Hostname: page-component-cd9895bd7-hc48f Total loading time: 0 Render date: 2024-12-27T08:41:03.660Z Has data issue: false hasContentIssue false
  • English
  • Français

Resisting the protectionist temptation: industry and the making of trade policy in France and the United States during the 1970s

Published online by Cambridge University Press:  22 May 2009

Helen Milner
Helen Milner
Affiliation:
Assistant Professor at the Institute on Western Europe, Columbia University, New York City.
Get access

Abstract

Why were advanced industrial states able to keep their economies relatively open to foreign trade in the 1970s and the early 1980s, despite declining U.S. hegemony and increasing economic difficulties? This article argues that an international-level change affected domestic trade politics and contributed to the maintenance of a liberal trading system. Examining the United States and France, the argument proceeds in two steps, showing first how domestic trade politics were changed and second how this change affected the policy process. Initially, I argue that aspects of the increased international economic interdependence of the postwar period altered domestic trade politics by creating new, anti-protectionist preferences among certain firms. Firms with extensive international ties through exports, multinational production, and global intra-firm trade have come to oppose protectionism, since it is very costly for them. Evidence for these new preferences was apparent among both American and French industries. Despite different contexts, firms in the two countries reacted similarly to the growth of interdependence. Next, I ask whether firms' preferences affected trade policy outcomes and show how these preferences were integrated into the policy process in both countries. Trade policy structures in neither country prevented firms' preferences from affecting the policies adopted. Even in France, a so-called “strong” state, firms' preferences were a key influence on policy. In the trade policy area then, the French and American states did not appear to differ greatly in their susceptibility to industry influence, even though their policy processes were different.

Type
Articles
Information
International Organization , Volume 41 , Issue 4 , Autumn 1987 , pp. 639 - 665
Copyright
Copyright © The IO Foundation 1987

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

1 Examples are Malmgren, H., “The Coming Trade Wars?” Foreign Policy 1 (Winter 1970), pp. 115–43CrossRefGoogle Scholar; Bergsten, C.F., “The Crisis in U.S. Trade Policy,” Foreign Affairs 49 (07 1971), pp. 619–35CrossRefGoogle Scholar; Kronholz, J., “Trade and Currency Wars Deepen the Depression,” Wall Street Journal, 23 10 1979, p. 1Google Scholar; Kindleberger, C., The World in Depression, 1929–1939 (Berkeley: University of California Press, 1973)Google Scholar.

2 Goldstein, Judith, “The Political Economy of Trade: Institutions of Protection,” APSR, 80 (03 1986), p. 162CrossRefGoogle Scholar.

3 Nontariff barriers (NTBs) were estimated to affect industrial sectors comprising 40–45% of industrial trade by the early 1980s for many advanced industrial countries. See Cline, W., “Exports of Manufactures from Developing Countries,” unpublished paper, Brookings Institution, 02 1982, Tables 2 and 3Google Scholar; see also Hine, R., The Political Economy of European Trade (Brighton, U.K.: Wheatsheaf, 1985), p. 224Google Scholar.

4 Ruggie, J., “International Regimes, Transactions, and Change,” International Organization 36 (Spring 1982), pp. 379–416CrossRefGoogle Scholar; Lipson, C., “The Transformation of Trade,” International Organization 36 (Spring 1982), pp. 417–56CrossRefGoogle Scholar; Lenway, S., The Politics of U.S. International Trade (Boston: Pitman, 1985)Google Scholar; Keohane, R., After Hegemony (Princeton, N.J.: Princeton University Press, 1984), chap. 9Google Scholar.

5 Hegemonic stability theory in its original form (see Kindleberger, World in Depression, especially chap. 14) cannot account for the limited protectionist response of the 1970s and 1980s; see Krasner, S., “State Power and the Structure of International Trade,” World Politics 28 (1976), pp. 317–47CrossRefGoogle Scholar. Others do a somewhat better job; see Keohane, R., “The Theory of Hegemonic Stability and Changes in International Economic Regimes,” in Holsti, O., Siverson, R., and George, A., eds., Changes in the International System (Boulder, Colo.: Westview, 1980)Google Scholar; Lake, D., “International Economic Structures and American Foreign Economic Policy,” World Politics (07 1983), pp. 517–43Google Scholar; Lake, D., “Beneath the Commerce of Nations,” International Studies Quarterly 28 (06 1984), pp. 143–70CrossRefGoogle Scholar; Russett, B., “The Mysterious Case of Vanishing Hegemony,” International Organization 39 (Spring 1985)CrossRefGoogle Scholar.

