Global Value Chains and Corporate Lobbying For Trade Liberalization

The Review of International Organizations
https://doi.org/10.1007/s11558-018-9337-0
Global value chains and corporate lobbying for trade

liberalization
Ka Zeng 1 & Karen Sebold 1 & Yue Lu 2
# Springer Science+Business Media, LLC, part of Springer Nature 2018
Abstract
This paper examines the influence of growing global value chain (GVC) integration on
the pattern of corporate lobbying for trade liberalization in the United States. We
hypothesize that industries with a higher level of foreign content embodied in their
exports should be more likely to support trade liberalization. This is because reduced
tariff barriers should substantially reduce both the costs of inputs for such industries
and the rents that may be obtained through protectionist policies. We test our hypoth-
eses through an examination of the lobbying and election funding activities of the
Fortune 500 companies in the U.S. between 2006 and 2012, using the debate over the
Trans-Pacific Partnership to orient our analysis. Research findings, which corroborate
our main hypotheses, point to the need to revisit conventional models of industry
demand for trade liberalization in light of the growing integration of trade, production,
and investment activities in the global economy.
Keywords Global value chains . Trans-Pacific Partnership . Trade lobbying . Trade

liberalization
JEL codes F13 . F14 . F15
Electronic supplementary material The online version of this article (https://doi.org/10.1007/s11558-018-

9337-0) contains supplementary material, which is available to authorized users.
* Ka Zeng
kzeng@uark.edu
Karen Sebold
ksebold@uark.edu
Yue Lu
lvyue@uibe.edu.cn
1
Department of Political Science, University of Arkansas, Fayetteville, AR 72701, USA
2
China Institute for WTO Studies, University of International Business and Economics,
Beijing 10029, China
Zeng K. et al.
1 Introduction
Production segmentation across national borders is becoming an increasingly salient

feature of the global economy. The rapid increase in intermediate trade through global
supply chain linkages means that foreign value added goods now constitute a growing
share of final goods in many countries and sectors. This paper examines the implica-
tions of growing global value chain (GVC) integration for the pattern of corporate
lobbying for trade liberalization in the United States (U.S.). In doing so, we leverage
newly available data on business lobbying for what may have been the world’s largest
free trade agreement, the Trans-Pacific Partnership (TPP), and for trade liberalization
more generally, to support our argument.
From its inception, the TPP has been touted as a B21st century, high quality^
agreement that promises to not only improve market access for American goods and
services exports, but also set high-standard rules for trade and create a more level
playing field for American businesses. If successfully implemented, the TPP, whose 12
participating countries together account for about 40% of the world’s gross domestic
product (GDP), will represent the largest free trade area ever created (Lim et al. 2012).
While the United States under President Trump withdrew from TPP negotiations in
early 2017, the other 11 TPP countries have sought to revive the agreement, leading to
the signing of the revised Comprehensive and Progressive Agreement for Trans-Pacific
Partnership (CPTPP) in March 2018.
Out of realization that the TPP aligns with broader U.S. policy objectives toward
China, the Trump administration has indicated a willingness to return to the TPP. While
the TPP as it was originally conceptualized has not yet come to fruition, U.S. busi-
nesses did actively lobby for the conclusion of the agreement and for the delegation of
negotiation authority over international trade agreements to the executive branch
through the so-called trade promotion authority (TPA) during the period it was under
consideration. It is interesting to note though that there exists considerable variation in
the level of corporate support for the TPP. Among the Fortune 500 companies we
analyze, only a little over 100 firms have lobbied in favor of the agreement. This raises
the question as to what influences divergent corporate behavior over a trade agreement
such as the TPP.
This paper offers an explanation for the above question that emphasizes how firms’
enmeshment in GVCs may potentially influence their election funding and contribution
behavior. Building on the theoretical framework of Blanchard et al. (2017), we suggest
a couple of mechanisms through which GVC integration may affect business support
for trade liberalization.
