intellectual property (‘Special 301’) and telecommunications (‘Tele-communications 301’, or Section 1377) were also introduced in the 1988 amendments to Section301 in the Omnibus Trade and Competitiveness Act of 1988 (Public Law 100-148). The Super 301provision lapsed in 2001 and has not been renewed.14 Council Regulation 2641/84.15 On the TBR, see Bronckers and McNelis (2001) and Garcia (1999).16 Interview, Commission official, 11 July, 2002; interview, Commission official, 17 July, 2002.
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pressure,17 growing concern over non-tariff barriers,18 and dissatisfaction with the
performance of the dispute-settlement procedures of the General Agreement on
Tariffs and Trade (GATT)19 all played a role. Strategic and institutional factors
were also important. On the institutional side, successive GATT rounds had
placed most of the traditional protectionist policy responses out of reach of
policymakers. Strategically, the codification of procedures for the wresting open
of foreign markets – including bureaucratic authority over investigations, time-
tables for action, and provisions for mandatory retaliation (in the case of Section
301) – arguably increased the credibility of US and EU negotiators when pursu-
ing disputes with foreign states.20
The Transatlantic Business Dialogue originated in part as a mechanism for
easing trade tensions between the US and the EU and in part as a forum for the
hammering-out of proposals for trade and regulatory liberalisation that could be
accepted by both European and American industries. US Commerce Secretary
Ron Brown proposed the idea for a business dialogue at a speech in Brussels in
late 1994, following which a survey was sent by the US Commerce Department
and the European Commission to 1,400 business and trade associations in Europe
and the United States, asking inter alia respondents’ views on whether a US-EU
business dialogue should be initiated (80 per cent of respondents reportedly
responded in the affirmative).21 The following year the Transatlantic Business
Dialogue held its first meeting in Seville and produced dozens of specific recom-
mendations for regulatory and trade-policy reform to be submitted to EU and
US governments; since then it has held twice-yearly meetings and conducted
ongoing negotiations through sectoral working groups.
The TABD represents a special case of so-called ‘minilateralism’ – the pursuit
of liberalisation by actors with convergent interests not broadly shared by out-
siders – special in that the ‘insiders’ are not states, but business firms.22 The TABD
is unusual in three respects: it is a transnational business lobby, it was organised
by government and it enjoys delegated powers of negotiation (though, clearly, it
enjoys no direct policymaking power). Maria Green Cowles reports that US
officials offered what was in effect an informational and preference-based argu-
ment in favour of the TABD’s creation, claiming first that business was several
years ahead of government on issues of trade liberalisation, and second that EU
business preferences were closer to those of US business and government than to
the preferences of the European Commission.23 In this respect the TABD was
17 Destler (1995).18 See e.g. Grieco (1990).19 Stone Sweet (1997), Taylor (1997) and Hudec (1990).20 Taylor (1997, p. 237, n. 57).21 Cowles (2000, p. 163).22 See Yarbrough and Yarbrough (1992).23 Cowles (2000, p. 164).
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expected to be closer to the issues that might facilitate trade liberalisation be-
tween the US and the EU; its creation was advanced by the United States both for
this reason and as a means of activating (presumably) pro-deregulation European
business interests against the regulation-friendly Commission.
The new institutional arrangements of what we term ‘privatised commercial
diplomacy’ bear interesting relationships to recent currents in international rela-
tions theory. Perhaps most obviously, they represent direct mechanisms for em-
powering exporters and anti-protection coalitions, and they can be seen as part of
the effort by economically liberal governments to counteract the collective-action
bias that favours protectionist interest groups.24 The dispute-petition processes
echo Andrew Moravcsik’s reformulated liberal theory of international politics in
that they place states in the position of agents that filter and represent (portions
of) the interests originating in society.25 And the TABD is a paradigmatic (pri-
vate-sector) instance of the transnationalism described a quarter-century ago by
Keohane and Nye and recently rejuvenated in the work of Anne-Marie Slaugh-
ter.26 For students of two-level games,27 these arrangements represent something
of an anomaly. The usual structure of two-level games has heads of government
negotiating international agreements and then presenting them to legislatures for
ratification, with legislators perhaps taking advice from interest groups. In privat-
ised diplomacy, by contrast, interest groups move first, and their key interlocutors
are not legislatures but executives.