6 Pastor, R., Congress and the Politics of U.S. Foreign Economic Policy (Berkeley: University of California Press, 1980)Google Scholar; Porter, R., Presidential Decision-Making: The Economic Policy Board (Cambridge: Cambridge University Press, 1980)Google Scholar; Winham, G., “Robert Strauss, MTN, and the Control of Faction,” Journal of World Trade Law 14 (09–10 1980), pp. 377–97Google Scholar. For an argument focusing on ideas and institutions, see Goldstein, “Political Economy of Trade.”

7 Katzenstein, P., ed., Between Power and Plenty (Madison: University of Wisconsin Press, 1978)Google Scholar; Zysman, J., Governments, Markets, and Growth (Ithaca, N.Y.: Cornell University Press, 1983)Google Scholar.

8 Nordlinger, E., On the Autonomy of the Democratic State (Cambridge, Mass.: Harvard University Press, 1981), p. 100Google Scholar.

9 Export dependence measures industrial exports as a percentage of total domestic industrial production.Import dependence measures industrial imports as a percentage of total domestic consumption. CEREM, , Crise, Concurrence Internationale, et Stratégies Multinationales (Paris: CEREM, 1981), p. 27, Table 3Google Scholar; DREE, , line Décennie du Commerce Extérieur Français (Paris: Documentation Franchise, 11 1983), p. xivGoogle Scholar.

10 A. Lipietz, “The Globalization of the General Crisis of Fordism,” SNID Occasional Paper #84–203, 1984, Table 1. French export dependence peaks in 1899, then declines until after World War II, and then begins increasing again.

11 Export dependence measures industrial exports as a percentage of total domestic industrial production. Import dependence measures industrial imports as a percentage of total domestic consumption. Report of the President's Commission on Industrial Competitiveness, Global Competition, vol. 1 (Washington, D.C.: GPO, 1985), p. 36Google Scholar.

12 U.S. Department of Commerce, 1977 Enterprise Statistics (Washington, D.C.: GPO, 1981)Google Scholar.

13 Grunwald, J. and Flamm, K., Global Factory (Washington, D.C.: Brookings, 1985), p. 7Google Scholar; Helleiner, G., “Transnational Corporations and the Trade Structure,” in Giersch, H., On The Economics of lntra-Firm Trade (Tubingen, W. Ger.: Mohr, 1979), pp. 159–84Google ScholarPubMed.

14 Savary, J., Les Multinationales Françaises (Paris: Presses Universitaires de la France, 1981); pp. 19–23, 26–29, 110–12Google Scholar; Ardagh, J., France in the 1980's (New York: Penguin, 1982), pp. 45–47Google Scholar; Savary, J., “Les Multinationales Françaises,” Économie et Humanisme 257 (01–02 1981), p. 75Google Scholar.

15 Savary, , Les Multinationales Françaises, pp. 19–26Google Scholar.

16 Grunwald, and Flamm, , Global Factory, pp. 25–27Google Scholar.

17 This argument is developed in detail in Milner, H., “Resisting the Protectionist Temptation: Industry Politics and Trade Policy in France and the U.S. in the 1920s and the 1970s,” Ph.D. diss., Harvard University, 1986Google Scholar. Parts of the argument have been developed elsewhere. For discussions of export dependence, see Wilson, J. H., American Business and Foreign Policy, 1920–33 (Boston: Beacon Press, 1971)Google Scholar; Becker, W., The Dynamics of Government–Business Relations (Chicago: University of Chicago Press), 1982Google Scholar; Fong, G., “Export Dependence and the New Protectionism,” Ph.D. diss., Cornell University, 1982Google Scholar. For discussions of multinationality and its related trade, see Helleiner, G., “Enterprises and the New Political Economy of US Trade Policy,” Oxford Economic Papers, vol. no. xxix–1 (1977), pp. 102–16CrossRefGoogle Scholar; Lavergne, R., The Political Economy of US Tariffs (Toronto: Academic Press, 1983)Google Scholar; Pugel, T. and Walter, I., “US Corporate Preferences and the Political Economy of Trade,” Review of Economics and Statistics 67 (3 08 1985), pp. 465–73CrossRefGoogle Scholar.

