The Domestic Side of International Trade Negotiations

The politics of many international negotiations can usefully be conceived as a two-level game. At the national level, domestic groups pursue their interests by pressuring the government to adopt favorable policies and politicians seek power by constructing coalitions among these groups. At the international level, national governments seek to maximize their own ability to satisfy domestic pressures while minimizing the adverse consequences of foreign developments. Neither of the two games can be ignored by central decision-making so long as their countries remain interdependent, yet sovereign.

Robert Putnam, “Diplomacy and Domestic Politics: The Logic of Two-level Games,” International Organization 42:3 Summer 1988

Numerous governments have embraced the neoliberal economic ideology, in which the market determines economic growth and stability. As a result, countries are forging formal trade ties through free trade agreements. However, not everyone agrees that free trade provides mutual gains for countries or that the benefits of free trade outweigh the costs. For this reason, some domestic groups have called on national governments to intervene in the global economy to protect local production, consumers and workers. Domestic groups are doing the same in response to the current Trans-Pacific Partnership (TPP) trade negotiations.

The pressure that the governments of the TPP member countries face both at home and with their international counterparts reflects the two level game aspect of international negotiations, highlighted by Harvard professor Robert Putnam. In other words, free trade negotiations are not only between countries. Rather, they also take place between the national government and its domestic constituents.

In the case of the TPP negotiations, various domestic interest groups work to insert their voice into free trade negotiations even though they cannot sit at the actual bargaining table.

U.S., Japan, Autos and Food

As the 18th round of TPP negotiations took place in July, U.S. automakers demanded that Japan offer serious concessions. This was the first round of negotiations for Japan since it officially joined the TPP trade talks in March. Chrysler, Ford and General Motors voiced their concerns about Japan manipulating its currency so that its automobiles are less expensive in the global market.

Additionally, U.S. automakers have been concerned about Japan’s closed market. Although Japan does not place tariffs on car imports, it places a 2,000 unit cap on these imports. As a result, in 2011, Japan exported $41 billion worth of auto products to the United States compared to only $1.5 billion worth of U.S. exports of auto products to Japan. On the other hand, the United States has import tariffs of 2.5% for cars and 25% for trucks.

The Japanese government also faces domestic pressures as it negotiates the TPP. Japanese farmers and consumers are concerned that opening Japan’s agricultural market will lead to an influx of food imports. Increased food imports may threaten domestic producers and food safety, according to the same two aforementioned groups.

US, Vietnam, Labor and Human Rights

Several U.S. interest groups have called on President Barack Obama to end trade talks with Vietnam, another country that is a part of the TPP negotiations. It is important to keep in mind that free trade agreements are not just about tariffs but also issues such as freedom of association, environmental standards and good governance.

The Teamsters, Citizen Trade Coalition and Human Rights Watch share their concern about Vietnam’s record in terms of labor rights and the protection of those who criticize the government. The criticism of Vietnam follows on the heels of a May 2013 report published by the Worker Rights Consortium. The report highlights a number of labor violations in Vietnam.

Notably, free trade agreements consist of labor provisions. The degree to which labor standards in existing free trade agreements are effective remain under scrutiny. Without much public data about the TPP negotiations, it is difficult to assess what is being discussed pertaining to labor rights for all member countries.

The Take Away

Free trade agreements are not just negotiated between countries. Rather, pressure from domestic groups, must also be taken into account. Domestic groups may not influence the specific rules within the free trade agreement. Yet, they can influence the agenda to emphasize labor and environmental regulations. Domestic groups can also play a key role at the state level to influence their U.S. Congress representatives and senators to either support, stall or outright vote against a free trade agreement. The U.S. Congress’ ability to vote against free trade agreements once they have been signed make negotiations between the White House and the U.S. Congress just as important. One such example was that of the interaction between President Obama and members of the U.S. Congress regarding the approval of the long-stalled free trade agreements with Colombia, Panama and South Korea.

Former US Trade Representative Ron Kirk’s statement in an interview sums up the two level game idea nicely:

As much as I enjoyed representing the United States around the world, if we were going to be moving forward with an aggressive trade agenda, we’re going to have to not just go to Geneva, Paris and Beijing and Africa; we were going to have to go to places like Detroit and Pittsburgh and Maine.