An empirical analysis of the U.S. Senate vote on NAFTA and GATT

Using state-level simulations in a political economy model of US trade policy

“…A key difference between earlier works (e.g., Baldwin andMagee 2000, andKamdar andGonzalez 1998) and this paper is that these authors use direct measures of trade sensitivity while we use economy-wide measures. One would expect that policy makers would tend to consider both the direct and indirect implications of a trade policy for their state before casting a vote.…”

“…Our paper fits within a subset of this literature that examines the determinants of congressional votes on tariff legislation (e.g., Hansen and Prusa 1997b;Baldwin and Magee 2000;and Kamdar and Gonzalez 1998). This literature has identified the importance of factors that measure regional trade sensitivity, such as state-level output shares, in explaining congressional voting patterns.…”

“…In fact, they find that many economic variables are very important determinants of congressional voting patterns, suggesting that Members of Congress in general consider both general economic conditions in their districts and states as well as special interest contributions. Kamdar and Gonzalez (1998) examine factors affecting Senate votes on NAFTA and the Uruguay Round Agreement. They consider general economic interests, special interest contributions, and general ideology in their estimating equation.…”

“…The authors attribute this change to the institutional changes implied by the Reciprocal Trade Agreements Act of 1934 which shifted power from the legislative to the executive branch of government and the increased role of administrative institutions after the creation of the General Agreement on Tariffs and Trade in 1947. Baldwin and Magee (2000) and Kamdar and Gonzalez (1998) identify political and economic factors such as campaign contributions from labor and business groups, the degree of unionization within a state or congressional district, and general economic conditions in the state or district (e.g., output by industry as a share of total gross state product and regional export performance), as significant factors affecting congressional voting on NAFTA and the Uruguay Round Agreement. Baldwin and Magee (2000) utilized a political economy framework to estimate the relative impact of economic and political factors on congressional voting on three agreements: the North American Free Trade Agreement (NAFTA), the Uruguay Round Agreement, and most-favored-nation status for China.…”

“…They found that trade policy decisions were significantly influenced by both economic and political factors. Hansen and Prusa (1997b), Baldwin and Magee (2000), and Kamdar and Gonzalez (1998) analyzed tariff legislation. Hansen and Prusa (1997b) conducted a historical analysis of US legislation employing the median voter model.…”