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This study of American trade policy addresses two puzzles associated with the use of aggressive bargaining tactics to open foreign markets. First, as the country with greater power and resources, why has the United States achieved more success in extracting concessions from some of its trading partners (such as Japan, Canada, and the European Union) than others (such as China and India)? Second, why haven't trade disputes that match democratic and authoritarian states more frequently sparked retaliatory actions than those between democratic pairs?
Ka Zeng finds answers to both of these questions in the domestic repercussions of the structure of trade between the United States and its trading partners. When the United States has a competitive trade relationship with its trading partner (i.e., when the two parties produce a similar range of commodities), both export-seeking and import-competing interests in the United States will likely support trade sanctions. In contrast, when trade is complementary (i.e., when the two countries produce a different set of commodities), threat tactics will likely suffer from the divergent policy preferences held by export-seeking and import-using interests. Coupled with the greater convergence of executive and legislative preferences in the former cases, domestic unity ought both to enhance the credibility and effectiveness of American threats and produce stronger pressure for brinkmanship and higher risks of trade retaliation in disputes with America's competitive trading partners. Since many of these nations happen to be democracies, this results in the anomaly of democratic trade war.
Trade Threats, Trade Wars draws on the "two-level game" theory as a key analytical device and supports its contentions both through quantitative analyses of dispute settlement under Section 301 of U.S. trade law and through detailed comparisons of U.S. trade negotiations with China, Japan, the European Union, Canada, and Brazil.
Crossing the disciplinary boundaries of political science, international relations, economics, and negotiation analysis, the book should appeal to students of international trade policy and those of international relations in general. It also offers practical policy prescriptions that promise to be of interest to trade policymakers.
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