18 The assumption that the costs of other options are about equal for all firms is probably not accurate. But it is unclear whether any systematic difference in costs exists for internationally oriented versus domestically oriented firms. It could be argued that domestic-centered firms, generally being smaller and more flexible, will find adjusting to foreign competition less costly; on the other hand, large multinationals may have advantages—i.e., in obtaining capital or buying into new ventures—that will make adjustment less costly for them. Whether it will be more costly for one group over the other probably depends on the particular firms and industry. For an interesting discussion of how other options affect demands for protection, see Aggarwal, V., Keohane, R., and Yoffie, D., “Dynamics of Negotiated Protectionism,” APSR 81 (06 1987), pp. 345–66Google Scholar. Their argument focuses on industries instead of firms, however.

19 Milner, “Resisting the Protectionist Temptation.”

20 Many studies have found that high levels or high rates of increase in imports are strongly correlated with high levels of demand for protection or with high actual levels of protection; see Baldwin, R., The Political Economy of U.S. Import Policy (Cambridge, Mass.: MIT Press, 1986)Google Scholar; Lavergne, Political Economy of U.S. Tariffs; Goldstein, J., “A Reexamination of American Commercial Policy,” Ph.D. diss., UCLA, 1983Google Scholar; Takacs, W., “Pressures for Protection,” Economic Inquiry 19 (10 1981), pp. 687–93CrossRefGoogle Scholar.

21 Milner, , “Resisting the Protectionist Temptation,” chap. 5, pp. 300–19Google Scholar.

22 Ibid., chap. 6, pp. 437–66.

23 Ibid., pp. 418–36.

24 Ibid., chap. 5, pp. 343–71.

25 In the 1980s, increased action has been taken against the Japanese. A number of unfair trade complaints have been filed and the U.S. government has also negotiated a semiconductor export pricing agreement with Japan. Many of the firms involved in these actions have been more concerned with opening the Japanese market and forcing the Japanese to play by “the rules” than closing the U.S. market. Firms in this industry have developed an increasingly strategic vision of their interests in trade; see forthcoming paper by H. Milner and D. Yoffie, “Strategic Trade and Industry Preferences,” on this point.

26 Milner, , “Resisting the Protectionist Temptation,” chap. 6, pp. 549–75Google Scholar.

27 Ibid., chap. 6, 495–522.

28 Ibid., chap. 5, pp. 372–96.

29 Ibid., chap. 6, pp. 576–604.

30 Bauer, R., Pool, I., and Dexter, L., American Business and Public Policy (Chicago: Aldine-Atherton, 1972)Google Scholar.

31 Nordlinger, , Autonomy of the Democratic State, especially pp. 104–5Google Scholar.

32 Gilpin, R., U.S. Power and the Multinational Corporation (New York: Basic Books, 1975)CrossRefGoogle Scholar, for example, maintains that the rise of multinational enterprise occurred in large part because of U.S. hegemony and the conducive environment that it provided for U.S. enterprise.

33 See Hennart, J. M., “The Political Economy of Comparative Growth Rates: The Case of France,” in Mueller, D., ed., The Political Economy of Growth (New Haven, Conn.: Yale University Press, 1983), pp. 197–201Google Scholar; Hanreider, W. and Auton, G., The Foreign Policies of West Germany, France, and Britain (Englewood Cliffs, N.J.: Prentice-Hall, 1980), p. 123Google Scholar.

34 Examples of the former are the French television manufacturer, Thomson, in the 1970s, and many of the steel companies, while St. Gobain, the glass manufacturer, is a good example of the latter.

