Demand-side factors: interest groups and civil society

From a demand-side perspective, interest groups and more broadly civil society pressure their governments for preferred trade policies. Business interests in advanced industrialized states have long been the strongest proponents of trade liberalization and FTAs (Baccini 2019, 76). Specifically, export oriented industries have generally been viewed as the strongest pro-trade interest. In postwar U.S., capital-intensive, export-oriented sectors represented the pro-trade lobby in Congress (Hiscox 2002, 65). Multinational firms have played a key role in driving the rise in North-South FTAs, as these firms sought access to less developed states with cheaper labor (Manger 2009). Manger (2009) describes North-South FTAs as a “contest between major economic powers to gain access to emerging markets and important product locations, to impede such access for competitors, and to restore it when others have moved first” (‘Introduction’). In contrast, import-competing industries that stand to lose from trade liberalization have often been described as opposing trade liberalization (Manger 2009,‘Chapter 2’).

Recent w'orks on the political economy of FTAs have challenged the notion that firms in the same industry share similar trade preferences (Baccini, Pinto and Weymouth 2017; Kim and Osgood 2019).These new “firm-centered” explanations argue that larger, more productive, and more competitive firms in both export and import industries support trade liberalization whereas smaller, less productive, and less competitive firms across industries oppose trade liberalization. Essentially, the pro- and anti-trade coalitions (including both firms and workers) cuts across industries. Irrespective of these differences, the underlying message is that a core segment of business serve as a strong pro-trade interest.

Non-business interests such as workers and farmers are the remaining major actors organizing on behalf of trade policies. Scholars are more divided on their depiction of labors position on trade policies. Kim and Osgood (2019) predict that workers’ closely align with the trade policy positions of their industries or firms. Hiscox (2002) argues that organized labor’s position on trade are largely dependent on factor mobility. When factor mobility is low, labor is internally divided on trade issues. When factor mobility is high, labor is more unified in their support or opposition to free trade (37-39). Manger (2009) depicts labor interests as a passive actor, unable to mount a strong support or opposition to FTAs (‘Chapter 2’). Farm interests in advanced industrialized states, on the other hand, are strong opponents of trade if they face competition from countries with cheaper food. Due to their dependence on government subsidies, support, and protection, farmers in advanced industrialized states have much to lose from FTAs that can lead to influx of food imports from countries with cheaper food (Manger 2009; Mulgan 2008). Farm interests in advanced industrialized states also wield significant influence over agricultural trade policies due to their small size, organizational coherence, and dominant role in agricultural policymaking and policy administration (Mulgan 2000; Sheingate 2001). Given these reasons, it is no surprise that farmers have played a critical role in derailing trade liberalization efforts in multilateral, regional, and bilateral trade negotiations (Haggard 1997; Manger 2009; Mulgan 2008).

In Japan and Korea, organized business interests have been the strongest supporters of FTAs, while organized farm interests have been the strongest opponents of FTAs. Beyond this similarity, however, important differences mark the pro- and anti-FTA trade coalitions in Japan and Korea. In Japan, organized business interests and organized farm interests have respectively led the pro- and anti-FTA coalitions. Both coalitions enjoy strong ties with related ministries and politicians and have access to trade policymaking institutions. In contrast, only the pro-FTA coalition— in other words organized business interests—enjoy access to institutions of trade policymaking and exhibit close ties with ministries and politicians in Korea. The anti-FTA coalition consists of a broad range of different kinds of civil society groups such as farm groups, labor unions, progressive citizens’ movement groups, and non-governmental organizations (NGOs). Due to their lack of access to the trade policymaking institution, anti-FTA activities occur as large social mobilizations and protests. The book makes the distinction between interest groups and civil society to highlight the different ways in which societal actors have tried to influence FTAs in Japan and Korea. Political leaders in Japan and Korea have faced very different forms of societal pressure on FTA issues.

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