First, given that final goods are produced with both domestic and foreign value
added, businesses whose supply chains are likely to be disrupted as a result of increased
trade barriers have increased incentives to lobby for free trade policies in order to
maintain unimpeded access to the necessary production material and intermediate
inputs. Second, firms in industries with strong GVCs linkage should have strong
incentives to support policies that increase the ease of conducting business
transnationally. In addition to reducing trade barriers, PTAs may help address some
of these concerns by providing trade facilitation measures that increase an industry’s
ability to more efficiently and reliably import and export goods. They may also help
reduce the complexity and heterogeneity of national standards so as to alleviate the
Global value chains and corporate lobbying for trade liberalization
burden of compliance. Third, as GVC integration erodes the Brents^ that businesses
may potentially be able to derive from protectionist policies, this should also dampen
their incentives to seek protectionist policies.
We test the above propositions using an original dataset of the lobbying and
federal election activities of the Fortune 500 firms in the U.S. over the TPP
specifically and trade liberalization more generally in the 2006-2012 period. We
further assess our argument using two novel measures for capturing the level of an
industry’s GVC linkages, one developed by the Organization for Economic Coop-
eration and Development (OECD) and the other calculated by the authors from the
World Input-Output Database (WIOD). A major improvement of these GVC mea-
sures over previous ones is that they clearly disentangle the domestic versus foreign
value added embodied in the goods as they cross a border for further processing
(OECD 2012). As such, they should better reflect the reality of global manufactur-
ing where products are BMade in the World.^
Our findings lend substantial support to the above conjectures, suggesting that as a
result of growing GVC integration, the main sources of industry trade preferences may
be shifting from export and multinational production to revolve around supplier-buyer
relationships that are gaining salience in an integrated global economy. In doing so, our
research makes a couple of important contributions to our understanding of industry
demand for trade liberalization. Importantly, in adopting a value-added approach to
analyzing GVCs, our research contributes to a small but growing body of research
(Baccini et al. 2017; Blanchard et al. 2017; Kim et al. forthcoming; Meckling and
Hughes 2017; Osgood 2017, 2018) on the political implications of GVCs. We further
go beyond these earlier studies by highlighting how growing input trade, separate from
multinational ownership, may be increasingly influencing industry lobbying activities
over trade liberalization.
In addition to examining how GVC participation may potentially increase in-
dustry support for free trade, we also emphasize a flip side of the story, that is, how
industries that currently have extensive GVC linkages with countries outside of a
potential trade bloc, especially one that is emerging as a hub of global supply chains
(i.e., China in our analysis), may demonstrate strong opposition to the proposed
agreement. This allows us to paint a fuller picture of the interest group politics
behind the heated debate over the TPP.
Finally, our argument may potentially help us better understand the sources of PTA
formation. Existing studies of the origins of PTAs have emphasized either the impor-
tance of political institutions such as regime type or veto players (e.g., Mansfield et al.
2002; Mansfield and Milner 2012) or that of economic factors such as multinational
production or investment discrimination (e.g., Baccini and Dür 2015; Chase 2003;
Manger 2009) in shaping PTA formation. Relatively few studies have explicitly
considered the rise of PTAs in the context of GVCs.1 The theoretical argument and
empirical evidence presented in this paper therefore help to shed light on how the rapid
rise of GVCs may influence the creation of modern PTAs by shaping industry
preferences over trade liberalization.
1
Osgood (2017, 2018) represent important exceptions.
Zeng K. et al.
2 Literature review
IPE scholars have brought different perspectives to the question of how countries
can achieve trade liberalization and PTAs despite the presence of protectionist
domestic interests. In terms of industry demand for trade protection, researchers
have relied on either the Heckscher-Ohlin (HO) model, which predicts factoral
cleavages over trade policy under conditions of factor mobility or the Ricardo-Viner
(RV) model, which anticipates that cleavages over trade policy will fall over
sectoral lines because certain factors of production cannot not be easily redeployed
from one sector to another. The sectoral model further anticipates that firms more
deeply integrated into the international economy through exports, foreign direct
investment (FDI), or intra-industry trade are more likely to support free trade than
those in import-competing sectors (Milner 1989).
