The Politics of Trade Adjustment vs. Trade Protection

24 Pages Posted: 19 Nov 2019

Date Written: November 8, 2019

Abstract

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

Suggested Citation

Kim, Sung Eun and Pelc, Krzysztof, The Politics of Trade Adjustment vs. Trade Protection (November 8, 2019). Available at SSRN: https://ssrn.com/abstract=3481161 or http://dx.doi.org/10.2139/ssrn.3481161

Sung Eun Kim

Korea University ( email )

1 Anam-dong 5 ka
Seoul, 136-701
Korea, Republic of (South Korea)

Krzysztof Pelc (Contact Author)

McGill University ( email )

855 Sherbrooke St. W
Montreal, Quebec H3A 2T7
Canada

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