Social protectionist bias: The domestic politics of North–South trade agreements
| Author | Evgeny Postnikov,Ida Bastiaens |
| DOI | 10.1177/1369148120910991 |
| Published date | 01 May 2020 |
| Date | 01 May 2020 |
| Subject Matter | Original Articles |
https://doi.org/10.1177/1369148120910991
The British Journal of Politics and
International Relations
2020, Vol. 22(2) 347 –366
© The Author(s) 2020
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DOI: 10.1177/1369148120910991
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Social protectionist bias:
The domestic politics of
North–South trade agreements
Evgeny Postnikov1 and Ida Bastiaens2
Abstract
North–South preferential trade agreements (PTAs) have proliferated rapidly in the past decades.
Despite a common focus on trade liberalisation, these preferential trade agreements differ greatly
in their inclusion of labour and environmental provisions. A difference in the enforcement of
these social standards is also puzzling: some preferential trade agreements envision sanctions
for non-compliance while others do not. What explains this variation? We argue that Northern
governments have their hands tied by domestic constituents demanding social standards as a
key protectionist instrument. However, different electoral rules moderate the success of these
demands. Because majoritarian systems provide a more efficient channel for the mobilisation of
protectionist interests, they are more prone to social protectionist bias than their proportional
representation counterparts. We assess our hypotheses using panel regressions of all North–
South preferential trade agreements. Our analysis refines previous findings on tariff and non-
tariff protectionist bias in majoritarian systems and shows how it is manifested in the design of
preferential trade agreements.
Keywords
electoral system, environment, labour, preferential trade agreements, protectionism, social
standards
Introduction
Non-trade issues, such as labour and environmental provisions, have become a recurring
feature of North–South (N-S) preferential trade agreements (PTAs) (Lechner, 2016;
Milewicz et al., 2016). In these PTAs, developed countries often demand that their Southern
trading partners commit to improving labour and environmental regulations to prevent a
race to the bottom in exchange for market access. Yet, the design of such social standards
varies greatly across N-S PTAs. Some countries, like New Zealand, include primarily envi-
ronmental provisions, while many others, like the United States, demand the fulfilment of
1University of Melbourne, Parkville, VIC, Australia
2Fordham University, Bronx, NY, USA
Corresponding author:
Evgeny Postnikov, University of Melbourne, Parkville, VIC 3010, Australia.
Email: evgeny.postnikov@unimelb.edu.au
910991BPI0010.1177/1369148120910991The British Journal of Politics and International RelationsPostnikov and Bastiaens
research-article2020
Original Article
348 The British Journal of Politics and International Relations 22(2)
both environmental and labour commitments. Furthermore, the degree of enforcement of
social standards varies cross-nationally. For example, non-compliance with labour or envi-
ronmental standards in US PTAs is punished with the cancellation of trade preferences or
the imposition of a fine. Other developed states, such as the European Union (EU) mem-
bers, do not include sanctions and instead, rely on dialogue and civil society cooperation for
implementation and enforcement.
What are the sources of this variation in coverage and enforcement of social stand-
ards? While issue-linkage in N-S trade relations and the emergence of non-trade issues
have been explored in many studies (Hafner-Burton, 2005; Kim, 2015; Lechner, 2016),
insufficient attention has been given to variations in PTA design. Scholars acknowledge
the propensity of democratic systems to be both pro-free trade (Milner and Kubota, 2005)
and exhibit hidden protectionism (Kono, 2006), but they fail to clarify predictions about
the locus and strength of these features. Our article is among the first to address this gap
by focusing on the previously overlooked phenomenon of social protectionism.
We argue that the design of social standards in N-S PTAs is a function of domestic
trade policy-making institutions, in particular, the electoral rules of the Northern state.
Labour and environmental standards might be viewed as a form of (social) protection
aimed at preventing trade-induced job losses. At the same time, this protection is viewed
favourably by constituencies who want free trade to be fair. International Political
Economy (IPE) scholars have long argued that electoral systems affect the degree of pro-
tectionism: majoritarian (or plurality) systems tend to have higher levels of tariffs and
subsidies compared to proportional representation (PR) systems (Evans, 2009; Grossman
and Helpman, 2005; Rickard, 2012a). We test whether this logic travels to a different type
of protection increasingly prevalent in N-S PTAs, social standards, while highlighting a
unique political logic of this novel type of protectionism.
Specifically, we hypothesise that N-S PTAs signed by Northern countries with plural-
ity systems will have relatively stronger social standards. Their agreements will contain
both labour and environmental protections and more coercive enforcement mechanisms.
PTAs signed by Northern states with PR or mixed systems will be weaker, that is, they
will include fewer (or no) social provisions and have limited or softer (or no) enforcement
mechanisms. Our logic is that governments face differing demands for the inclusion and
enforcement of social standards: concentrated domestic interests incurring major losses
from trade view enforceable social standards as a form of protection, whereas larger con-
stituencies favouring free and fair trade perceive them as a public good. Electoral institu-
tions determine whose voices get heard and how governments make a trade-off between
the enforcement (i.e. social protection) and inclusion (i.e. fairer trade) of social standards.
To test our hypotheses, we employ ordered probit analyses with robust standard errors of
data on electoral institutions from the Database of Political Institutions (DPI) and N-S
PTAs from Dür et al. (2014). We code the degree of social issue coverage and enforce-
ment in each PTA in our dataset. Our empirical analysis reveals that majoritarian govern-
ments tend to use all available tools of protection, including social standards, to shield
domestic constituents from the high costs of bilateral trade liberalisation. PR govern-
ments are more likely to respond to fair traders with less defined policy preferences over
specific design of PTAs. Considering that PTAs have become the main vehicle to elimi-
nate all traditional tariff and non-tariff barriers (NTBs) in today’s global economy, our
analysis is the first one to identify and demonstrate how a different type of protection
might thrive when traditional tools are no longer a viable political option. Our findings
are also particularly pertinent considering the robust evidence that the design of social
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