28 Jan 2014

Focus on research: Trade Governance

A group of enumerators getting ready to start the interviews

In the third phase of the NCCR Trade Regulation research continues within Work Package 1 into trade governance issues, including the spread of preferential trade agreements (PTAs). Government policies are strongly influenced by public opinion, so to understand trade regulation requires an understanding of public attitudes.

Victor Umaña is a participant in a project that focuses on PTAs and the preferences shown by citizens and firms. Through surveys carried out in the United States, Vietnam and Central America it investigates how the content and design of PTAs can affect these preferences.

Examining Individual Preferences Toward Trade Agreements

"Trade agreements have become increasingly complex and involve several policy domains. Trade agreements not only deal with measures at the border (i.e. tariffs and quotas), but also encompass other provisions, which traditionally have been part of the domestic regulatory realm, such as migration, labour rights, environmental commitments, competition policy, government procurement, and intellectual property rights.

This increase in the scope of trade agreements has created new cleavages as more and more groups in society are affected. Presently, some of the fiercest debates on trade policy concern the relationship between trade and the environment, social standards and migration, with some of these cleavages becoming as profound as the traditional conflicts between economic classes and sectors. In this project we examine citizens’ preferences concerning preferential trade agreements. We are interested in how the inclusion of measures to e.g. grant immigrants working permits, protect the environment, or to ensure social standards, alters the level of support for trade agreements.

The bulk of studies on individual trade policy preferences explain why voters will prefer free trade or protectionism. The archetypical question has been: Do you favour or oppose further trade liberalisation?  This is clearly a dichotomous approach that focuses only on whether voters prefer liberalisation or protectionism.  However, trade policy involves multiple dimensions with different features, from the number of trading partners to the characteristics of the countries and the specific content of trade agreements. Typical surveys therefore do not allow the researcher to test which of the various attributes of the policy makes respondents more or less likely to prefer a given agreement over another.

Correspondingly, one of the main gaps in the literature is that previous research has made important, but largely untested, assumptions about the preferences and beliefs of individuals as to which aspects of a trade agreement should make individuals more inclined to favour this form of trade cooperation.

In our research, we examine voters’ and firms’ attitudes towards economic integration in several countries including Costa Rica, the United States, Vietnam and Nicaragua, by using state of the art research techniques in the form of population based survey-embedded conjoint experiments. This method allows us to unpack the multidimensionality of individual preferences in policy issues.  In conjoint analysis, respondents rank or rate two or more hypothetical profiles that combine multiple attributes, enabling researchers to estimate the relative influence of each attribute value on the resulting choice or rating.

Improving our knowledge about which types of trade agreements individuals prefer over others and why they do so is crucial for moving one step further in our understanding of how individuals form their preference with regard to economic integration. As countries are struggling to cope with the economic crisis and the political backlash against globalisation, understanding the underlying determinants of the electorates’ policy preferences is crucial."

Victor Umaña

Víctor Umaña is a doctoral student in International Political Economy at ETH Zurich.  This project has received additional funding from Avina Stiftung and ETH Zurich and it is done in collaboration with INCAE Business School (www.incae.edu).