Inevitably, functionalism plays a role in explaining the emergence of these
institutions in Europe and the United States. The EU and US together account for
over half of global GDP and 40 per cent of world trade. Approximately one-
quarter of imports and over half of FDI in the EU come from across the Atlantic,
and US bilateral figures are even higher.28 The US and EU are also the most
frequent users of the WTO’s dispute-settlement procedures. While these facts
alone lack causal influence on institutions, they create an environment in which
both sides have incentives to construct arrangements that reinforce dispute settle-
ment (Section 301 and the TBR) and that reveal areas of common interest in
trade liberalisation (the TABD).
3. CROSS-POLITY AND CROSS-INSTITUTIONAL COMPARISONS
The most striking difference between the European and American experiences
of the dispute-petition processes is in the frequency of cases. Since 1985 (the
24 Gilligan (1997) and Milner (1988).25 Moravcsik (1997).26 Keohane and Nye (1977) and Slaughter (2004).27 Putnam (1988) and Milner (1997).28 European Union (2001, 2003) and US Census Bureau (2003).
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period when both Section 301 and the TBR/NCPI have been in effect), there have
been 74 Section 301 cases and only 25 TBR cases. A partial explanation for this
difference lies in the provisions for ‘self-initiation’ of Section 301 cases by the
USTR, a power the EU Commission lacks in the TBR. Still, with 29 of the
Section 301 cases since 1985 self-initiated, the 45 remaining cases are still strik-
ingly greater in number than the TBR cases.29
The absence of a provision for self-initiation of TBR cases itself deserves
explanation. The NCPI and TBR were not entirely uncontroversial among EU
member states. Garcia30 reports that the TBR met with two sources of resistance,
first from traditionally free-trading member states fearing that the measure was a
back door to protectionism, and second from those who saw it as an unnecessary
augmentation of the power of the Commission relative to the Council of Minis-
ters. These concerns also slowed adoption of the NCPI, which was first proposed
by France in 1982, formally submitted by the Commission in March 1983, and
adopted with modifications by the Council in September 1984 – with Germany
reportedly voting against, and Britain and Denmark abstaining.31
Interviewed EU Commission officials expressed surprise, and some regret, that
more TBR petitions are not filed.32 The main explanation lies apparently in the
multi-level structure of the EU. With both national-level and European-level
political systems as potential lobbying avenues, industry groups have reason to
favour the national level: proximity, familiarity and a degree of informality that
shields them from potential unintended consequences. While Commission offi-
cials stress the simplicity of the process for filing a TBR petition,33 industry
representatives emphasise both its complexity and the danger that business data
submitted as part of a TBR petition could be shared with other Commission
agencies (e.g. the Directorate-General for Competition) charged with policing
anti-trust or regulatory compliance.34 Also, while European trade lobbying is
carried out principally by European industry associations rather than national
associations or individual firms, Bouwen35 finds that European associations
generally possess the least access to the Commission among these three segments
of the business lobby.
29 Data on Section 301 are taken from US Trade Representative (n.d.); US Trade Representative,1998–2003. Data on the TBR are taken from European Commission (n.d. (a) ).30 Garcia (1999, pp. 392–94).31 Lalumière (2002, p. 8, n. 22).32 Interview, Commission official, 11 July, 2002; interview, Commission official, 17 July, 2002. Itis worth noting that the Commission has bureaucratic incentives to steer industry toward itselfand away from member states as a means of enhancing the centrality of its position in Europeanpolitics.33 Interview, Commission official, 11 July, 2002; interview, Commission official, 17 July, 2002.34 Interview UNICE representative, 13 June, 2003; interview, CIFEC representative, 17 June,2003.35 Bouwen (2004, p. 354).
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While the European Commission may be less well-situated than the US Trade
Representative to attract petitions for trade disputes, the relative competence of
the two economies’ bureaucracies appear to be reversed in their interaction with
the TABD. TABD officials and European Commission officials involved in the
TABD process note that the different administrative structures in the US and the
EU lead to differences in implementation of TABD proposals for regulatory
reform.36 As agencies of an intergovernmental organisation, European bureaucra-
cies are accustomed to working both within and between states, and coordination
among agencies across the various Directorates-General means that regulations
are vetted by the segments of the bureaucracy responsible for relations with third
states. American administrative agencies, in contrast, have no international ‘man-
date’; their authorising legislation generally contains no provision for interna-
tional coordination, and they are subject to more fine-grained legislative oversight
than their EU counterparts.
