Hostname: page-component-8448b6f56d-t5pn6 Total loading time: 0 Render date: 2024-04-24T08:08:51.964Z Has data issue: false hasContentIssue false
  • English
  • Français

Anticipating exclusion: Global supply chains and Chinese business responses to the Trans-Pacific Partnership

Published online by Cambridge University Press:  30 July 2019

Robert Gulotty  and
Xiaojun Li
Get access Rights & Permissions [Opens in a new window]

Abstract

Preferential trade agreements (PTAs) promise exclusive access for their members at the expense of excluded parties. But what does this exclusivity mean for firms in nonmember states if production networks are internationally organized? This paper analyzes the effect of PTA exclusion on firms embedded in the global supply chains, focusing on the case of China's exclusion from the Trans-Pacific Partnership (TPP). Drawing on a survey of Chinese firm managers during the TPP negotiations, we find that productive and downstream firms anticipated the exclusion and made adjustments accordingly, which led to a general sense of optimism toward the agreement. When presented with the prospect of an expanded TPP, however, firms are divided depending on how their own positions in the global supply chain complement or compete with the new member. These findings, validated with interviews in the field, suggest that the effects of PTA exclusion depend on the ability and need for firms to adjust. As a result, exclusion does not equate to an unalloyed loss for excluded firms.

Keywords

preferential trade agreementglobal supply chainChinaTrans-Pacific Partnershiptrade diversion
Type
Research Article
Information
Business and Politics , Volume 22 , Issue 2 , June 2020 , pp. 253 - 278
Copyright
Copyright © V.K. Aggarwal 2019 and published under exclusive license to Cambridge University Press

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Footnotes

†

This article grew out of a conference on China and Regional Integration at the 2015 Summer Institute on International Relations, funded by the Chicago Project on Security and Terrorism (CPOST), the Peking University School of International Studies, and the University of Chicago Beijing Center. Funding for this research is supported by the UBC Hampton Research Endowment Fund (F14-01146). We benefited from comments from the participants of the International Political Economy Society annual meeting in 2015. We would like to thank Quinn Marschik for research assistance.