In light of the increasingly rapid pace at which goods and production are
crossing national borders, recent scholarship (Blanchard 2007, 2010: Blanchard
and Matschke 2015; Jensen et al. 2015; Johns and Wellhausen 2016) has increas-
ingly turned to the role of global supply chains in facilitating trade liberalization.
However, these studies tend to focus on the political implications of GVC partic-
ipation through FDI or associated related party (RP) trade. Relatively few studies
have examined how the growing complexity of trade relations within global
production chains may be altering traditional patterns of industry support for trade
liberalization separate from ownership concerns or developed a more general
framework for assessing the implications of GVC linkages for industry trade
preferences.
Extending the work of Antràs and Staiger (2012), Blanchard et al. (2017) more
specifically address the question of how GVC linkages modify countries’ incentives
to impose import protection by adopting a value-added approach to assessing global
supply chain activity. A key innovation of this approach is that it shifts the focus of
analysis from multinational ownership to input trade in order to account for the
extensive cross-border input linkages that are becoming larger in scale compared to
multinational production for most countries and sectors.2 The study finds that final
goods tariffs should decrease with an increase in either the level of domestic content
in foreign-produced final goods or the foreign content of domestically produced
final goods.
More recent studies extend this line of inquiry to examine the trade policy
preferences of U.S. firms. For example, Meckling and Hughes (2017) suggest that
vertically specialized firms in the solar photovoltaics industry — firms specializ-
ing in specific stages of the production process such as upstream suppliers to a
global supply chain, global manufacturers with a high level of dependence on
imported inputs, and downstream users of final products — should be more likely
to support free trade due to their connections with global supply chains. Osgood
(2017, 2018) further suggests that compared to import competition or export
2
Foreign value added constitutes more than 20% of the value of final manufacturing output in many countries,
reaching more than 50% for some countries and sectors. Similarly, domestic value added accounts for a large
share of imported final goods as exported intermediate products could return home embodied in foreign final
goods. Blanchard et al. (2017).
orientation, FDI and input-sourcing are more important drivers of support for free
trade agreements. Firms that engage in more FDI, source a greater amount of
intermediate imports from, or produce for downstream exporters to a particular
country are more likely to support trade liberalization with that country.
This paper contributes to this emerging body of literature by developing an argument
about how GVCs may affect the pattern of corporate lobbying for trade liberalization,
in particular preferential trade liberalization through an agreement such as the TPP. To
the best of our knowledge, despite a relatively large body of literature on the origins of
PTAs (e.g., Baccini and Dür 2015; Mansfield et al. 2002; Mansfield and Milner 2012),
only a handful of studies have explicitly examined how GVCs may affect domestic
support for or opposition to PTAs.3 Furthermore, these studies tend to draw their
conclusions based on one particular form of GVC (e.g., multinational production)
without taking into consideration the multiple ways through which GVC integration
may manifest itself. In the next section, we focus more specifically on GVCs as a
theoretical construct and build on recent literature on their political economy implica-
tions to derive our theoretical propositions.
3 Theoretical framework and argument
Despite the growing importance of GVCs, their sheer diversity has presented
considerable challenge to theoretical and empirical analyses of the political econ-
omy of trade liberalization.4 In order to deal with the challenge of sorting out the
political implications of different types of GVCs both theoretically and empirical-
ly, we choose to focus on the most salient features of global supply chains while
remaining agnostic about the specific GVC organizational form. Following the
lead of Blanchard et al. (2017), we conceive of GVCs as trade in factor services
(value-added content). Since GVCs blur the distinction between goods produced
at home and those manufactured abroad, such an approach can effectively account
for the wide heterogeneity among GVCs and help generate more general predic-
tions about the effect of GVC integration on trade policy preferences. While
inspired by Blanchard et al. (2017), we go beyond their study by developing a
more detailed argument about how the liberalization of both tariff and non-tariff
barriers via PTAs affect industry trade preferences.