TABD proposals on regulatory reform typically require regulatory cooperation
not only across international boundaries but also among bureaucratic agencies,
and inter-agency cooperation is significantly better institutionalised in the
EU than in the US. For example, while an outward- (indeed, upward-) looking
bureaucracy such as the Federal Aviation Administration is accustomed to certi-
fying the airworthiness of imported aviation equipment on a bilateral (country-to-
country) basis, the inward-oriented Occupational Health and Safety Administration
reviews applications for certification of foreign testing laboratories on a facility-
by-facility basis.37 One consequence of these administrative differences is that
implementation of the Mutual Recognition Agreement (MRA), championed by
the TABD and concluded between the US and the EU, has met with greater
obstacles on the US side.38 As one EU Commission official put it, European
bureaucrats are ‘more in the habit of picking up the phone before we regulate’.39
The TABD itself has encountered some difficulty sustaining itself as an insti-
tution. For six months in 2002 the group went without a chairperson on either the
European or the American side, and for more than a year its working group on
dispute settlement lacked an American director. The TABD issued neither of its
usual biennial reports in 2003, and its membership has experienced significant
turnover during its ten years of existence. Intergovernmental negotiations over
implementation of parts of the MRA concluded in 2000 are still under way as of
August 2005. One explanation for the TABD’s difficulties lies in its disaggregated
nature: it is both multinational and multi-sectoral, and consequently its incentives
for sustained collective action are less sharp than those facing a single-sector
36 Interview, TABD representative, 8 July, 2002; interview, Commission official, 15 July, 2002.37 Devereaux, Lawrence and Watkins (2003, pp. 28–29).38 Devereaux, Lawrence and Watkins (2003, pp. 27–29).39 Interview, Commission official, 15 July, 2002.
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40 Data are taken from US Trade Representative (n.d.); US Trade Representative 1998–2004;European Commission (n.d. (a) ). Industrial classifications were coded by the authors.
industry association. As a transnational negotiating body, it also lacks a key
competence available to states: the ability to trade off one group’s interests against
those of another. The TABD is thus limited to making proposals representing
a consensus among its member corporations. In this light, the dispute-petition
processes are more capable of motivating private-sector action than the broad
effort at multinational corporatism represented by the TABD.
4. DISPUTE-PETITION PROCESSES: WHO USES THEM AND WHERE THEY LEAD
The industries that have been represented in cases under the TBR and Section
301 are tabulated in Figures 1 and 2 respectively.40 Some similarities in the
FIGURE 1Trade Barriers Regulation/CPI Cases by Industry, 1985–2004
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industrial patterns across the two instruments are immediately apparent. Food,
Beverages and Tobacco represent the largest number of cases in both the TBR
and Section 301, accounting for about one-fifth of the TBR cases and over one-
third of the Section 301 cases. Also high on both lists are Textiles, Leather and
Footwear, Intellectual Property and an ‘Other’ category including not only a
range of industries but also behind-the-border measures such as investment regu-
lations, anti-dumping procedures, customs valuation, etc. Since agriculture and
textiles are sectors heavily distorted by commercial-policy measures worldwide,
it is at first sight not surprising that these sectors have frequent resort to the
market-opening measures of the TBR and Section 301. At the same time, textiles
and footwear are hardly leading sectors in either the US or EU economy, suggest-
ing that like anti-dumping procedures, the dispute-petition processes may in
part enlist government power to sustain uncompetitive industries. That both
the EU and US have made relatively frequent use of the dispute measures for
intellectual property issues, though, makes it clear that leading sectors are also
represented.
FIGURE 2Section 301 Cases by Industry, 1975–2004
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FIGURE 3EU Anti-dumping Cases by Industry, January 2000 to September 2004
If the dispute-petition processes were simply a form of disguised protection-
ism, as Bhagwati has suggested of Section 301,41 we would expect to see a
similar list of industrial sectors represented there as in more traditional protec-
tionist instruments such as anti-dumping. Figures 3 and 4 tabulate the industries
that have filed anti-dumping petitions (respectively) in the EU from January 2000
to September 2004 and in the US from 1979 to 1994.42 While not quite a mirror-
image of the tabulations of industries represented in the dispute-petition cases,
the industry mix in anti-dumping investigations is quite different. Food, Bever-
ages and Tobacco are much less frequently targets of anti-dumping investiga-
tions than dispute petitions. Textiles, Leather and Footwear are lower on each
list in anti-dumping cases (and far lower in the US); in addition, all of the EU
41 Bhagwati (1990).42 Data for the EU are taken from European Commission (n.d. (b) ). Data for the US are taken fromBloningen (n.d.).