35 Policy networks come from Katzenstein, , ed., Power and Plenty, p. 308Google Scholar.

36 J. Zysman, “The French State in the International Economy,” and P. Katzenstein, “Conclusion: Domestic Structures and Strategies of Foreign Economic Policy,” in Katzenstein, ed., Power and Plenty; Zysman, Governments, Markets, and Growth.

37 Krasner, “U.S. Commercial and Monetary Policy,” in Katzenstein, ed., Power and Plenty.

38 Zysman, “The French State”; Katzenstein, “Conclusion”; Zysman, Governments, Markets, and Growth, chaps. 1–3 and conclusion.

For this view of trade policymaking, see Cohen, S., The Making of U.S. International Economic Policy (New York: Praeger, 1977), pp. 131–36Google Scholar.

This notion of unity is similar to Barzelay's idea of segmentation. He presents a well thought out argument as to why segmentation reduces a state's control over its policymaking apparatus. See Barzelay, M., The Politicized Market Economy (Berkeley, Calif.: University of California Press, 1986)Google Scholar.

39 Milner, , “Resisting the Protectionist Temptation”; Adams, J., and Stoffaes, C., eds., French Industrial Policy (Washington, D.C.: Brookings, 1986), especially pp. 17–20Google Scholar, also notes the growing fragmentation of industrial policymaking in France and the increasing role of the EC in it.

40 Boittin, and Valluet, , Les Importations (Paris: Qui Est-ce Que, 1982), especially pp. 38–121Google Scholar; UN, , Le Controle des Pratiques Commerciales Restrictives Dans le CEE (New York: –UN, 1977), especially p. 1Google Scholar; Garcia, , Notes et Études Documentaires, #4404–4405, 2 09 1977, pp. 14–19Google Scholar.

41 Garcia, , Notes et Études, pp. 14–16Google Scholar; Beauchamp, X., Un État dans L'État (Paris: Bordas, 1976), pp. 117–22Google Scholar; Joly, D., La Régime Française du Controle du Commerce Extérieur, thesis, Dijon, 1975Google Scholar.

42 Milner, “Resisting the Protectionist Temptation,” chap. 6; Le Monde, 16 December 1977.

43 Milner, “Resisting the Protectionist Temptation,” chap. 6.

44 Ibid., chap. 6; Beauchamp, Un État dans L'État.

45 Milner, “Resisting the Protectionist Temptation,” chap. 6, pp. 576–604.

46 Ibid., chap. 6, pp. 437–66.

47 Ibid., chap. 6, pp. 523–48.

48 Evidence of the fragmentation of U.S. trade policymaking is contained in Krasner, “U.S. Commercial and Monetary Policy,” in Katzenstein, ed., Power and Plenty; Destler, I.M., Making Foreign Economic Policy (Washington, D.C.: Brookings, 1980)Google Scholar; Cohen, Making of U.S. International Policy.

49 Suleiman, E., Politics, Power, and Bureaucracy in France (Princeton, N.J.: Princeton University Press, 1974)Google Scholar; Suleiman, E., Elites in French Society (Princeton, N.J.: Princeton University Press, 1978)Google Scholar.

50 Suleiman, Elites, chaps. 8 and 9.

51 Milner, “Resisting the Protectionist Temptation,” chap. 6. The footwear, radio and television, and watch and clock industries are examples. An illustration from this study was Thomson's head of international operations, who was the brother of the president of the republic from 1974–81.

52 The following authors discuss the “special relationship” between big business and the state in France. Shonfield, A., Modern Capitalism (New York: Oxford University Press, 1965)Google Scholar; Michalet, A., in Vernon, R., ed., Big Business and the State (Cambridge, Mass.: Harvard University Press), especially pp. 124–25Google Scholar; Suleiman, Politics, Power and Bureaucracy, especially chap. 12.

53 Milner, “Resisting the Protectionist Temptation,” chap. 6.

54 Messerlin, P., “Bureaucracies and the Political Economy of Protection: Reflections of a Continental European,” World Bank Staff Working Paper, #568, 1983Google Scholar; in contrast, see Finger, J., Hall, H., Nelson, D., “The Political Economy of Administered Protection,” American Economic Review 72 (06 1982), pp. 425–66Google Scholar.