Our empirical analyses yield findings that are consistent with those of
Blanchard et al. (2017) that increases in foreign value added in domestic goods
should lead to lower applied bilateral tariffs as well as lower bilateral temporary
trade barrier (TTB) coverage ratios. Our auxiliary argument about the aversion to
the TPP of those industries with extensive GVC linkages with a major country
excluded from the agreement, China, also mirrors their finding that governments
should be less likely to resort to protectionist applications of TTBs in the presence
of strong value chain linkages, such as in the case of China.
3
See, for example, Chase (2003); Manger (2009).
4
For studies that address the diversity in GVCs’ organizational forms and governance patterns, see, for
example, Antràs and Chor (2013); Baldwin and Venebles (2013); Blanchard et al. (2017); Gereffi et al. (2005).
Zeng K. et al.
3.1 GVC participation and industry preferences for trade liberalization
We build on earlier studies of the political economy of the endogenous competi-

tion driving the proliferation of PTAs (e.g., Chase 2003; Manger 2009) in devel-
oping our argument. Underlying such an argument is the recognition that even
those PTAs influenced heavily by non-economic considerations may reflect certain
economic calculations involving domestic actors. Specifically, we focus on the
political implications of growing foreign content in exports5 and suggest a couple
of reasons why a higher level of foreign content embodied in a sector’s exports
should increase its support for trade liberalization, and preferential trade liberal-
ization in particular.
3.2 Preferential tariffs and GVC participation
An important way through which GVC integration may alter firm trade preferences is
by accentuating the importance of tariff reduction for such industries. As goods cross
borders multiple times in long supply chains, even low tariff levels in individual
countries may translate into significant trade costs in the aggregate (Bruhn 2014).
The fact that tariffs are applied to gross imports and not just the value-added part
means that exporters may have to pay taxes for the parts produced by others, thus
further magnifying the importance of tariff barrier reduction. In other words, longer
supply chains further accentuate the inefficiencies of existing trade barriers, especially
in the absence of carefully designed rules of origin (ROOs) or value added tariff rules
(Blanchard 2015).
For firms highly dependent on intermediate goods trade, tariff barriers may therefore
negatively impinge on their comparative advantage because the ability to source inputs
inexpensively plays an important role in shaping their competitiveness in the interna-
tional market (OECD 2013: 150). In addition, while domestic producers of final goods
tend to benefit from tariff protection in the absence of GVCs, they should also see their
competitiveness being eroded by tariff barriers in a world with such networks. Put
differently, in a world of GVCs, tariffs start to exert not only a Bbeggar-thy-neighbor,^
but also a Bbeggar thyself^ effect (Miroudot 2011).
PTAs address the above concerns of domestic industries, as the elimination of
tariff barriers represents a key feature of most PTAs, shallow and deep ones alike.
While PTAs allow member countries to give each other preferential tariff treatment
that discriminates against third-parties, thus potentially violating the most-favored-
nation (MFN) principle of the WTO and its predecessor, the General Agreement on
Tariffs and Trade (GATT), Article XXIV of the GATT/WTO grants an exception,
provided that PTAs liberalize Bsubstantially all trade.^ PTAs thus provide member
countries with an opportunity to eliminate tariff barriers in sensitive issue areas such
as agriculture and fisheries where multilateral trade liberalization has proved diffi-
cult (Horn et al. 2010), even though they do not always succeed in doing so.
5
Both the TiVA dataset and the methods we follow to calculate GVCs using WIOD data (e.g., Wang et al.
2014) consider GVCs as the share of foreign content in exports. We therefore follow the convention and
conceive of GVCs as the share of foreign content in exports instead of production.
3.3 Non-tariff barriers and GVC participation
Non-tariff barriers represent another major impediment to the operation of GVC- embed-
ded industries. In a world with GVCs, indirect costs, in particular the Bability to move
goods continuously, safely and economically^ (UNCTAD 2013) matter just as much as
direct costs in affecting the extent of an industry’s GVC participation and competitiveness.
