The Politics of Trade Adjustment vs. Trade Protection
24 Pages Posted: 19 Nov 2019
Date Written: November 8, 2019
When the United States' Trade Adjustment Assistance program was originally created, it was seen as a substitute for protectionism: a means of offering relief to workers without increasing economic distortion. Over the next 30 years, this view was abandoned, as trade compensation progressively became a partisan issue. Yet we show that trade adjustment and protectionism continue to act as substitutes. Using the first geo-coded measure of US trade protectionist demands, we show that controlling for trade shocks, counties with a history of successful TAA petitions see fewer calls for trade protection. This effect holds when we confine our analysis to the steel industry, a heavy user of anti-dumping duties. And though they are both means of addressing import exposure, the two policy options have distinct political effects: in particular, successful TAA petitions carry a significant electoral benefit for Democratic candidates. Greater recognition of the substitutability of trade compensation and protectionism would improve governments’ response to import exposure.
Keywords: trade adjustment, imports, globalization, anti-dumping
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