American Trade Politics and the Triumph of Globalism

Orin Kirshner

• Publisher: Routledge
• Year: 2014
• ISBN:
  9781317804116
• Edition: 1
• Topic: Politics & International Relations
• Subtopic: Trade & Tariffs
• Index: Politics & International Relations

A deep and unresolved tension exists within American trade politics between the nation's promotion of an open world trading system and the operations of its democratic domestic political regime. Whereas most scholarly attention has focused on how domestic politics has interfered with the United States' global economic leadership, Orin Kirshner offers here an analysis of the ways in which U.S. leadership in the arena of global trade has affected American democracy and the domestic political regime.

By participating in multilateral trade agreements, the U.S. Congress has transferred its trade policymaking authority to the president and, through international trade negotiations, from the American state to the GATT/WTO regime. This reorganization of policymaking authority has resulted in the "triumph of globalism, " and fundamentally alters the citizen-state relationship assumed in democratic theory. Kirshner illustrates this process through four case studies: The Reciprocal Trade Agreements Act of 1945, The Trade Expansion Act of 1962, The Trade Act of 1974, The Omnibus Trade and Competitiveness Act of 1988, and further examines the impact of the Uruguay Round Agreements Act of 1994 on the political and institutional structure of American trade politics up to the current period.

American Trade Politics and the Triumph of Globalism makes a significant contribution to the study of both international trade and domestic American politics. This is essential reading for students and scholars of trade policy, international political economy, American politics, and democratic theory.

PART I

The Problem

1

TRIUMPH OF GLOBALISM

American Trade Politics

The tariff is not an economic question exclusively. It is a political problem as well.

E. E. Schattschneider (1935)

The Third Ministerial Conference of the World Trade Organization (WTO) was intended to launch a new round of global trade talks designed to deepen international trade liberalization and create a more open world economy. Hosted by the United States in Seattle, Washington, from November 30 to December 3, 1999, the Conference was heralded by President Bill Clinton and his advisors as “an historic opportunity for the United States to exercise leadership in setting the trade agenda for the next century.” The political stakes were high. “Failure,” said United States Trade Representative Charlene Barshefsky, “is not an option.”¹

Yet events did not turn out as planned. When WTO delegates arrived in Seattle, they were met by an unprecedented coalition of unions, family farmers, environmentalists, consumer rights activists, faith-based organizations, professional associations, and anti-poverty groups, who engaged in mass marches, teach-ins, and civil disobedience to protest the initiation of the so-called “Millennium Round.” Although each of these groups championed its own special cause, they were united around a common political concern: they believed that the foreign trade policy-making process was undemocratic and that it elevated global free trade concerns over domestic issues. They were protesting the idea that non-elected bureaucrats working largely behind closed doors were responsible for setting international trade rules that affected agriculture, services, trade-related investment measures, intellectual property rights, public health and safety laws, and international trade in goods; and oversaw a binding international dispute settlement process with little (if any) input from the domestic citizens and groups who would be affected by these economic rules and political mechanisms.²

When it became obvious to local law enforcement authorities that some of these groups were intent on preventing WTO delegates from convening, the situation on the streets became more serious. Following a meeting with federal, state, and local law enforcement officials, Seattle’s mayor declared a state of civil emergency and ordered Seattle police to move the protesters out of a twenty-five-block area of downtown. As seen worldwide on the Cable News Network, the protesters were met by more than 500 Seattle riot police dressed in full battle gear, who used clubs, tear gas, pepper spray, rubber bullets, flash grenades, armored personnel carriers, and mass arrests to disperse the crowd and create a no-protest zone in the center of the city. What began on November 30 as a largely peaceful effort to shut down the WTO Ministerial Conference ended on December 3 with more than 600 protesters in jail and the city of Seattle ruled by martial law.³ For its part, the launch of a new global trade round was temporarily put on hold.⁴

At the core of what became known as “the battle in Seattle” was a political problem that has plagued American trade politics ever since the United States assumed the mantle of global economic leadership at the end of World War II: a deep and unresolved tension between the promotion of an open international trading system and the operations of the nation’s democratic domestic political regime. The idea that a tension exists between America’s postwar efforts to construct an open world trading system and the nation’s democratic domestic political regime is not new. Indeed, scholars have identified this tension as the source of critical issues in American politics and international relations for more than five decades.⁵ However, most of the attention has focused on how America’s democratic domestic regime has interfered with the exercise of world economic leadership.⁶ Little attention has been paid to how the exercise of world economic leadership has affected the organization of American democracy. This chapter takes up the analytical challenge and in so doing sets the book’s explanatory puzzle. It examines the impact of world economic leadership on American democracy within the sphere of foreign trade politics since World War II.

