An Overview of Trade Agreements and Canvassing in The United States

As laws are voted on by members of congress many times there are people working behind the scenes attempting to influence politician’s decisions. These lobbyists argue their position to politicians along with financial resources in order to gain the support of congressman on their view of the issue. There is a constant struggle in ideology between whether or not the United States should participate in free trade with other nations or whether they should practice protectionism and place more tariffs on imports to protect their own industries. Like any international policy there is no clear winner between the two sides because there are different groups with different priorities lobbying both sides. In the 20th century the United States switched over from a general trade policy of protectionism to being an advocate for global free trade. Ehrlich (2008) Since 1998, 12 free trade agreements have been proposed to congress, and of those, 12 have passed. Allen (2009) The Trans-Pacific Partnership and the North American Free Trade Agreement are two recent agreements that have opened up trade with the US and many other nations around the world. What has caused the United States to so actively support trade liberalization and free trade agreements with other countries? The strong political support for these agreements stems from substantial lobbying by large corporations in favor of free trade agreements. Increased trade options without restrictions is beneficial for these corporations and allows them to grow within their country as well as globally.

International trade agreements such as tariffs or free trade agreements between countries are usually initiated by private corporations from one of the countries involved. After the initial deal negotiators from all parties involved come together to work out the details of the potential trade agreement. Allen (2009) These corporations and businesses that initiated the talks are usually very active within the negotiations, lobbying for more favorable trade conditions that will benefit their industry. The corporations lobby both their government as well as all other entities involved in the trade deal so they can negotiate favorable terms on all sides of the deal. These terms negotiated help the growth and profit of the businesses because they are able to export much more freely into newly unrestricted nations along with gain the ability to produce easier away from their home country. The big businesses use their tremendous wealth in order to influence politicians in the involved countries so they agree to the deal. Politicians are interested in helping the big businesses, even if they do not fully agree with the policy, because they need funds in order to run for re-election as well as for personal gain. As a result of this many trade agreements are formed from political pressure from their prospective country’s industries.

The North American Free Trade Agreement (NAFTA), that was effectively active on January 1st 1994, was an agreement between the US, Canada, and Mexico that would bring an end to most trade barriers between the 3 countries. Lewis (1993) In the issue of free trade it is sometimes difficult to know where political party ideologies lay because there have been some shifts in recent years, therefore the political party of the politician is a smaller factor. One thing that seems to remain constant with free trade agreements and NAFTA is that it has the support of large corporations and foreign partners in the agreement. During the delegation of NAFTA the largest supporters were Mexican Government and business along with large corporations within the United States. It is not fully clear how much was spent in total by US based corporations due to poor quality of existing records and lax disclosure policy. It is clear however that opponents of NAFTA including environmental groups, workers unions, and small farmers have been severely out-funded which likely played a huge role in the passage of the agreement. Lewis (1993) Environmental groups oppose the bill because many of the top pollution causing corporations in the United States will increase exports due to the bill and therefore increase the amount of pollution they inevitably cause. Workers unions and small farmers oppose the bill because both workers and farmers will lose jobs or be displaced to outsourcing of jobs by large corporations reacting to the newly unrestricted trade. These groups have much less to invest in lobbying efforts against the bill because they have much less to financially gain if it does not pass than the amount that large corporations can gain with the passage of the bill.

The Trans Pacific Partnership is a bill that opened up trade between the United States and many nations in the Pacific Rim area including Japan, Vietnam, New Zealand, and many others. This trade agreement is the largest signed by the United States to date, being signed on February 4th 2016. Lobbying efforts were very similar to the North American Free Trade Agreement in that large corporations were big supporters of the agreement. 487 companies involved with The US Business Coalition for TPP spent over $550 million dollars on federal lobbying in the year prior to the passage of the agreement. Common (2015) The shear amount spent by just US corporations on lobbying for the bill shows how much value large corporations place on free trade agreements involving the United States. Members of the coalition spent nearly 5 times more on federal lobbying than they did on funding political campaigns in 2014. Common (2015) Lobbying against the agreement were the AFL-CIO and Environment America but even both of these titans and their allies could not make a dent in the funds raised by those supporting the agreement. Common (2016) The amount of support for the agreement in congress, which included both democratic and republican congressmen, along with the approval of the president, allowed for fast track legislation in which congress could vote yes or no but not make changes to the agreement. This was a show of good faith negotiations because it allowed other nations relief that deals they had already agreed upon would not be picked a part by the United States. The money spent in lobbying by the US Business Coalition for TPP could have been a huge factor in the success of the agreement.

Lobbying is extremely effective in influencing international trade agreements as well as other forms of legislation. In the United States, international trade arrangements such as tariffs or free trade agreements will have an outcome that will always be beneficial for some groups of people and disadvantageous for others. In the free trade agreements such as the Trans Pacific Partnership and the North American Free Trade Agreement the main groups trying to influence decisions are large corporations, labor unions, and public interest groups. While labor unions and public interest groups generally lobby against these agreements due to evidence they lead to more outsourcing of jobs and less power for working class families, they lack the resources to compete with the large corporations when it comes to funding. Currently for every $1 spent by labor unions and public interest groups on lobbying, $34 is spent by large corporations. Ehrlich (2008) Even though many citizens and groups oppose these trade agreements many times they pass with a majority of the support coming from both the Democrats and Republicans. This shows the impact of lobbying in the international trade industry and why some people are skeptical that these agreements are passed with the best intentions rather than personal gain for politicians.

