Investing in Protection

The idea for the book was born from a conversation with Noboru Hatakeyama, a former top official in Japan’s Ministry of International Trade and Industry—the (in)famous MITI—in the fall of 2002. I had just arrived in Japan with a completely different research project in mind, but found that the foreign policy establishment was wholly occupied with the free trade agreements that Japan had just started to negotiate. Hatakeyama was one of the key figures in promoting the new policy. Since the end of the US occupation, Japan had relied on multilateral trade institutions, avoided any preferential agreements, and only reluctantly negotiated bilaterally with the US, which were worried about the strength of Japanese exports in the 1980s.

Now Japan turned its policy completely around, engaging in a flurry of bilateral negotiations. The driving force behind this change was a realization that Japanese firms were strongly discriminated against in their activities abroad. Seen from Japan, NAFTA appeared almost purposefully designed to make it hard for the likes of Nissan and Panasonic to operate in Mexico.

It was an exciting time to be in Tokyo, and I spent the next six months running from meetings with trade officials to workshops with academics to interviews with company and trade association representatives.

Some of the work was more like investigative journalism than social science research. In Japan, the private sector prefers to let the government take the lead; getting the unofficial version of a policy is often hard.

Because of this reluctance to discuss views publicly, especially with foreigners, and because the English-speaking, urbane, elite bureaucrats are much more accessible, many at the time thought that Japan’s trade agreements were a government-driven project.

But once I scratched the surface of this new strategic policy consensus, I came upon a fierce battle between different interest groups whose strategic priority was their own material gain. In short, despite a different institutional and cultural context, it was a way of policymaking that any observer of US politics would immediately recognize.

This allowed me to extend the study into large, comparative framework. It turns out that North-South PTAs follow a similar pattern, whether the powerful party is Japan, the US, or the EU.

The developing country usually swallows whatever is offered in return for the promise of more foreign investment, or the veiled threat that others are standing in line ready to sign their own deal. In the book, I analyze the cases of NAFTA, the EU-Mexico and Japan-Mexico FTAs, the agreements that the US and the EU have negotiated with Chile, and the “Economic Partnership Agreements” that Japan has sought with Thailand and Malaysia.

Approaching the analysis through such qualitative case work has its risks. It seems almost a universal rule of human behavior that whenever we pursue our naked self-interest, we justify it with reference to the greater social good.

Politicians and lobbyists have mastered this to the point where they believe their own words—turning them into what Marx called “character masks.” For the researcher, this means that we can never take statements at face value and must avoid asking for motivations, and instead trace decisions and identify critical junctures. In short, we must objectify our subjects, and ask if our theories predict their actions rather than their words. But doing so also gives us a much deeper insight into the policy-making process than looking for statistical correlations.