This chapter sets out the book’s main descriptive problem. It argues that America’s promotion of an open world trading system since World War II has required a fundamental reorganization of state power within the nation’s foreign trade policy-making process that has subordinated domestic economic and political concerns to matters of global economic management. This reorganization of power has provided the political and institutional foundations for a national policy of freer trade dedicated to the creation, maintenance, and expansion of a supranational regulatory authority designed to manage trade liberalization on a worldwide basis: the General Agreement on Tariffs and Trade (GATT), and its successor, the WTO. I refer to this globally oriented national policy as “world trade leadership.” The chief institutional feature of this policy has been the centralization of state power within the trade policy-making process. This centralization of power has taken the form of a transfer of trade policy-making authority from Congress to the president and from the American state to the GATT/WTO. Stated more formally, the independent variable in this analysis is the exercise of world trade leadership; the dependent variable is the centralization of state power within the trade policy- making process—a phenomenon I call the “triumph of globalism.” The argument presented in this chapter is not that the foreign trade policy-making process has become less democratic; rather, the democratic process itself has been reorganized in such a way as to elevate global issues and concerns over domestic ones.

The triumph of globalism in postwar American trade politics is not simply a matter of academic concern. It has far-reaching implications for American democracy as well, for, as trade-related global economic and political forces have had a growing impact on the United States, the political capacity of American citizens to harness national state power to deal with them at the domestic level has declined.

I begin by defining the terms foreign trade policy, world trade leadership, and democracy, which will serve as an overview for the chapter’s main argument. Next, I turn to a historically grounded investigation of the triumph of globalism in four crucial case studies. This is followed by a consideration of the impact of the triumph of globalism on American domestic politics since the formation of the WTO in 1995. Finally, I bring these themes together to suggest that there is firm, empirical support for the chapter’s main hypothesis: that America’s postwar policy of world trade leadership has rested on a centralization of the foreign trade policy- making process—a phenomenon that has given pride of place to global concerns over domestic ones.

Triumph of Globalism: Defining Terms

Before proceeding to an empirical demonstration of the impact of world trade leadership on the operations of democracy within the trade policy-making process, it is necessary to define three terms: foreign trade policy; world trade leadership; and American democracy.

Foreign Trade Policy

Since World War II, America’s exercise ofworld trade leadership has required the adoption of a foreign trade policy designed to promote the development of the GATT/WTO regime. A nation’s foreign trade policy sets the political rules that regulate the relationship between its domestic economy and the world economy with respect to the cross-border exchange of goods, services, intellectual property rights, and trade-related investment. As is the case with taxes and the military, foreign trade policy has been a constituent feature of modern states since they emerged during the long sixteenth century in Europe.⁷ This is because foreign trade policy concerns one of the enduring features of states: the regulation of the interface between the internal and external realms.⁸ With respect to foreign trade, this regulation concerns state–market–citizen relationships at the intersection of the domestic and world economies. A foreign trade policy that opens a nation’s economy to global market forces is traditionally referred to as liberal and is marked by the roll-back of state intervention into cross-border trade flows. A policy that closes a nation’s borders is traditionally called protectionist and is characterized by increased intervention into those flows. Because it regulates the boundaries between the national and world economies, a nation’s foreign trade policy also affects citizen—market relationships. It does so by increasing or decreasing the exposure of a nation’s domestic economy—and hence citizens and society—to global market forces. A liberal foreign trade policy tends to increase the sway of global market forces in domestic society, while a protectionist policy tends to decrease their significance. Since World War II, American foreign trade policy has been broadly liberal—it has aimed at the withdrawal of the American state from the regulation of cross-border trade flows. It has done so, moreover, with an eye toward establishing a supranational regulatory authority for the management of trade liberalization on a worldwide basis: the GATT/WTO.

As a practical matter, America’s exercise of world trade leadership has required the enactment of a series of legislative statutes that have reorganized trade policymaking power within the American state. At the core of these statutes has been congressional authorization for the president to enter into binding international trade agreements. The need for these statutes is rooted in the constitutional design of the American state. While Article II Section 2 of the Constitution gives the president the power to enter into international agreements, Article I Section 8 grants Congress the power to “regulate commerce with foreign nations.”⁹ Thus, in order for the United States to enter into international agreements affecting “commerce with foreign nations,” Congress must delegate its Article I Section 8 powers to the president.

World Trade Leadership

Since World War II, the United States has played a distinctive role within the world economy and international state system as rallier of nations in support of global free trade—a role I refer to as “world trade leadership.” America’s exercise of world trade leadership has focused on the construction of an open international trading system—a system within which global market forces, rather than state power, determine international trade flows. The foremost objective of this system has been to encourage high levels of global economic growth by increasing the productivity of capital, labor, and agriculture on an international basis. The idea that free trade encourages global economic growth by enhancing productivity is taken as an article of faith by the three major schools of international political economy: liberalism, mercantilism, and Marxism. Indeed, although David Ricardo, Friedrich List, and Karl Marx disagreed profoundly on the distributive and political consequences of free trade, they were...