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³⁰ The cost and time figures were confirmed in interviews with top Washington, D.C.-based international trade law firms and METI officials. They would on average be the same across industries but vary case by case. One lawyer for a Washington, D.C. law firm that frequently represents Japan in both antidumping and WTO litigation said that when firms decline to go forward with a particular case of litigation after an initial inquiry, they cite the expected costs of dedicating staff to support the case. Author telephone interview with Washington, D.C. lawyer, Princeton, September 22, 2006.

³¹ Modeling both the supply of protection and decision to challenge would go beyond the scope of this article. We instead rely upon data of observable protection to determine the conditions under which states challenge WTO-inconsistent policies. In Section IV, the subsection entitled “Addressing Potential Bias in METI Sample of WTO-Inconsistent Policies” discusses the possibility of an endog-enous process.

³² Grier, Munger, and Roberts (fn. 11); Hansen and Mitchell (fn. 11); Hillman, Keim, and Schuler (fn. 8).

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⁴¹ The number of actors may raise collective-action costs for mobilization offirmsin an industry, which varies across industries. We take this into account in our empirical analysis and discussion in the text.

⁴² A similar reluctance to litigate would be expected when deciding whether to defend against antidumping petitions in domestic legal procedures. Although antidumping is not the focus of analysis in this article, a lawyer for a Washington D.C. law firm frequently involved in antidumping cases noted that electronics firms are less likely than steel firms to pursue litigation to defend against an antidumping petition. Author telephone interview with Washington, D.C. lawyer, Princeton, September 22,2006.

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⁴⁷ This table reports WTO disputes following the convention to count as one case a dispute between one pair of countries on a given policy issue.

⁴⁸ While we treat the velocity of the business environment as a continuum in the empirical analysis, it is convenient here to considerjust the case of high-velocity industry represented by electronics versus all others.

⁴⁹ Office and telecom equipment, typical electronics-industry products, comprised 14 percent of world merchandise exports in value in 2004. WTO, International Trade Statistics 2005.

⁵⁰ Unlike the Japanese report, the U.S. report does not select cases on the basis of WTO consistency, so some items included are not potential WTO disputes.

⁵¹ Henrik Horn, Petros Mavroidis, and Hakan Nordstrom, “Is the WTO Dispute Settlement System Biased?” Discussion Paper, no. 2340 (Washington, D.C.: Center for Economic Policy Research, 1999). In an innovative study to generate potential disputes as a function of bilateral product-market pairings (PMPS) over S1 million, Horn, Mavroidis, and Nordstron find that for the first four years of the WTO and for the 113 members for which trade data was available, there were over one hundred thousand PMPS relative to 146 WTO disputes filed. The U.S., EU, and Canada initiated more disputes than predicted by their trade interests model. Lack of effective representation is suggested as one reason why developing countries initiate relatively fewer disputes than their share of trade.

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⁵⁵ Krauss, Ellis and Pempel, T. J., Beyond Bilateralism: U.S-Japan Relations in the New Asia-Pacific, eds. (Palo Alto, Calif:Stanford University Press, 2004Google Scholar).

⁵⁶ The Byrd Amendment case (DS217) is counted here as a steel-industry case. Although it is related to horizontal policy issues relevant to other industries, it was primarily backed by the steel industry, which has been the major target of U.S. antidumping measures. Author interview with METI official, Tokyo, August 22, 2005. The antizeroing case (DS322) was also supported by the steel industry, but is not counted as a steel-industry case because it was primarily related to the ball-bearings industry. The case against U.S. procurement policies was horizontal because it broadly affected several industries.

⁵⁷ Japan Tariff Association, data available at http://www.stat.go.jp/english/data/chouki/18.htm (accessed October 30, 2006).

⁵⁸ The data on Japanese political contributions was collected by the authors from data on corporate donations in public filings reported in the daily government bulletin, Kanpo. Note that we have only counted donations by firms and associations to the LDP that were over ¥1 million. From 1995 to 2002, political contributions to the LDP accounted for an average of 92 percent of total political contributions to all political parties from corporations and business associations. Kanpo (Government Bulletin), http://kanpou.npb.go.jp/ (accessed October 30, 2006).