For example, studies (e.g., UNCTAD 2013) have shown that lengthy and cumbersome
custom procedures at border crossings can generate considerable costs for firms, especially
when the magnification effect is taken into consideration. In contrast, smooth border
procedures may yield even greater trade gains than tariff reduction.
Furthermore, the rising number as well as the complexity and heterogeneity of
quality and safety standards may impose substantial costs on GVC-embedded indus-
tries, especially those supplying components to several destinations, as they may have
to duplicate production processes to comply with conflicting standards (OECD, WTO,
and UNCTAD 2013). The trade facilitation measures included in PTAs may therefore
play an important role in relieving the burden that businesses may face when moving
goods across national borders.
In addition to non-tariff barriers at the border, the close nexus between trade and
investment in GVCs means that behind-the-border policies on such matters as intellectual
property rights, investment regulations, and contract enforcement have become of partic-
ular importance to businesses. PTAs once again help address these concerns. Not only do
they increasingly cover issues that go beyond trade such as investment and competition,
but they also contain much stronger provisions than appear in multilateral agreements,
such as those addressing trade-related investment measures, trade-related intellectual
property rights, services, and public procurement (Horn et al. 2010; Maur and Shepherd
2011; Miroudot 2011). By reducing the complexity and heterogeneity of national stan-
dards and including stronger discipline on a number of issues that are of particular concern
to investors, PTAs may become particularly attractive for businesses as they seek to
increase the ease of conducting business transnationally.
3.4 GVCs and firm preferences for PTAs
Still another mechanism through which production segmentation may influence industry
support for preferential trade liberalization is by reducing the rents that a domestic industry
may potentially capture through protectionist policies. Since some of the rents that this sector
will receive through protectionist policies will be passed onto foreign upstream suppliers in
the presence of global value chains, this should also reduce the sector’s incentive to lobby for
protection and increase its support for trade liberalization (Blanchard et al. 2017).
Of course, as foreign upstream firms may benefit from trade liberalization, these
externalities may also generate countervailing pressures on pro-trade industries with
extensive supply chains, dampening their support for trade liberalization. However, it is
reasonable to expect that, for these industries, the benefits of liberalizing trade with
input industries should outweigh concerns about the potential benefits that foreign
producers may be able to capture through trade liberalization, thus providing sufficient
incentives to support trade liberalization. All of the above mechanisms suggest that
industries with a high level of dependence on foreign value added in their production
and export activities should be more likely to support regional trade liberalization.
Zeng K. et al.
In emphasizing the benefits accruing to the Bwinners^ of trade liberalization, the

above hypothesis may have neglected potential opposition to trade liberalization
stemming from other domestic interests in the context of GVC integration. As previous
studies (Antràs and Helpman 2004; Bernard et al. 2007) have pointed out, there exists
wide variation in the degree to which firms are integrated into GVCs and productivity is
an important factor affecting such variation. While highly productive firms are likely to
source inputs abroad, firms with low productivity should be more likely to engage in
domestic production of the inputs or source their inputs domestically. Domestic
producers of intermediate products and less productive producers of finished products
should thus be expected to oppose liberalization of intermediates for fear of either direct
foreign competition or the potential competitive advantage that trade liberalization
would provide to their domestic competitors.6 On balance, however, it is reasonable
to expect that increases in the level of intermediate goods imports in an industry should
be associated with stronger support for liberalization from businesses with substantial
GVC linkages and weaker opposition from domestic producers of intermediate goods
and low productivity producers of finished goods.
The above discussion leads to the following main hypotheses of the paper:
& Hypothesis 1: Firms in industries that draw on a high level of value added from
TPP countries in their exports should have been more likely to support regional
trade liberalization through an agreement such as the TPP.
& Hypothesis 2: Firms in industries that have a high level of foreign value added in
their exports should have been more likely to lobby for trade liberalization.