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FIGURE 4US Anti-dumping Cases by Industry, 1979–1995
anti-dumping cases in this product category target primary synthetic textiles,
while the TBR cases include mainly finished products.
To generalise a bit further, the dispute-petition processes tend to target indus-
tries in which the GATT/WTO system has been least successful in achieving
liberalisation – agriculture, textiles and intellectual property – while the anti-
dumping investigations tend to target more highly liberalised sectors. Since one
possible outcome of a case under Section 301 or the TBR is a formal dispute in
the GATT/WTO, it is worth comparing the relevant experience of the two dis-
pute-petition processes. Confining the comparison to the period since 1995, when
the new WTO dispute-settlement procedures came into effect, the ultimate dis-
position of cases under the two processes has been remarkably similar. Of the
23 cases under Section 301 since 1995, 15 have resulted in formal consultations
under the WTO dispute-settlement procedures, and nine have resulted in the
formation of a dispute-settlement panel. Of the 23 TBR cases during the same
period, ten have gone to WTO dispute-settlement consultations, and eight have
resulted in the formation of panels.
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These figures point to another noteworthy feature of the dispute-petition pro-
cedures: they are rather effective. To observers of the WTO system, the formation
of a panel represents a success for the organisation’s quasi-judicial dispute-
settlement procedures. To negotiators from states initiating a dispute, however,
the formation of a panel represents a failure of bilateral trade diplomacy.
The great majority of cases under both the TBR and Section 301 are resolved
without recourse to the judgment of a WTO dispute-settlement panel. That said,
most disputes of any type under the WTO do not result in the formation of
panels but are instead either withdrawn or settled at the consultation stage.43
And both the TBR and Section 301 represent a small portion of the several
hundred disputes that both the EU and the US have launched in the WTO since
its creation. Despite the creation of new access points for the private sector, the
initiation of trade disputes remains largely in the hands of states.
5. THEORETICAL AND NORMATIVE CONSIDERATIONS
Moravscik depicts states as agents of influential groups in society; inter-
national politics is the interplay of these groups’ preferences as represented by
states.44 Section 301 and the TBR are interesting in part because they are real
embodiments of this theoretical idea: the US and EU are, in this context, provid-
ers of diplomatic services to industry. And, while the TABD clearly lacks the
‘dictatorial’ powers ascribed to it by critics, the group does internationalise and
routinise one aspect of industry’s influence over regulatory politics. At the the-
oretical level, how should we understand an international politics of trade in
which states institutionalise channels for industry influence?
As in any situation of agency, the first consideration is the nature of the
principal-agent relationship. The information asymmetry customary in principal-
agent problems – typically, an uninformed principal and an informed agent – are
somewhat more complex here. Industry is better-informed than government about
its difficulties making sales in specific foreign markets, but government is pre-
sumably better-informed than industry about the provisions of international trade
agreements. In order to gain attention and stimulate action from government,
industry has incentives to overstate the protectionist effect of foreign states’ trade
practices, just as in anti-dumping cases it has incentives to overstate the extent of
injury.
To maintain a clientele among industry, the administrative agencies charged
with responding to petitions in 301 and TBR cases have incentives to achieve
results; on the other hand they maintain multifaceted trade relationships with
43 See World Trade Organisation (n.d.).44 Moravcsik (1997).
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foreign governments that may work at odds with the objectives of a specific
claim by industry. The information and incentive problems generate the two
principal dilemmas of privatised diplomacy: first, government’s reliance on
information from an interested party (industry), and second, the ‘unpacking’
of broader multi-issue and multi-country trade relationships into case-by-case
interactions. Unlike multilateral negotiating rounds, such case-by-case inter-
actions do not permit tradeoffs of concessions across sectors as a means to
‘compensate’ foreign governments for policy changes that assign costs to parti-
cular interest groups.