⁵⁹ Author interviews with METI officials, Tokyo, June 3, 2003, and August 23, 2005.

⁶⁰ We omit cases related to primary goods, services, and horizontal cases that do not mention a specific industry.

⁶¹ Japan's top-fifteen trade partners were routinely included in the reports: Australia, Canada, China, EU, Hong Kong, India, Indonesia, Korea, Malaysia, Mexico, Philippines, Singapore, Taiwan, Thailand, and the United States. In addition, reports occasionally listed trade barriers for Argentina and Brazil, which we have included.

⁶² METI, data available at http://www.meti.go.jp/policy/trade_policy/trade_db/html/f_y2003.html (accessed October 30,2006).

⁶³ Japan External Trade Organization OETRO) and METI, Kokusai keizai ruru ni kan sum kigyo anketto chyosa [Survey of Corporations about International Economic Rules] (Tokyo:JETRO, February 2004Google Scholar).

⁶⁴ Data summarizing WTO disputes by agreement shows that the GATT is cited in nearly 40 percent of complaints, followed by antidumping and safeguard agreements, which were referenced in 10 percent of cases (note that WorldTradeLaw.net's summary of WTO cases initiated during the years 1995 to 2004 shows a total of 652 legal complaints, allowing for the overlap in which one WTO dispute cites multiple agreements). Available at http://www.worldtradelaw.net/ (accessed October 30,2006).

⁶⁵ One horizontal WTO dispute (DS95, US-Procurement) is excluded. While we include the Byrd Amendment case that could be considered a horizontal issue because the policies affected more than one industry, the results are not sensitive to omitting this case.

⁶⁶ OECD/STAN database, www.oecd.org/sti/stan (accessed October 30,2006).

⁶⁷ See Dess, Gregory and Beard, Donald, “Dimensions of Organizational Task Environments,” Administrative Science Quarterly 29, no. 1 (1984CrossRefGoogle Scholar); Scherer, F. M. and Huh, Keun, “R&D Reactions to High-Technology Import Competition,” Review of Economics and Statistics 1A, no. 2 (1992CrossRefGoogle Scholar); D'Aveni (fn. 36); Kusunoki, Ken, Nonaka, Ikujiro, and Nagata, Akiya, “Organizational Capabilities in Product Development of Japanese Firms: A Conceptual Framework and Empirical Findings,” Organization Science 9, no. 6 (1998CrossRefGoogle Scholar); Mendelson and Pillai (fn. 37); Smith, Keith, “Measuring Innovation,” in Fagerberg, Jan, Mowery, David C., and Nelson, Richard R., eds., The Oxford Handbook of Innovation (Oxford:Oxford University Press, 2005Google Scholar). Research and development has also been used as a measure of asset specificity, e.g., with high R&D representing high asset specificity. See Alt, James, Carlsen, Fredrik, Heum, Per, and Johansen, Kare, “Asset Specificity and the Political Behavior of Firms: Lobbying for Subsidies in Norway,” International Organization 53, no. 1 (1999CrossRefGoogle Scholar). Because this generates the opposite expectation-that R&D would have a positive correlation with industry mobilization for government intervention-the two concepts are empirically testable.

⁶⁸ Hall, Bronwyn and Ziedonis, Rosemarie Ham, “The Patent Paradox Revisited: An Empirical Study of Patenting in the U.S. Semiconductor Industry, 1979–1995,” RAND Journal of Economics 32, no 1 (2001CrossRefGoogle Scholar).

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⁷⁰ OECD/STAN database, www.oecd.org/sti/stan (accessed October 30, 2006). Current value figures adjusted to 2000 base-year prices.

⁷¹ Ibid.

⁷² Current value figures adjusted to 2000 base-year prices. Ministry of Finance, Foreign Direct Investment, http://www.mof.go.jp/english/elc008.htm (accessed October 30, 2006).

