Combining detailed information on trade barriers with input-output data, we study the effects of trade protection on employment along supply chains. The main focus is on the effects of US AD duties against China on US employment. To deal with endogeneity concerns, we develop an instrument for AD protection, which exploits exogenous variation in the political importance of industries driven by changes in the identity of swing states across electoral terms. We find that AD duties have a net negative impact on US jobs: they reduce employment growth in downstream industries, with no significant effects in protected and upstream industries. We provide evidence for the mechanisms behind these effects: trade protection decreases imports and raises prices in targeted indus- tries, increasing costs for downstream producers. Our analysis shows that, rather than fostering employment growth, politically-motivated protection gives rise to job losses.
We examine firm-level lobbying on the ratification of affects the content of Free Trade Agreements (FTAs). Using detailed information from lobbying reports filed under the Lobbying Disclosure Act, we construct a unique dataset that allows us to identify which firms lobby on FTAs, their position (in favor or against), and their lobbying effort on the ratification of each trade agreement. Using this dataset, we show that lobbying on FTAs is dominated by large internationalized firms, which are in favor of these agreements. On the intensive margin, individual firms put more effort supporting agreements that generate larger potential gains – larger improvements in their access to foreign consumers and suppliers and smaller increases in domestic competition – and that are more likely to be opposed by politicians. To rationalize these findings, we develop a new model of endogenous lobbying on FTAs.
We also study how firm-level lobbying shapes the content of FTAs. The dataset provides information on firms' lobbying effort to influence deep trade policies (e.g. intellectual property rights, investment rules, sanitary and phytosanitary measures, labor and environmental regulations), both in terms of their expenditures on specific trade issues and the institutions (Congress and federal agencies) they target. We also collect information on various characteristics of lobbying firms, including their size, multinational status, and the main sector in which they operate. We use this dataset to document novel facts. We show that lobbying on deep trade policies is dominated by large firms, most of which are multinational corporations. On the intensive margin, larger firms spend more, lobby on more deep trade issues, and target more institutions. To rationalize our empirical findings, we develop a theoretical model in which heterogeneous firms choose whether to be politically organised and how much to spend lobbying on each deep trade issue.
Finally, we construct a unique dataset to examine the determinants of votes on trade agreements by members of the European Parliament (MEPs). Against common Eurosceptic views, we find that EU legislators’ votes on trade agreements reflect the trade policy interests of their electorate. The interests of large corporations also affect MEPs’ voting decisions.