55 Milner, “Resisting the Protectionist Temptation,” chap. 6.

56 Messerlin, , “Bureaucracies and the Political Economy of Protection,” pp. 40–43Google Scholar; Feigenbaum, H., Politics of Public Enterprise (Princeton, N.J.: Princeton University Press, 1985)CrossRefGoogle Scholar; Simonnot, P., Les Nucleocrats (Grenoble: Presses Universitaires de Grenoble, 1978)Google Scholar. For steel, see Harvard Business School, “France Enters the 1980's,” by P. Hall, J. McCormick, and B. Scott, 1980, Case #380–202, and P. Hall, unpublished research; Shepard, G., Duchene, F., Saunders, C., eds., Europe's Industries: Public and Private Strategies for Change (Ithaca, N.Y.: Cornell University Press, 1983), pp. 66–69 especiallyGoogle Scholar. For textiles, see Mytelka, L., “In Search of a Partner,” in Cohen, S., and Gourevitch, P., eds., France in a Troubled World Economy (London: Butterworth), 1982Google Scholar; Mahon, R. and Mytelka, L., “Industry, the State, and the New Protectionism,” International Organization 37 (Autumn 1983), pp. 551–82CrossRefGoogle Scholar; Shepard, et al. , eds., Europe's Industries, pp. 38–40 especiallyGoogle Scholar.

57 Zysman, “The French State”; Katzenstein, “Conclusion”; and Zysman, Governments, Markets, and Growth, chaps. 1–3 and conclusion.

58 Boittin, and Valluet, , Les Importations, especially pp. 94–95Google Scholar; David, F., Le Commerce International à la Dérive (Paris: Calmann-Levy, 1982), pp. 189, 192–95Google Scholar; Stoffaes, C., La Grande Menace Industrielle (Paris: Calmann-Levy, 1978), p. 426Google Scholar; Milner, “Resisting the Protectionist Temptation.”

59 Boittin, and Valluet, , Les Importations, especially pp. 70–75Google Scholar; but these authors point out that only 3% of all French imports, excluding energy products, are still under quotas.

60 Figures suggest that, by the mid-1980s, about a third of all categories of manufactured imports were subject to some form of nontariff barrier. This does not mean that imports in all of these categories were severely restricted, however. Many nontariff barriers are very ineffective compared to tariffs or quotas. Cline, “Exports of Manufactures,” Table 2–3; Hine, , Political Economy of European Trade, p. 224Google Scholar.

61 Price, V. Curzon, Industrial Policies in the EC (London: St. Martin's, 1981), p. 21CrossRefGoogle Scholar; Stoffaes, La Grande Menace Industrielle; Giordano, Y., “Analyse de la Politique Française du Commerce Entérieur Depuis le VIem Plan,” thesis, Nice, 1982Google Scholar; Giordano, Y., “Analyse de la Politique Française du Commerce Extérieur Depuis le VIem Plan,” Revue d'Économie Industrielle 29 (3d trimester, 1984)CrossRefGoogle Scholar. Adams, and Stoffaes, , eds., French Industrial Policy, p. 18Google Scholar, also point out France's declining control over its industrial policy tools since the EC has begun regulating the national use of instruments such as industrial subsidies.

62 Stoffaes, C., “La Politique Industrielle,” Cours Aux Sciences Politiques, vol. 1, 1980, pp. 37–44Google Scholar.

63 Pisani, E., Enjeux et Conditions des Equilibres Extérieurs de la France, Paris, Senate Report #31, 1978, pp. 170–75. This is for all state aid, including both direct and much indirect aid. See alsoGoogle ScholarAdams, and Stoffaes, , eds., French Industrial Policy, p. 28Google Scholar.

64 La Vie Frangaise, 22–28 April 1985.

65 Giordano, , “Analyse de la Politique Française,” 1982, p. 211Google Scholar; Giordano, , “Analyse de la Politique Française,” 1984Google Scholar; Stoffaes, La Grande Menace Industrielle; Adams, and Stoffaes, , eds., French Industrial Policy, pp. 32–35Google Scholar.