⁷³ We coded HHI for the product at the closest level of aggregation to the products specified in the trade barrier.Japan FairTrade Commission, Statistics of Cumulative Production and Shipment Concentration in MajorIndustries, http://www.jftc.go.jp/ruiseki/ruisekidate.htm (accessed October 30,2006).

⁷⁴ Kanpo (fn. 58).

⁷⁵ GDP data is from World Bank Development Indicators, reported in 2000 constant U.S. dollars. The import penetration and employment share data is from the OECD/sTAN database, www.oecd.org/ sti/stan (accessed October 30,2006).

⁷⁶ Since the multinomial logit model assumes independence of irrelevant alternatives, in some cases the multinomial probit model is more appropriate. However, the data are not very informative about the correlation among the underlying latent variables. Using the Bayesian multinomial probit estimation of Kosuke Imai and David A. van Dyk, the estimation of the correlation parameter is found to be sensitive to its prior distribution. Nevertheless, when we conduct sensitivity analyses using various priors, e.g., strong positive correlation, independent, and strong negative correlation, the coefficient for R&D is consistently negative with substantive impact. Imai, Kosuke and van Dyk, David A., “A Bayesian Analysis of the Multinomial Probit Model Using Marginal Data Augmentation,” Journal of Econometrics 124 (February 2005CrossRefGoogle Scholar); idem, “MNP: R Package for Fitting the Multinomial Probit Model,” Journal of Statistical Software, 14, no. 3 (May 2005Google Scholar).

⁷⁷ The results are consistent when clustering standard errors for seventeen two-digit ISIC industry categories or when clustering standard errors for thirteen trade partners. The results are also consistent when using rare events logit to estimate model 1 with a dichotomous dependent variable. For example, the estimated R&D coefficient using rare events logit is -2.116 (p-value of 0.025). King, Gary and Zeng, Langche, “Logistic Regression in Rare Events Data,” Political Analysis 9, no. 2 (2001CrossRefGoogle Scholar).

⁷⁸ We used the software CLARIFY. See Michael Tomz, Jason Wittenberg, and Gary King, “CLARIFY: Software for Interpreting and Presenting Statistical Results, Version 2.1,” (Stanford University, University of Wisconsin, and Harvard University, January 5,2003). Available at http://gking.harvard. edu (accessed June 1,2005).

⁷⁹ Keidanren announces an annual policy assessment for the LDP and the Democratic Party of Japan (DPJ), which evaluates the two parties' consistency and performance on ten priority policies (most members contribute to the LDP). This assessment provides the basis on which 1,662 member corporations make political contributions to political parties. Tax reform, social security system reform, and regulatory reform were listed as the top three items in 2006, whereas promotion of appropriate trade and investment policies was listed as the ninth item. Available at http://www.keidanren.or.jp/english/policy/2006/067table.pdf (accessed October 30, 2006).

⁸⁰ Hansen, Wendy, Mitchell, Neil, and Drope, Jeffrey, “The Logic of Private and Collective Action,” American Journal of Political Science 49, no. 1 (2005CrossRefGoogle Scholar); Schaede, Ulrike, Cooperative Capitalism: Selfregulation, Trade Associations, and theAntimonopoly Law in Japan (Oxford:Oxford University Press, 2000Google Scholar).

⁸¹ Author interview with METI official, Tokyo, August 23, 2005.

⁸² Japan has joined as a third party for two complaints against China; one initiated by the United States (DS309 Value-added Tax on Integrated Circuits, filed in 2004) and one initiated by the U.S, EU, and Canada (DS339, 340,342 Measures Affecting Import of Auto Parts, filed in 2006). A METI official said that the affected Japanese industry associations did not request a complaint in these cases. Author interview with METI official, Tokyo, August 17,2006.

