Daniel Kono, a political scientist at UC Davis, has an interesting article in the latest issue (100:3) of the American Political Science Review (APSR), entitled "Optimal Obfuscation: Democracy and Trade Policy Transparency" (the modest abstract follows below; the full article is available here for APSA Members and other APSR subscribers). Kono's article is intended as a mildly provocative contribution to the ongoing (neo-Kantian) democracy-trade-peace discourse, but I find his analysis more interesting with respect to the way we view TBT/SPS measures, not least on the backdrop of the just-released GMO Panel Report.
Kono doesn't dispute the robustness of existing research indicating a correlation between democracy and trade-openness measured by tariff levels and what he calls "core" non-tariff barriers (quotas etc.). Rather, he argues (and demonstrates empirically) that democracy induces protectionism-bound politicians to replace transparent trade barriers with more complex, less transparent ones, primarily "high quality" non-tariff barriers such as TBT and SPS measures.
This finding is fairly unsurprising, I think, for trade scholars and practitioners, but it is interesting to see empirical analysis substantiating it. If we were talking about services trade this would be even more obvious. Moreover, Kono takes things a step further and asks "why do democracies have higher quality non-tariff barriers", facing-off two alternative explanations: the first, benign, one, is that democracies "make politicians more responsive to public concerns about health, safety, and the environment"; the second, somewhat less benign, is that democracies compel politicians to pursue "optimal obfuscation" by reducing protectionist measures whose consumer effects are more transparent (tariffs and "low-quality" non-tariff barriers), adopting instead less transparent "high quality" non tariff barriers (in blunter terms, high-quality NTBs are the political response bypassing public demand to remove barriers, in the face of interest group pressure to maintain them, not the result of public pressure to install them for non-trade reasons).
To discern which of these explanations is more realistic - and I think this is where the analysis gets interesting - Kono uses three proxies for "public demand for health, safety and environmental standards" - ISO certifications per capita, an environmental governance index (WEF-EC-Yale-Columbia) and water quality (same source). Kono postulates (reasonably, I believe) that if high quality NTBs reflect voter demand, they should roughly correlate with these three proxies. Yet he finds that countries with higher ISO certifications, standards and water quality actually have lower quality NTBs - gleaning no evidence that voter pressure leads to quality NTBs. In an additional analytical step, Kono shows that where high-quality NTBs showed no correlation to voter preferences, they do show consistently positive correlative relations to interest group variables, such as high sectoral employment and import penetration - similar to "core" NTBs.
Now, these conclusions need not taint all TBT/SPS and similar measures as driven by "optimally obfuscatory" protectionist motivations, rather than by public demand. Surely, beyond statistical regressions, there are many specific measures driven wholely by justified public health/safety/environment preferences, while many others are driven by domestic industry needs.
A subsequent thought on the legal plane: should it not be the role of the international legal system to be able to distinguish between the two (the publically driven, and the politically opaque) - perhaps instead of the more traditional tests of trade-restrictiveness? Indeed, furthering these findings, perhaps we should not consider each TBT/SPS case as an instance in which democracy confronts free trade. Rather, in promoting democracy, a potential role of an international rule and judiciary should be to expose national measures as ones pursuing "optimal obfuscation", in order to help correct democracy's imperfections?
T.
Abstract:
"A growing body of research shows that democracies have more liberal trade policies than do autocracies. I argue, in contrast, that democracy has contradictory effects on different types of trade policies because electoral competition generates more information about some than about others. It generates considerable information about policies whose effects on consumer welfare are easy to explain to voters, but less information about policies whose effects are more complex. By increasing the transparency of some policies relative to others, democracy induces politicians to reduce transparent trade barriers but also to replace them with less transparent ones. I test this hypothesis by examining the impact of democracy on tariffs, “core” nontariff barriers (NTBs) such as quotas, and “quality” NTBs such as product standards in 75 countries in the 1990s. I find that democracy leads to lower tariffs, higher core NTBs, and even higher quality NTBs. I conclude that democracy promotes “optimal obfuscation” that allows politicians to protect their markets while maintaining a veneer of liberalization".
