November 18, 2020
T. Renee Bowen (UCSD) , J. Lawrence Broz (UCSD) , Marc-Andreas Muendler (UCSD) and Bertrand Wilden (UCSD)
The World Trade Organization and U.S. Domestic Politics
Abstract
The Appellate Body (AB) of the World Trade Organization (WTO) settles appeals in trade disputes and has been rendered inoperative in December 2019 after the refusal of the United States to approve new members. To what extent do WTO-AB rulings matter in domestic U.S. politics? We use two measures of “political backlash” and find strong empirical support for the local political relevance of AB rulings. First, voters in US counties that were more exposed to adverse AB rulings were significantly more likely to vote for Donald Trump in the 2016 presidential election than for the Republican presidential candidate four years prior. We measure local “exposure” with the cumulative share of county employment in industries affected by AB rulings between 1995 and 2015. The result is robust to county-level import competition, controls for the “China shock,” and economic, political, and demographic controls. An analysis of media coverage in AB exposed counties suggests that the public was prominently informed about WTO proceedings relevant for local industries. Second, when US membership in the WTO was up for reauthorization in Congressional bills in 2000 and 2005, members of Congress representing districts that were more exposed to adverse AB rulings were more likely to vote against reauthorization. Here, we measure local “exposure” with the cumulative share of congressional district employment affected by AB rulings from 1995 to 1999 for the 2000 vote, and from 2003 to 2004 for the 2005 vote. Overall, our results suggest that, for decades, WTO-AB rulings have been salient in domestic US politics and have contributed to a backlash from exposed voters and U.S. legislators.