⁸³ Eight of Japan's eleven WTO cases have additional complainants (see Appendix), as indeed most WTO disputes involve more than one complainant. It is not clear, however, whether Japan piggybacks on the actions of other countries in terms of legal work and diplomatic relations in these eight cases, since Japan prepares an independent legal case and represents itself in the WTO adjudication.

⁸⁴ Omitted cases are expected to be few and of little significance. As discussed in Section IV in the subsection “Identifying Potential WTO Cases,” the government gathers information through every available channel and aims to be comprehensive in its compilation of the list. Firms have little reason not to disclose that they face a trade barrier.

⁸⁵ Rosendorff (fn. 18).

⁸⁶ World Trade Analyzer data set, compiled by International Trade Division, Statistics Canada. Information available at http://www.statcan.ca/bsolc/english/bsolc?catno=65F0016X (accessed October 30,2006).

⁸⁷ Textiles represents another low-velocity industry, but would not be expected to take an active role advocating WTO cases given low exports. The chemical industry competes in a low-to-middle velocity business environment and has substantial exports, but the industry faces fewer trade barriers. It may also have less demand for WTO dispute resolution because it has another forum option. Chemical industry trade issues are routinely addressed at the International Council of Chemical Associations (ICCA), which was established by developed countries' national chemical associations during the GATT Uruguay Round negotiations. Author interviews with officials of Sumitomo Chemical and Japan Chemical Industry Association, Tokyo, January 23, 2004, and February 23, 2004.

⁸⁸ We categorize ISIC 30–33 as electronics.

⁸⁹ The pattern of activity to address IPR infringement in China, which is a major problem for Japanese firms, shows a preference for settlement by administrative procedure over litigation. Administrative procedure is used more (4,263 requests) than formal legal claims (192 cases totaling civil and criminal procedures). METI, Field Survey for Infringement of Intellectual Property Right in China (June 2005). Available at http://www.meti.go.jp/english/report/data/050623ChinaIPR.html (accessed October 30, 2006). Primary reasons cited for prevalent use of administrative procedure are expedited process and direct benefits through confiscation and disposal of counterfeit goods. In the report, twenty-one of the 134 companies that responded were electronics firms; of those twenty-one, 95 percent suffer from IPR infringement. Other industries include machinery (thirty-five respondents, 71 percent suffer from IPR infringement); chemical (twenty-seven respondents, 63 percent suffer from IPR infringement); automobile (eight respondents, 100 percent suffer from IPR infringement); and miscellaneous industrial goods (twenty-seven respondents, 78 percent suffer from IPR infringement).

⁹⁰ Author interview with METI official, Tokyo, January 13, 2004.

⁹¹ Author interviews with officials of Sony, Tokyo, December 4,2003, and January 25,2005; author interviews with officials of Matsushita, Tokyo, November 28,2003.

⁹² Author interview with Sharp official, Tokyo, January 15, 2004; author interview with Ricoh official, Tokyo, February 12, 2004.

⁹³ Author interview with Matsushita Electric official, Tokyo, November 28,2003; author interview with Mitsubishi Electric official, Tokyo, January 21,2004.

⁹⁴ Journalof'Commerce, (January 15,1999).

⁹⁵ The DOC determined that Fujitsu and NEC had sold vector supercomputers at less than fair value. It calculated a dumping margin of 173 percent for Fujitsu and 454 percent for NEC. Department of Commerce, “Notice of Final Determination of Sales at Less than Fair Value: Vector Supercomputers from Japan,” Federal Register, vol. 62, no. 167 (August 28,1997), 45623–45627.

⁹⁶ Journal of Commerce, (March 4,1999).

⁹⁷ Author interview with NEC officials, Tokyo, March 10, 2004. According to the officials interviewed, one of the reasons they wanted to take this case up to the Supreme Court was to defend NEC's corporate reputation of not giving in to unfair trade practices.

⁹⁸ Author interview with NEC officials, Tokyo, March 10,2004.

⁹⁹ Author interview with Hitachi official, Tokyo, January 29, 2004.

¹⁰⁰ Author interview with Sony official, Tokyo, December 4, 2003.

