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I thank Christy Brandly, Michael Dreiling, Jeffry Frieden, Lloyd Gruber, Robert Gulotty, Noel Johnston, Andrew Kerner, Charles Lipson, Michael Plouffe, Stephen Weymouth, and Alton Worthington, as well as participants in the University of Chicago's Program on International Politics, Economics and Security and the University of Michigan's Political Economy Workshop.
Manufacturing supply chains grew enormously in size, speed, and complexity with the flowering of global trade after 1960. For some firms, this meant the import of intermediate inputs sourced from foreign manufacturers, or even outsourcing the manufacture of final products overseas. For an even smaller group of firms, efficiency improvements in transport, reduced trade barriers, and improving institutions in host markets permitted the movement of production facilities abroad. Although few in number, these offshore outsourcers and multinationals control an enormous quantity of manufacturing output and world trade. Beyond this elite, many more producers have come to benefit from imported intermediates, or through incorporation into the supply networks of export-competitive firms. The globalization of the supply chain implicates all producers, if not equally.
How has this reorientation of supply chains outside national boundaries affected the politics of international trade? Building on the literature on foreign investment and producer preferences over trade policy,1I argue that a complete account of industrial preferences over trade policy in the current era must place the globalization of supply networks at its center. The sourcing or production of both intermediate and final goods abroad is now a critical element of firms' production strategies. The development of a successful global supply chain often means the difference between profitability and going out of business, and trade agreements facilitate these networks' flourishing.2Employing evidence on the public positions of US firms and trade associations toward all US trade agreements since the North American Free Trade Agreement (NAFTA), I show that opportunities to multinationalize production and source intermediate inputs are now the primary drivers of producer preferences over US trade agreements.
The predicted effects of globalization of the supply chain are large. For a typical industry, increasing the quantity of imported intermediates from its first quartile to its third quartile in the data more than doubles the number of firms supporting trade. The probability...