Pro Trade, Against Competition: Explaining Firms’ Support for Selective Trade Protection

This paper challenges the conventional view that large, productive companies – the so-called ‘winners of globalization’ – are unequivocally in favor of trade liberalization. While larger export markets are great for these firms, they also engage in strategic competition with rival companies, generating incentives to mobilize for discrimination in the form of highly specific, targeted trade measures. In this paper, I hypothesize that support for these trade barriers is particularly strong among firms that are involved in two-way or intra-industry trade (IIT) and global value chains (GVCs), because these firms face import competition while being vulnerable to an increase in trade barriers due to import-dependent and export-oriented interests. Selective trade measures – such as bilateral tariffs and anti-dumping duties – minimize the number of affected firms and countries, and thus reduce the risk that access to foreign markets will be restricted. In four case studies, I explore how IIT and GVC integration influence firms’ attitudes towards trade protection.