¹⁰¹ Author interview with METI official, Tokyo, August 23,2005.

¹⁰² Author interview with NSC official, Tokyo, January 13,2004. Metal-related industries composed only 3 percent of the total FDI outflows ofJapan in 2003, compared with 14 percent for the electronics industry and 8 percent for the transportation industry. See http://www.mof.go.jp/english/fdi/ 2004a_3.htm (accessed October 30, 2006). Metal includes both ferrous and nonferrous industries. Transportation includes automobiles, motorcycles, and other vehicles as well as components.

¹⁰³ Process development and quality improvement of existing products are more important than rapid new-product development. Author interview with NSC official, Tokyo, October 29, 2003.

¹⁰⁴ The practice of having the industry beneficiary pay the litigation fees, at least partially, is fairly common among WTO members, including the United States and the EU.

¹⁰⁵ Author interview with NSC official, Tokyo, October 29, 2003.

¹⁰⁶ Author interviews with NSC and JFE officials, Tokyo, October 29, 2003, January 9, 2004, and January 13,2004.

¹⁰⁷ Author interview with NSC official, Tokyo, October 29, 2003. “United States-Definitive Safeguard Measures on Imports of Circular Welded Carbon Quality Line Pipe from Korea” (DS202, June 13, 2000).

¹⁰⁸ Author interview with NSC official, Tokyo, October 29, 2003.

¹⁰⁹ Before 2000, Toyota and Nissan shared the chairmanship. Author interview with JAMA official, Tokyo, October 29, 2003.

¹¹⁰ Yano Research Institute, Market Share in Japan (Tokyo:Yano Research Institute, 2005Google Scholar).

¹¹¹ The ratio of exports in domestic productionforToyota is 53 percent, Nissan 51 percent, and Honda 41 percent. Available at http://www.jama.or.jp/stats/stats_news.html (accessed October 30,2006).

¹¹² Author interview with officials of Nissan, Tokyo, December 19, 2003; author interview with officials of Honda, Tokyo, December 22, 2003; author interview with officials of Toyota, Tokyo, February 20, 2004. Industry officials said they chose bilateral venues over others, especially WTO adjudication, because of fear of direct retaliation from the Chinese government and anticipation of the Japanese government's reluctance to bring a case against China. In 2001, China imposed a 100 percent tariff on Japanese auto imports as retaliation after Japan imposed safeguard measures on agricultural imports from China.

¹¹³ Nikkei Shimbun (March 19, 2004); Inside US-China Trade, vol. 4, no.6 (February 11, 2004).

¹¹⁴ Iida (fn. 54).

¹¹⁵ Author interview with JAMA official, Tokyo, October 29, 2003.

¹¹⁶ Author interview with METI official, Tokyo, June 3,2003; author interview with Nissan official, Tokyo, December 19, 2003.

¹¹⁷ Iida (fn. 54), 135.

¹¹⁸ Author interview ofJAMA official, Tokyo, October 29,2003; author interview with METI official, Tokyo, August 25, 2005.

¹¹⁹ Author interview with Toyota official, Tokyo, January 16,2004.

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¹²⁴ Nikkanjidosha Shimbun (May 1995).

¹²⁵ Author interview with officials ofJAMA, Tokyo, October 29,2003; author interview with officials of Toyota, Tokyo, February 20, 2004.

¹²⁶ Author interview with Toyota official, Tokyo, January 16, 2004.

¹²⁷ Davey (fn. 28).

¹²⁸ Economic and Social Research Institute, Business Statistics, http://www.esri.cao.go.jp/jp/stat/ (accessed October 30,2006).

¹²⁹ Asahi Shimbun (August 1, 2005), 5. In another article, Nissan and Toyota officials lamented about the shortening cycle of new products. Nikkei Shimbun (July 1,2005).

¹³⁰ Author interview with Nissan representative, Tokyo, December 19, 2003. 131 Author interview with Toyota official, Tokyo, January 16,2004.