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 globalisation’ – are unequivocally in favour of trade liberalisation. 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 hypothesise that support for these trade barriers is particularly strong among firms that engage in two-way or intra-industry trade (IIT), because these firms face import competition while being vulnerable to foreign retaliation due to export-oriented interests. Selective trade measures – such as bilateral tariffs and anti-dumping duties – minimise the number of affected firms and countries, and thus reduce the risk that access to foreign markets will be restricted due to retaliatory responses. In four case studies, I explore how IIT and other political-economic factors influence firms’ attitudes towards selective trade protection and how these preferences are translated into trade policies pursued by governments. The findings shed light on the structural shift towards forms of trade protection that are inherently more discriminatory, which can pose a threat to the international trading system based on the principle of non-discrimination.