By Alan Verne Deardorff, Robert Mitchell Stern
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Extra info for Constituent Interests and U.S. Trade Policies (Studies in International Economics)
On the other hand, once it has been discovered by means of economic analysis that this particular coping mechanism can be improved upon by restricting the information available to the principals, it becomes possible to improve the coping mechanism. And note that such an improvement may not need to wait for a complete overhaul of the policy regime such as might accompany a new constitution. 5 Rather, coping mechanisms can be modified in both small and large ways, and in real time, as either the system or our understanding of it evolve.
These remain matters of law and interpretation rather than trade policy as such. But he does discuss two exceptions that reflect the intrusion of policy: (1) how to assess countervailable subsidies for nationally owned industries that have been privatized as in the case of steel; and (2) imports of softwood lumber from Canada. Nonetheless, what strikes Cunningham is how difficult it was for the domestic interests to affect the outcome in these cases. S. industry agrees to the outcome. The examples he cites include: (1) the 1986 and 1996 settlements of the Canadian softwood lumber cases; (2) the 1978 Trigger Price Mechanism for steel imports; and (3) antidumping investigations of uranium imports from Russia and other former Soviet republics.
The first such example actually predated Mayer's (1984) direct democracy model, and was provided by Findlay and WelIisz (1982). They subsumed the entire policy-making process into a black box, so to speak, that translated lobbying expenditure into tariffs. This "tariff formation function" was then the basis for optimization by owners of sector-specific factors, who would choose their levels of lobbying to maximize the net benefits to them of securing protection. A second such approach was, in a sense, the mirror image of the tariff formation function approach.