References

Allee, Todd, and Peinhardt, Clint. 2011. “Contingent credibility: The impact of investment treaty violations on foreign direct investment.” International Organization 65 (3): 401–32.CrossRefGoogle Scholar
Antràs, Pol, and Helpman, Elhanan. 2004. “Global Sourcing.” The Journal of Political Economy 112 (3): 552–80.CrossRefGoogle Scholar
Arel-Bundock, Vincent, and Pelc, Krzysztof J.. 2018. “When Can Multiple Imputation Improve Regression Estimates?” Political Analysis 26 (2): 240–45.CrossRefGoogle Scholar
Baccini, Leonardo, and Dür, Andreas. 2015. “Investment discrimination and the proliferation of preferential trade agreements.” Journal of Conflict Resolution 59 (4): 617–44.CrossRefGoogle Scholar
Baccini, Leonardo, and Urpelainen, Johannes. 2014. “Before Ratification: Understanding the Timing of International Treaty Effects on Domestic Policies.” International Studies Quarterly 58 (1): 29–43.10.1111/isqu.12080CrossRefGoogle Scholar
Baccini, Leonardo, Pinto, Pablo, and Weymouth, Stephen. 2017. “The Distrbutional Consequences of Preferential Trade Liberalization: Firm-Level Evidence.” International Organization 71 (2): 373–95.CrossRefGoogle Scholar
Baier, Scott L., and Bergstrand, Jeffrey H.. 2007. “Do free trade agreements actually increase members’ international trade?” Journal of international Economics 71 (1): 72–95.CrossRefGoogle Scholar
Baldwin, Richard. 2006. “Globalisation: the great unbundling(s).” Economic Council of Finland 20 (2006): 5–47.Google Scholar
Baldwin, Richard. 2016. The Great Convergence. Cambridge, MA: Harvard University Press.Google Scholar
Bhagwati, Jagdish. 2008. Termites in the trading system: How preferential agreements undermine free trade. Oxford: Oxford University Press.CrossRefGoogle Scholar
Caliendo, Lorenzo, and Parro, Fernando. 2015. “Estimates of the Trade and Welfare Effects of NAFTA.” The Review of Economic Studies 82 (1): 1–44.CrossRefGoogle Scholar
Chaney, Thomas. 2008. “Distorted gravity: the intensive and extensive margins of international trade.” The American Economic Review 98 (4): 1707–21.CrossRefGoogle Scholar
Chen, Wanling, He, Chuantian, and Liu, Sheng. 2017. Annual Report on the Development of Foreign Trade and Economy of Guangdong. Beijing: Social Science Academic Press.Google Scholar
Costantini, James, and Melitz, Marc. 2008. “The dynamics of firm-level adjustment to trade liberalization.” The organization of firms in a global economy 4: 107–41.Google Scholar
Dür, Andreas, Baccini, Leonardo, and Elsig, Manfred. 2014. “The design of international trade agreements: Introducing a new dataset.” The Review of International Organizations 9 (3): 353–75.CrossRefGoogle Scholar
Goldstein, Judith L., Rivers, Douglas, and Tomz, Michael. 2007. “Institutions in International Relations: Understanding the Effects of the GATT and the WTO on World Trade.” International Organization 61 (1): 37–67.CrossRefGoogle Scholar
Griffith, Melissa K., Steinberg, Richard H., and Zysman, John. 2017. “From great power politics to a strategic vacuum: Origins and consequences of the TPP and TTIP.” Business and Politics 19 (4): 573–92.CrossRefGoogle Scholar
Grossman, Gene M., and Rossi-Hansberg, Esteban. 2008. “Trading tasks: A simple theory of offshoring.” The American Economic Review 98 (5): 1978–97.CrossRefGoogle Scholar
Hicks, Raymond, Milner, Helen V., and Tingley, Dustin. 2014. “Trade policy, economic interests, and party politics in a developing country: The political economy of CAFTA-DR.” International Studies Quarterly 58 (1): 106–17.CrossRefGoogle Scholar
Johns, Leslie, and Wellhausen, Rachel L.. 2016. “Under one roof: Supply chains and the protection of foreign investment.” American Political Science Review 110 (1): 31–51.CrossRefGoogle Scholar
Kim, In Song. 2017. “Political cleavages within industry: firm level lobbying for trade liberalization.” American Political Science Review 111 (1): 1–20.CrossRefGoogle Scholar
Kim, In Song, Milner, Helen V., Bernauer, Thomas, Spilker, Gabriele, Tingley, Dustin, and Osgood, Iain. 2019. “Firms and Global Value Chains: Identifying Firms’ Multidimensional Trade Preferences.” International Studies Quarterly 63.1 (2019): 153–67.CrossRefGoogle Scholar
Kuno, Arata, and Naoi, Megumi. 2015. “Framing Business Interests.” Working Paper. https://ssrn.com/abstract=2671986.Google Scholar
Lakatos, Csilla, and Nilsson, Lars. 2017. “The EU-Korea FTA: anticipation, trade policy uncertainty and impact.” Review of World Economics 153 (1): 179–98.CrossRefGoogle Scholar
Lim, Chin L., Elms, Deborah Kay, and Low, Patrick (eds.). 2012. The Trans-Pacific Partnership: a quest for a twenty-first century trade agreement. Cambridge: Cambridge University Press.CrossRefGoogle Scholar
Magee, Christopher S.P. 2008. “New measures of trade creation and trade diversion.” Journal of International Economics 75 (2): 349–62.CrossRefGoogle Scholar
Manger, Mark S. 2009. Investing in Protection: the politics of preferential trade agreements between north and south. Cambridge: Cambridge University Press.CrossRefGoogle Scholar
Melitz, Marc J. 2003. “The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity.” Econometrica 71 (6): 1695–725.CrossRefGoogle Scholar
Osgood, Iain. 2016. “Differentiated products, divided industries: firm preferences over trade liberalization.” Economics & Politics 28 (2): 161–80.CrossRefGoogle Scholar
Osgood, Iain, Tingley, Dustin, Bernauer, Thomas, Kim, In Song, Milner, Helen V., and Spilker, Gabriele. 2017. “The charmed life of superstar exporters: Survey evidence on firms and trade policy.” The Journal of Politics 79 (1): 133–52.CrossRefGoogle Scholar
Petri, Peter A., Plummer, Michael G., and Zhai, Fan. 2012. The Trans-pacific partnership and Asia-pacific integration: A quantitative Assessment, vol. 98 Peterson Institute.Google Scholar
Rho, Sungmin, and Tomz, Michael. 2017. “Why Don't Trade Preferences Reflect Economic Self-Interest?” International Organization 71 (S1): S85–S108.CrossRefGoogle Scholar
Rose, Andrew K. 2004. “Do We Really Know That the WTO Increases Trade?” American Economic Review 94 (1): 98–114.CrossRefGoogle Scholar
Schattschneider, Elmer Eric. 1935. Politics, Pressures & the Tariff. New York: Prentice-Hall, Inc.Google Scholar
Trefler, Daniel. 2004. “The Long and Short of the Canada-U.S. Free Trade Agreement.” The American Economic Review 94: 870–95.CrossRefGoogle Scholar
Zhang, Su. 2015. “Chinese entrepreneurs discuss impact of TPP.” Caijing, 8 October 2015. http://economy.caijing.com.cn/20151009/3980196.shtml.Google Scholar
Supplementary material: File

Gulotty and Li supplementary material

Appendix

Download Gulotty and Li supplementary material(File)
File 44.1 KB