In the case of the TABD, the problem of relying on information from an
interested party is particularly acute. In the nightmare scenario of anti-globalisation
groups such as Public Citizen and Corporate Europe Observer, the TABD pro-
cess gives regulated industries a chance to free themselves of regulations that
work in the public interest but at a cost to profits. This rather grandly over-
estimates the TABD’s influence, since even the relatively low-hanging fruit rep-
resented by the Mutual Recognition Agreement has not been fully implemented.
When asked about the TABD’s achievements in the regulatory area, both TABD
officials and European Commission officials begin with general statements of
the group’s importance; as practical evidence, however, they offer only the
Mutual Recognition Agreement and an indefinite postponement of the EU’s
proposed metric-only labelling requirement. On this basis it may be that con-
sumers have little to fear from the TABD. Still, the critics of the TABD process
are not without reason in asking whether institutionalised industry initiative in
regulatory coordination is a case of the cart going before the horse, especially
since the business-dialogue model is being replicated in new multilateral arrange-
ments. It seems hardly likely that an organisation composed of chief executive
officers of multinational corporations would act in the public interest except by
coincidence.
A consideration to be borne in mind is that the opposite of institutionalised
industry influence on government is not generally the absence of industry influ-
ence, but rather the exercise of informal, and hence less observable, influence.
The emerging mechanisms of privatised commercial diplomacy are valuable in
part because they entail procedural formalities including the generation of a
documentary ‘trail’. As one Commission official said of the TABD, ‘They don’t say
anything to us that doesn’t go in their report, and we don’t say anything to them
that doesn’t go in our report’.45 This is something of an over-statement; govern-
ment officials attend TABD meetings, but Commission officials insist that they
are there only as observers.46 Section 301 and the TBR both result in public
45 Interview, Commission official, 15 July, 2002.46 Interview, TABD representative, 8 July, 2002; interview, TABD representative, 10 July, 2002;interview, Commission official, 15 July, 2002.
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reports summarising their findings and actions. Shining some light on actions
taken by government in the field of trade policy is potentially valuable in its
own right.
The TABD has also had some spin-off effects that augur well for advocates
of expanded public input into international economic arrangements. In the first
instance, business is itself part of ‘the public’ – though the expanded industry
access afforded by privatised commercial diplomacy is clearly not what global-
isation’s critics have in mind. The TABD has also energised consumer groups
and helped give rise to the TACD – the Transatlantic Consumer Dialogue, formed
in 1998 – whose membership currently includes 65 consumer-advocacy groups in
Europe and the United States.47 The TACD holds annual meetings, has work-
ing groups on a number of issues including trade, food, health and intellectual
property, and, like the TABD, issues reports to governments spelling out desired
policy directions.48 The EU has also initiated civil-society dialogues involving
(among others) labour and environmental groups, and the US Trade Repre-
sentative has begun including such groups in the memberships of its advisory
committees.49
The TABD would appear to have naturally built-in limitations on its poten-
tial reach. As a cross-sectoral and transatlantic industry lobbying group, the range
of its opportunities for consensus within the group are significantly smaller than
in, say, a national industry confederation or a single-sector industry association.
What states are able to do, assign benefits and costs across industries with policy
choices in which some industries win and others lose, the TABD itself is institu-
tionally constrained from doing. It remains to be seen whether the group will
develop the institutional continuity that would be required in order to signifi-
cantly raise its level of effectiveness, and whether the emergence of parallel
processes for civil-society input will produce a genuinely competitive arena for
international economic policymaking.
The petition processes for the initiation of trade disputes in Section 301 and
the TBR have not lived up to the dire predictions of 301’s greatest detractors.
They are susceptible to abuse, surely, but they have hardly led to an unravelling
of the rules-based multilateral trading system, and in some respects they support
it. As 301 cases and TBR cases have become closely allied with the GATT/
WTO’s rules and partly joined to its dispute-settlement machinery, the measures
have come to resemble less ‘aggressive unilateralism’ and more a simple adjunct
to the normal dispute process. Since cases frequently involve grey areas of the
law, the measures are also potentially useful in uncovering areas where the WTO
system is in need of clearer specification of obligations.
47 See Transatlantic Consumer Dialogue (n.d. (a) ).48 Transatlantic Consumer Dialogue (n.d. (b) ).49 US Trade Representative (n.d. (b) ).
488 RICHARD SHERMAN AND JOHAN ELIASSON
© 2006 The Authors
Journal compilation © Blackwell Publishing Ltd. 2006
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