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  • This article was downloaded by: [Temple University Libraries]On: 14 November 2014, At: 11:05Publisher: RoutledgeInforma Ltd Registered in England and Wales Registered Number: 1072954Registered office: Mortimer House, 37-41 Mortimer Street, London W1T 3JH,UK

    Journal of European PublicPolicyPublication details, including instructions forauthors and subscription information:http://www.tandfonline.com/loi/rjpp20

    Explaining protectionism andliberalization in EuropeanUnion trade policy: the case oftextiles and clothingMehmet UgurPublished online: 04 Feb 2011.

    To cite this article: Mehmet Ugur (1998) Explaining protectionism and liberalizationin European Union trade policy: the case of textiles and clothing, Journal of EuropeanPublic Policy, 5:4, 652-670, DOI: 10.1080/13501769880000071

    To link to this article: http://dx.doi.org/10.1080/13501769880000071

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  • Journal of European Public Policy 5:4 December 1998:652-70

    Explaining protectionism and liberalization in European Union trade policy: the case of textiles and clothing Mehmet Ugur

    ABSTRACT The political economy of trade policy models and theories of European Union (EU) policy-making can explain only the incidence of protectionism or inertia in EU trade policy. To address this weakness, this article proposes an alternative approach based on state--society interaction under different degrees of issue transparency/ divisibility. In this perspective, four endogenous policy outcomes may emerge: strict protectionism, selective protectionism, selective liberalization and dominant liberalization. The conclusion is that the level of protectionism is determined by the level of issue transparency/divisibility rather than the level of protectionist demands. This conclusion- based on the functionality of European integration in equalizing the rates of returns on societal loyalty to a territorial jurisdiction - is tested against evidence on the evolution of the EU's textiles and clothing policy during the Multifibre Arrangement and Uruguay Round negotiations. The evidence lends support to this argument and suggests that regional integration, in contrast to the unqualified claims of its opponents and proponents, is conducive to both protectionism and liberalization - depending on the extent to which trade policy issues are treated as transparent/divisible.

    KEY WORDS European integration; EU trade policy; lobbying; protectionism; textiles and clothing.

    Developed countries have protected their textiles and clothing (T&C) industry not only during the short- and long-term agreements of 1961-73, but also under the Multifibre Arrangement (MFA) of 1973-94. Over this period, the European Union's (EU's) policy has gone through low-level protectionism up until 1976, strict protectionism from 1977 to 1985 (Dolan 1983; Aggarwa11983; Farrands 1979; Pelkmans 1993), and gradual liberalization after 1986. The reversal of the policy in 1986 led not only to the elimination of national quotas in 1993, but also to the conclusion of the Agreement on Textiles and Clothing (ATC) in 1994. This article develops and tests an analytical framework for explaining the incidence of protectionism/liberalization in EU trade policy on the basis of two variables: the level of protectionist pressure and the degree of transparency/divisibility of the policy issue.

    Section 1 reviews briefly the political economy of trade policy (PETP) literature 1998 Routledge 1350-1763

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  • Protectionism and liberalization in EU trade policy 653

    in economics and the political science perspectives on EU policy-making. This review suggests that the existing literature derives the policy outcomes in a reductionist manner from the demands for protection and the institutional context within which they emerge. To address this shortcoming, section 2 presents an alternative approach, suggesting that the degree of protectionism in EU policy may or may not be a positive function of protectionist demands - depending on the level of issue transparency/divisibility. Section 2 will demonstrate that the level of protectionism is inversely related to issue transparency/divisibility and may be positively or negatively related to the level of protectionist demands of the producers. Section 3 probes the relevance of this analytical framework by examining the EU's T&C policy in the context of both the MFA and the Uruguay Round. The evidence presented there suggests that the level of protectionism in EU policy tended to be high (low) when issue transparency/divisibility was low (high) and the sign of the association between protectionism and the level of protectionist demands depended on the extent to which the T&C trade policy issue was treated as transparent/divisible.

    1. PROTECTION A N D INERTIA IN EU TRADE POLICY: A BRIEF REVIEW

    What is common to the PETP and theories of EU policy-making is the acknowledgement that policy outcomes must be derived from state-society interaction. Yet this is only part of what is required to derive a non-reductionist policy stance. It is also necessary to conceptualize the state-society interaction without deriving the policy outcomes from the preferences of either the state or the society. This is what is missing in Magee (1997), who states that policy-makers cannot control the level of protectionism any more than an auctioneer can control the price of pork bellies. This reductionist tendency ignores the possibility that the state (or the policy-maker as a proxy) may deploy strategies that enable it to resist protectionist demands.

    This is acknowledged implicitly in Rodrik (1994), who criticizes the PETP for treating the supply of protection (i.e. the state) as a 'black box'. This criticism applies, for example, to Findlay and Wellisz (1982) and Magee (1984) who assume that the level of protection is a positive function of lobbying by import-competing industries and a negative function of lobbying by consumers and other industries. Given the collective action problem faced by the large and diffused group of consumers (Olson 1965), both works conclude that trade policy will be protectionist. The same logic also leads Magee et aL (1989: chs 3, 9) to show that protectionism will prevail even when the parties' election probability is an increasing function of the contributions they receive and a decreasing function of the policy intervention they are committed to. A similar tendency can also be found in Grossman and Helpman (1993). Even though 'the parameters of the country's political economy' are considered as significant, these authors still conclude that protectionism is a positive function of lobbying and the regional/sectoral concentration of the sectors involved.

    As observed by Meier (1990) and Rodrik (1994), this approach suffers from a

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  • 654 M. Ugur

    bias towards treating the state as a soft entity akin to a price-taker firm. The state's territorial competence, however, may enable the policy-maker to choose either the level of protection or the intensity of the protectionist demands as given and react accordingly. If the policy-maker chooses the latter, the PETP's tendency to derive the level of protection from societal preferences may be justified. If, however, the state picks up a certain level of protection as given, the demands for protection will be the dependent variable determined in the 'market'. The level of protection to be chosen can be determined, for example, within a regional integration framework that enables the member states to approximate their policies and reduce the ability of the pro-protection groups to secure special treatment.

    The impact of regional integration on the level of protectionism is discussed widely in the PETP literature. The verdict

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