POLS 342 Foreign Policy Mark Peceny Timothy Sipp 12/12/08
NAFTA and the Making of US Trade Policy: Symbolic Constructivism, Collective Action, Domestic Institutions and National Interests.
There are ongoing discussions about the nature of the decision making process in determining trade policy and international relations. Some analytical models promote ideas about factor mobility and the costs of collective action, while others focus on domestic institutions and relatively open access to legislative representatives. Most models agree that there is not a single variable that controls the process of trade policy determination in America. One thing is certain, historically, the strategic national interests of a unitary rational state actor have not been an overriding concern in the formation of trade policy. Therefore, this paper will accept the assumption that multiple actors have a role to play in the formulation of trade policy in the United States and seek to demonstrate their particular dynamics as observed in the negotiation and ratification of NAFTA.
Let’s begin with the rational actor model that stipulates that an entity will act to maximize their assets and minimize their liabilities. Assuming perfect information is available, this rational actor will seek trade policies that are aligned with their interests and promote their prosperity. For a developed country with abundant capital in concentrated ownership, this means seeking freer trade. For a developed country with abundant labor this means a preference towards protectionist policies. (Alt and Gilligan: 1994. p. 332) This is an excellent situation for our rational actor as long as their interests aren’t counter to anyone else’s and they have all of the pertinent information. If there are two or more rational actors with countervailing interests or multiple unknown variables, how does the situation get resolved? What are the constituent components of this conflict and how do they evolve and interact to arrive at an outcome preferred by some and disliked by others?
It appears that several levels of cost –benefit analyses are conducted by each rational actor. Keep in mind that for our purposes that a rational actor is an entity and can represent a multitude of people with similar interests or a coalition of groups with a convergence of interest in one particular matter. The costs considered range from the costs of collective action, to the costs of doing nothing. These costs could be rather tangible as in economical (income), and political (prestige or collateral) costs or they could be more abstract like technical competitive advantage and strategic posturing for primacy in relative balances of power. (Krasner: 1976. p. 321-324) These costs associated with determining trade policy reflect both the impetus to negotiate and the resistance to change.
Both domestic institutions and individual behavior are important aspects of determining trade policy. The existence of domestic institutions ensures channels for communication without having to engender those channels and incur the organizational costs. This is a great benefit to minority actors without either the economic clout or political influence necessary to affect trade policy in their favor. (Alt and Gilligan: 1994. p. 337) Domestic institutions can often be seen as reactions to past crises that precipitated policy changes. (Krasner: 1976. p. 343) Since these organizations were engendered as a response to a perceived threat, they are defensive in nature and do not seek positive aims (like national interests), but negative goals (like job protection), designed to maintain gains and prevent losses of either income or political influence. (Krasner: 1976. p. 341) Rational actors will under certain conditions make a choice that is not in their individual interests or, more likely, in the national interest, but do so with confidence in their convictions. The question to be asked is “Why?”
With the introduction, negotiation, and ratification of NAFTA we see a complex process of interaction between multiple, layered interests and analytical models (Stolper-Samuelson, Hecksher-Ohlin, Rogowski, and Ricardo-Viner) that contribute to our understanding of their functioning to achieve a treaty that remains enforce fifteen years later. NAFTA as a trade treaty is unique in many ways: from the unexpectedly high resistance within the U.S. from previously unaligned special interest groups to the fact that, across the board, for the countries involved, the benefits far outweighed the costs. (Mayer: 1998 p. 65) Additionally, this is the first treaty that a U.S. president had to seek congressional approval to negotiate. As such this treaty was subject to the highly accessible legislative branch of government that in-turn provided fertile ground for domestic conflict and possible policy derailment. (Mayer)
Crucial to the opposition of NAFTA within the United States was the organizational tactic of symbolic constructivism that united disparate interests in denial of trade policy that could effectively be beneficial to some of them. (Mayer: 1998. p. 106) This method called on distinct symbols of national pride and confidence to be maintained at a “small” financial cost with a significant gain in the valuable variables of heritage and prestige. (Mayer: 1998. p. 272) The big question remains, how did such previously small players affect such great influence on these negotiations and what perspective accounts for their success?
The fact that the negotiations for NAFTA occurred during an election cycle in the United States contributes greatly to the level of influence open to domestic political wrangling. When Bill Clinton was a presidential candidate; that he suggested that he wouldn’t continue negotiations without two side agreements concerning the environment and labor was unprecedented. It was, however, arguably, this tactic of vague conditionality that benefited him over his rivals. (Mayer: 1998. p. 165)
The prevailing wisdom at the international level was that NAFTA was good for the national grand strategies of all three countries involved: Mexico, Canada and the United States. However, forces within each country fought the implementation of NAFTA on different grounds. Ross Perot lead the charge in America against NAFTA during the 1992 presidential election by assuring America that ratifying NAFTA would ensure a “huge sucking sound” as jobs fled America to Mexico. Dick Gephardt ensured that the Congressional discussion would be equally clouded with newly empowered symbolic constructions that weakened NAFTA on behalf of American pride. (Mayer: 1998 p. 216, 272) This confluence of special interests and domestic institutions made the passage of NAFTA’s provisions highly unlikely. To see NAFTA passed would require a strong push from multiple sources within government and private business alike.
According to Mayer, page 273, an immense effort was required from business leaders, congresspersons, and the president (Clinton at the time) to garner enough support to pass the legislation necessary to ratify NAFTA. The fact that Symbolic Constructivism came to represent a majority of the argument in the ratification of NAFTA is justification for continued research into the costs of collective action, perceptions of legitimacy and factual accuracy in political calculations. According to Krasner (page 342) and Alt and Gilligan (page 337) a state has no impetus to enact change in policy, trade or otherwise, until there is an exogenous, perhaps chaotic, force that warrants change for the purpose of protection. And even then, the protection doesn’t have to be unilateral, but can be customized to specific factors of production or the maintenance of particular institutions. (Alt and Gilligan: 1998 p. 337)
In the case of NAFTA, Mexico saw a strategic advantage in securing a free trade agreement with the United States. Several industries within Mexico were for the agreements (like Mexican manufacturing), while others suffered because of NAFTA (like Mexican grain farmers). In the U.S. support for NAFTA had to come from the top down as grassroots organizers fought NAFTA over symbolic ideas instead of dollars and sense. Canada has always dragged it’s heals concerning NAFTA and even though Chrétien won on anti-NAFTA sentiment his overwhelming victory paved the way for American led interest in ratifying the agreements. (Mayer: 1998 p. 300)
This analysis shows that there is a complex relationship between symbolic constructivism, domestic political institutions and trade policy and that there is no clear, linear relationship to be denoted. In the case of NAFTA, we have seen particular circumstances leveraged with specific methods to achieve strategic competitive advantage. This decision-making process involving rational state actors engaging in irrational behavior at the behest of special interests born of domestic political institutions is typical of the real-world and not theoretical constructs. To better understand these multi-faceted systems we must employ analytical models that are informed by more than one school of thought and involve domestic politics, international relations and the study of individual human behavior and collective action.
Krasner, Stephen, “State Power and the Structure of International Trade, “ World Politics, Vol. 28, No. 3, (April 1976), pp. 317-347
Alt, James and Michael Gilligan, “The Political Economy of Trading States: Factor Specificity, Collective Action Problems, and the Domestic Political Institutions,” Journal of Political Philosophy, Vol. 2, No. 2, (1994), pp. 165-192
Mayer, Frederich, “Interpreting NAFTA: the science and the art of political analysis” © 1998. Columbia University Press