The Intricacies of Firms’ Support for Labor Provisions in US Trade Agreements

Abstract

AbstractDo pro‐trade firms want trade agreements to include stronger provisions protecting workers? The position of those firms in the US in recent years is often counterintuitive vis‐à‐vis the expectations of the literature. To solve that puzzle, I argue that it is necessary to account for the intricacies of the position of firms/associations on US trade–labor linkage according to their GVC integration. I argue that highly GVC‐integrated firms/associations fear the uncertainties of strong labor provisions in PTAs and prefer to oppose commitments that could potentially lead to sanctions. However, it can be risky to oppose the inclusion of strong labor provisions in US PTAs. Instead, I argue that highly integrated firms/associations nowadays support trade–labor linkage but attach intricate conditions to that support based on lessons from previous experiences. To probe that argument, I perform a qualitative text analysis of the public submissions of firms/industry associations positioning themselves on the link between trade and labor in US PTAs between 2008 and 2020. The empirical analysis underscores the plausibility of my hypothesis. The results point to subtle ways in which pro‐trade firms may lobby trade–labor linkage. The paper has implications to the design of sustainable development provisions in US PTAs and beyond.