The service economy: U.S. trade coalitions in an era of deindustrialization
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Services dominate the US economy and are increasingly traded across borders yet little is known about service firms’ trade policy objectives or lobbying activities. We fill this gap by examining services’ political engagement on trade policy as manifested through lobbying, public positions on trade, and reports issued by U.S. Industry Trade Advisory Committees. We document for the first time that service firms are highly active in the politics of US trade agreements and, compared to firms in goods-producing industries, are much less likely to disagree over trade. Instead, service firms are almost uniformly supportive of US trade agreements, which we explain by focusing on the stark US comparative advantage in services. Service firms are therefore a key constituency for deeper international economic cooperation, helping to explain the present era of global integration despite tough times for uncompetitive US manufacturing. We expect service producers to join the defense of global economic order against emergent populism.
KeywordsServices Lobbying Trade agreements Comparative advantage Industrial fragmentation
JEL ClassificationF13 L80 D72
We thank Neal Beck, Mark Brawley, Marc Busch, Matt Castle, Steve Chaudoin, Jeff Frieden, Bobby Gulotty, Gordon Hanson, Brad Jensen, Mark Manger, Naoko Matsumura, Anna Maria Mayda, Krzysztof Pelc, Dennis Quinn, Pietra Rivoli, Peter Rosendorff, Nita Rudra, Beth Simmons, Bob Vastine, Erik Voeten, and Hye Young You, along with seminar participants at Georgetown University, McGill University, New York University, Rice University, and the University of Toronto, and panel participants at MPSA 2017 and APSA 2017. A special thanks to In Song Kim for sharing the LDA reports on trade agreements with us. Rohan Carter-Rau, Nadia Docrat, George Ghabrial, and Jeff Sauer provided excellent research assistance. An online appendix is available on the Review of International Organizations’ webpage. Baccini acknowledges the support of the FRQSC grant (Établissement de nouveaux professeurs-chercheurs), 2017-NP-198967. All errors are our own.
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