Bilateral and Multilateral Cooperation in International Trade A Political-Economy Perspective by Ingo Rohlfing A thesis submitted in partial fulfilment of the requirements for the degree of Doctor of Philosophy in Political Science Approved, Thesis Committee Prof. Dr. Philipp Genschel (Chair) Prof. Dr. Markus Jachtenfuchs Prof. Dr. Peter Mayer Date of Defense: July 11, 2007 School of Humanities and Social Sciences Table of Contents 1. Introduction ..................................................................................................7 2. A Model of Institutional Choice...................................................................28 3. Research Design and Methodological Approach .......................................83 4. Trade Cooperation after 1860..................................................................103 5. The Interwar Period .................................................................................147 6. The World Trade Regime after World War II............................................191 7. Conclusion ...............................................................................................254 References ..................................................................................................281 2 Detailed Table of Contents 1. Introduction................................................................................................7 The Theoretical Framework........................................................................12 Research Design and Methodological Approach........................................18 Findings and Implications...........................................................................21 Going Small Again? A New Bargaining Design for the WTO......................23 Plan of the Thesis.......................................................................................26 2. A Model of Institutional Choice ..............................................................28 2.1. Forms of Cooperation and Bargaining Approaches in International Trade ..............................................................................31 Forms of Cooperation .............................................................................31 Bargaining Approaches ..........................................................................35 2.2. Actors and Preferences in International Trade ....................................37 Political-Economy Approaches to Domestic Trade-Policy Making..........38 Assumptions about Economic and Political Actors .................................40 Economic Actors .................................................................................40 Political Actors.....................................................................................46 2.3. Unilateralism and Reciprocity in International Trade ...........................47 2.4. Institutional Choice ..............................................................................50 Bilateral versus Multilateral Bargaining...................................................52 Concerns about Distribution: Bilateral Bargaining ...............................52 Concerns about Enforcement: Multilateral Bargaining ........................54 Unconditional Most-Favored-Nation Treatment ......................................59 The Interaction of Distribution and Enforcement.....................................64 The Choice of Bargaining Approaches ...................................................66 2.5. Scope of the Model .............................................................................69 Regime Type ..........................................................................................70 Domestic Institutional Configuration .......................................................71 Ideology of Political Actors......................................................................74 Relative Size of a Country ......................................................................74 Asymmetry between Countries ...............................................................75 2.6. Competing Explanations......................................................................77 Security...................................................................................................78 Revenue .................................................................................................78 Efficiency ................................................................................................79 Balance of Payments and Balance of Trade...........................................80 Ideas.......................................................................................................81 3. Research Design and Methodological Approach..................................83 3.1. What Data is Needed? ........................................................................83 3.2. Period of Investigation and Case Selection.........................................85 Period of Investigation ............................................................................85 3 Case Selection........................................................................................86 3.3. Process Tracing as an Instrument of Causal Inference.......................95 Case Selection on the Dependent Variable ............................................95 Causal Inference in Process Tracing ......................................................96 Within-Case Variance .............................................................................98 4. Trade Cooperation after 1860 ...............................................................103 4.1. The Anglo-French Agreement of 1860 ..............................................104 French Trade Policy in the First Half of the Nineteenth Century...........104 Attempts at Unilateral Liberalization in the 1850s .................................105 The Prelude to the Anglo-French Treaty of 1860..................................106 The Start of the Negotiations ................................................................110 Negotiation of the Complementary Convention ....................................115 Conclusion............................................................................................119 4.2. The Méline Tariff of 1892...................................................................123 The Tariff Revision of 1872...................................................................123 The Tariff Revision of 1881...................................................................125 Attempts to Continue Liberalization...................................................125 Increasing Protectionism and the Tariff Commission ........................127 Mobilization and Parliamentary Decision...........................................130 The Renegotiations of the Trade Agreements...................................131 The Méline Tariff of 1892......................................................................135 The Domestic Political Process.........................................................135 International Negotiations after the Méline Tariff...............................139 Conclusion............................................................................................140 4.3. Institutional Choice in the Nineteenth Century: Conclusion...............145 5. The Interwar Period ...............................................................................147 5.1. The Fordney-McCumber Act of 1922 ................................................149 The Prelude to the Fordney-McCumber Act .........................................149 The Fordney-McCumber Act in Congress.............................................154 International Repercussions and Implementation .................................161 Conclusion............................................................................................165 5.2. The Reciprocal Trade Agreements Act of 1934.................................170 From Fordney-McCumber to the Reciprocal Trade Agreements Act ....170 The Reciprocal Trade Agreements Act in Congress.............................173 Administering the Reciprocal Trade Agreements Act ...........................178 International Negotiations after 1934 ....................................................182 Conclusion............................................................................................184 5.3. Institutional Choice in the Interwar Period: Conclusion......................189 6. The World Trade Regime after World War II ........................................191 6.1. The Negotiations on the GATT..........................................................193 The First Steps Toward a Post-War Trade Regime ..............................193 The Atlantic Charter..............................................................................196 The Mutual Aid Agreement ...................................................................196 The Committee Negotiations ................................................................198 4 Refusal by Congress ............................................................................199 The Protocol of GATT Negotiations ......................................................200 Conclusion............................................................................................203 6.2. The Kennedy Round..........................................................................205 The Annecy Round and the Torquay Round.........................................205