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Unit 10 : Political Economy of Non-tariff Barriers : and Their Applications

Some illustrations of the statistical findings Notes
Having tested our model, it is useful to illustrate how the societal and statist variables on which we
focused affected trade policy in the countries considered here. While detailed case studies are beyond
the scope of this article, anecdotal evidence suggests that these variables were salient influences on
commercial policy during the 1980s.
Consider, for example, the role that the exchange rate played in United States trade policy. Between
1983 and 1986, the incidence of U.S. NTBs rose by over 25 percent. Much of this rise seems to be due
to a significant appreciation in the dollar. While the values of the other independent variables in our
model changed relatively little from 1982 to 1985 in the case of the United States, the value of REER
increased dramatically. The societal view that this appreciation should precipitate an increase in
demands for protection accords with a number of accounts of exchange-rate politics in the United
States during this period. I. M. Destler and C. Randall Henning note that, by the early 1980s, many
sectors of U.S. industry had concluded that the dollar’s strength was degrading their competitiveness.
By 1985, their opposition to the dollar’s strength reached a peak. Imports were flooding into the
United States at a rate unprecedented during the post-World War II era and Destler and Henning
maintain that “most [industries] considered the prime source of their problems [to be] the sky-high
dollar.” They also argue that “[w]hen the strong dollar triggered a flood of imports, a rise in
protectionist bills was a predictable result.” U.S. industry and labor petitioned the Reagan
administration and Congress to remedy the dollar appreciation. With no direct control over exchange-
rate policy, Congress responded by “generat[ing] a veritable explosion of trade legislation initiatives”
in 1985. It is also noteworthy that the period from 1982 to 1985 witnessed a rapid surge in the number
of petitions for trade-policy relief by U.S. industry and a turn toward managed-trade policies by the
United States. These developments both led directly to an increase in the incidence of NTBs and, in
the opinion of J. David Richardson, were largely attributable to the dollar’s appreciation.
The effects of unemployment on NTBs are illustrated by the case of West Germany during the 1980s.
From 1983 to 1986 the incidence of West German NTBs rose by approximately 15 percent; and from
1982 to 1985, the level of West German unemployment rose by about 25 percent, while the remaining
independent variables in our model experienced only very modest fluctuations. Kathleen Thelen
points out that throughout the post–World War II era, “the [West German] government sought first
and foremost to maintain a stable currency and hold inflation in check, even if it meant higher
unemployment.” By 1983, the West German economy had deteriorated to the point where unemployment
had reached its highest level since the end of World War II. Of particular importance for present purposes
was the structural nature of West German unemployment. In 1983, over a quarter of those West Germans
without jobs had been unemployed for more than one year. The Bundesbank reported that “[t]he
prospects for bringing unemployment down quickly to a more bearable level are admittedly slim; this
will certainly not happen in the short term.” Labor problems reached a peak in 1984 with the metal
workers’ strike, which was designed in part to reduce unemployment. It is interesting that the
Organization for Economic Cooperation and Development reported in 1986 that West German NTBs
were most pervasive in those sectors where tariffs had been reduced and that among these were sectors
in which metal workers were employed in large numbers (such as steel). This suggests that the
government responded to mounting unemployment by increasing the incidence of NTBs in 1986. Given
the political strength of organized labor, the traditional unwillingness of the government to enact
macroeconomic policies to counter unemployment at the risk of undermining monetary stability, and
Germany’s mounting unemployment problems, West Germany’s course of action is not surprising.
Further, it is interesting to compare the effects of institutional variations between Japan and the
United States on their respective propensities to impose NTBs. It is often argued that Japan is a
“strong” state in which policymakers are extremely well-insulated and autonomous with respect to
interest groups. The United States, on the other hand, is often portrayed as a “weak” state in which
policymakers lack both insulation and autonomy. Yet both of these countries are characterized by a
relatively large number of parliamentary constituencies based on our sample of states. This suggests
that public officials in both countries are likely to be susceptible to societal pressures (although not
necessarily to the same extent); and it jibes with the view expressed in a number of recent studies that

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