66 This figure is just for direct state aid to industry; see Les Echos, 24 February 1977; figures on export subsidies as a percent of total manufactured exports averaged 40–45% for France and around 10% for the United States in the late 1970s; see Bergsten, C.F. and Cline, W., Trade Policies in the 1980s (Washington, D.C.: Institute for International Economics, 1982), p. 32Google Scholar and European Management Forum (EMF), Report on International Industrial Competitiveness, 1984 (Geneva: EMF Foundation, 1984), p. 7Google Scholar, Table 1.3. Data on all subsidies as a percent of GNP place it at about 2–2.5% for France in the 1970s and about 0.5% for the United States; see Anjaria, S., Iqiubal, Z., Kurmani, N., and Perez, L., Developments in International Trade Policy (Washington, D.C.: IMF), Occasional Paper #16, 11 1982, p. 56Google Scholar and Franko, L., in Helleiner, G. et al. , Protectionism or Industrial Adjustment (Paris: Atlantic Institute, 1980), p. 39Google Scholar.

67 EMF, , Report on International Competitiveness, p. 168Google Scholar.

68 Milner, , “Resisting the Protectionist Temptation,” chap. 6, pp. 467–95Google Scholar.

69 Ibid., chap. 6, pp. 437–95; Adams, and Stoffaes, , eds., French Industrial Policy, p. 18 especiallyGoogle Scholar.

70 For example, see Kelman, S., Regulating America, Regulating Sweden (Cambridge, Mass.: MIT Press, 1981)Google Scholar; Vogel, D., National Styles of Regulation (Ithaca, N.Y.: Cornell University Press, 1986)Google Scholar.

71 For example, the U.S. machine tool and tire cases in Milner, “Resisting the Protectionist Temptation,” chap. 5; Fong, “Export Dependence.”

72 Ashford, , Policy and Politics, pp. 148–52Google Scholar; Ardagh, France in the 1980s, chap. 2; Kuisel, R., Capitalism and the State in France (Cambridge: Cambridge University Press, 1981), chap. 10Google Scholar; Kolodziej, E., French International Policy Under DeGaulle and Pompidou (Ithaca, N.Y.: Cornell University Press, 1974), chaps. 1, 4Google Scholar.

73 Giordano, , “Analyse de la Politique Franchise,” pp. 54–57Google Scholar; see also Bobe, B. and Messerlin, P., in Bourguinat, H., ed., Internationalisation el Autonomie de Décision (Paris: Economica, 1982)Google Scholar.

74 Giordano, “Analyse de la Politique Françhise”; S. Cohen, “Informed Bewilderment: French Economic Strategy and the Crisis,” in Cohen and Gourevitch, eds., France in a Troubled World Economy; Berger, S., “Lame Ducks and National Champions,” in Andrews, William and Hoffmann, Stanley, eds., The Fifth Republic at Twenty (Albany, N.Y.: SUNY, 1981), pp. 292–310Google Scholar.

75 Hall, , Governing the Economy (Oxford: Oxford University Press, 1986), chap. 8Google Scholar; Kahler, M., “European Protectionism in Theory and Practice,” World Politics 37 (07 1985), pp. 498–500CrossRefGoogle Scholar.

76 Evans, P., Rueschemeyer, D., and Skocpol, T., eds., Bringing the State Back In (Cambridge: Cambridge University Press, 1985), p. 42CrossRefGoogle Scholar.

77 Hall, , Governing the Economy, p. 180Google Scholar.

78 Michalet, in Vernon, , ed., Big Business and the State, pp. 115–22Google Scholar.

79 See Simmonot, Les Nucleocrats; Feigenbaum, Politics of Public Enterprise; Suleiman, E., Centralization and Democracy in France, unpublished manuscript, 1986Google Scholar.

80 Richard Samuels's notion of “reciprocal consent” in Japan seems similar to the French case, although differences between the two countries exist. Samuels, R., The Business of the Japanese State (Ithaca, N.Y.: Cornell University Press. 1987)Google Scholar.