Free trade agreements, while they are thought to bring an overall benefit to the countries involved, are not supported by everyone. Workers and labor unions actively lobby against FTAs because imports are generally associated with unemployment and many times workers become displaced due to a shift in the industry after a free trade agreement takes place. The lobbying efforts of these groups have not been completely overlooked however as the Trade Adjustment Assistance program was created in 1962 in order to aid workers negatively affected by the agreements. Trade adjustment assistance has programs that assist workers harmed by the agreements in many ways, from aiding in job search to supplementary wages for workers who received pay cuts due to the introduction of new competition. Lake (2016) Labor unions and workers may have not been successful in lobbying to shut down FTAs due to the monumental difference in funding between them and the large corporations supporting FTAs, but they have been able to arrange for assistance programs to make the agreements more bearable.

In recent years much of lobbying done by groups with similar goals are done within a coalition of the groups. Business coalitions allow the firms involved tie together resources in order to achieve a common goal, the coalitions lobby as a single entity to influence public policy. Since each one of these large corporations alone has an extremely substantial pool of resources, a coalition of them is an extremely prominent force in American politics. In negotiations for the North American Free Trade Agreement there were 149 representatives from large organizations present at negotiations, who supported the agreement, while only one environmental group, who opposed the agreement, was present. Lewis (1993) A MapLight report has shown that representatives who voted yes to the Trade Promotion Authority in the TPP agreement received an additional $230,000 in campaign contributions from pro-TPP corporations as opposed to those who voted no. Lewis (1993) These figures show the sheer leverage held by these businesses when they unite under a common goal, and while this is not officially lobbying, one could see where politicians could be incentivized to vote one way or another.

With the United States moving more towards a policy of international liberalism and free trade they are far from being rid of tariffs. Many industries in the United States rely on large tariffs to survive and continue to lobby in support of them for countries not involved in the free trade agreements. Many clothing and food industries that manufacture in the United States lobby for strict tariffs against outside nations so they can continue to profit and manufacture at the same rate. Even in some current free trade agreements such as the Trans Pacific Partnership, these industries have successfully influenced clauses in which only a certain portion of foreign goods in their specific industry are allowed tariff free. Clark (2009) Lobbying from these companies is a large factor in political decisions for tariffs because general endogenous trade policy concludes that governments would rather operate with lower tariffs to minimize the trade loss. This lobbying is how the American clothing industry tells the government how important specific tariffs are to their survival and United States production. These corporations also lobby for selective distribution in these agreements because of how popular online shopping is becoming. The luxury fashion brands were worried about their goods being sold next to fake and cheaper versions online in other countries which would tarnish their name along with reduce profits. These firms then launched an extensive lobbying campaign in 2009 to convince representatives to enact selective distribution. Clark (2009) The movement was successful for the companies who were worried when in 2010 the makers of goods were given much more control of online sales. It is clear that political lobbying works to push large agreements but also to enact smaller conditions within or separate from the agreements.

In the case of free trade agreements there may be an unintended consequence to American lobbying which could either help or harm corporations lobbying in the United States. Andrey Stoyanov has determined that with the introduction of free trade agreement foreign corporations and interests gain influence in American politics and lobbying while firms based in the United States lose a portion of their influence due to the introduction of new competitors. Stoyanov (2014) Now this is not saying that this is always bad for American companies because in the case of these free trade agreements the foreign interests often share the same goals and are able to add their resources to the lobbying effort. But along with the lobbying power of foreign firms, foreign public interest groups also gain some influence because the two countries in the agreement are more tied together and a problem in one country could lead to a problem in the other. As free trade agreements expand to new countries, the globalization of lobbying efforts in the working class also expands. Stoyanov (2014) In turn the opposition of free trade agreements will grow as more are made, making it easier for these groups to oppose free trade agreements in the future. This cross border lobbying makes each dollar spent in lobbying by all competitors worth less because more competition is introduced into the struggle for political influence.

Some theorists argue that the most influential factor in United States federal lobbying for or against free trade agreements are other governments rather than corporations. These foreign governments, whether or not they are involved in the agreement, will attempt to lobby US politicians in agreeing with their views. Governments not involved will sometimes devote resources against free trade and attempt to delay the notarization or the agreement or stop it all together. The reason that outside countries often oppose FTAs are because these agreements actually harm the outsider’s economy due to the fact that countries within the agreement are more likely to trade with each other rather than any outside countries. Stoyanov (2014) Also tariffs are more likely to be imposed on outside countries as they would bring increased benefit to the industries within the agreement. While they do not have a major effect on the outcome they are a notable opponent to free trade agreements in general because it is likely that there will always be some countries left out of the FTAs. The governments that are involved in the agreements will also lobby US politicians to encourage more favorable terms for their country. During the passing of NAFTA I is estimated that Mexican government and business had spent nearly $40 million in lobbying support for the bill by the time it passed in 1993. Lewis (1993) The estimated amount spent by foreign governments on lobbying for the TPP is roughly $50 million in the year prior. While enough of an amount to have influence it is nowhere near the amount of $550 million spent by US corporations in the Business Coalition. Common (2015) Those who say that foreign government lobbying is the most influential factor to free trade agreements have some valid points but since big businesses are spending the most on lobbying by far as well as being responsible for the United States economic wellbeing, they have the most influence in the political field.

Trade policy in the United States is dictated by those who partake in the trading, businesses. FTAs are heavily influenced by large corporations because the corporations are responsible for a massive amount of lobbying and funding for the agreements and are therefore given leverage in the negotiations for the deals. While the opponents of FTA’s are not given the same power as their corporate counterparts their lobbying efforts accomplish the allocation of resources that are used to assist those harmed by the agreements. Federal lobbying large corporations provides a large amount of leverage to these corporations in deciding the specifications and turnout of trade agreements in the United States.