To be sure, Fortune 500 firms are likely to differ not only within industries, but also
across industries that range from makers of software, service sector companies,
manufacturing firms such as Boeing who has customers with state backing and
government support, to pharmaceutical producers subject to heavy government control
and regulation. However, such diversity in industry characteristics should not under-
mine our argument as these characteristics are likely to influence the level of GVC
activities instead of firms’ trade policy preferences given a certain level of GVC
linkages. Businesses with existing extensive GVC ties with a foreign country should
have incentive to avoid any disruptions to such relations that may negatively affect
business operations regardless of the heterogeneity in either the home or foreign
country regulatory or political environment.
3.5 GVC linkages, PTA exclusion, and industry preferences for trade liberalization
Existing research tends to emphasize the implications of GVC linkages for the trade
policy preferences of those businesses that are embedded in such relationships. How-
ever, the preferences of those industries with significant supply chain linkages with
countries that may (potentially) be excluded from a trade agreement are far from clear.
6
Baccini et al. (2016) argue that domestic producers of intermediate goods are particularly likely to oppose
trade liberalization. It should be noted that in contrast to that study, we are primarily interested in industry
demand for trade protection and thus do not specifically address the supply of protectionist policies, or the
conditions under which governments pursue trade liberalization in the presence of competing demands for
protection and liberalization.
In contrast to multilateral trade liberalization, PTAs allow member countries to extend

one another lower tariffs without having to provide the same treatment to third parties.
Consequently, PTAs may potentially generate a Btrade diversion^ effect, with trade
being diverted from more productive non-member countries to less efficient members
within the bloc (e.g., Fernández and Portes 1998; Haftel 2004; Mansfield 1998; Mattli
1999). In addition, a PTA may lead to investment discrimination as it may require the
firm to shift its trade and investment relations with an excluded country to PTA member
countries to gain better access to intermediate inputs and upstream manufacturing tasks
required for their production (Baccini and Dür 2015; Blanchard 2015). In light of the
substantial costs brought about by PTAs’ trade and investment diversion effects,
producers with substantial supply chain linkages to excluded countries should have
strong incentives to oppose such agreements. Such an effect should be further magni-
fied when the level of GVC linkages with the excluded country (in our case, China) is
particularly high.
While ostensibly an agreement designed to promote regional trade liberalization, the
TPP has widely been viewed as part of the Obama administration’s strategy to
counterbalance the rising power and influence of China (e.g. Song and Yuan 2012)
and to exert pressure on Beijing to address unfair Chinese trade practices (e.g., USTR
2016). The exclusion of China from the current negotiations may not only have
negative effects on the production and sales of Chinese firms, but may also disrupt
the supply chain linkages of those American firms dependent on imports of interme-
diate goods from China. The substantial adjustment costs incurred by these firms in
relocating their production from China to other TPP member countries should therefore
lead them to be less likely to support the agreement.
Of course, given the market size of the TPP countries,7 it is also conceivable that
these businesses would nevertheless have supported the TPP if shifting trade to TPP
member countries could have opened up competitive sourcing options that outweighed
such adjustment costs. However, given China’a continuing transformation from a low-
cost sourcing destination to Ba hub, or even the hub, of global supply chains^ despite
rising wages in the country,8 it is reasonable to expect that industries with strong supply
chain linkages to China would have to make substantial adjustments to such relation-
ships even if substitutes for their products could be found in TPP member countries.
The potential costs involved in such adjustments may therefore have led these firms to
oppose the creation of an exclusive trade agreement such as the TPP.
As mentioned earlier, the TPP was born out of a desire to increase American clout in
Asia and provide a check on China’s growing economic and military power. This raises
questions about whether trade and investment relations with China and support for
the TPP may have been mutually exclusive or contradictory when it came to trade
preferences. However, it is reasonable to expect that as commercial entities primarily
concerned about profits or losses, businesses should have been primarily motivated by
economic rather than political interests in their calculations regarding the TPP. While
7
TPP member countries together have a gross domestic product (GDP) of nearly $28 billion and account for
about 40% of global GDP and one-third of world trade (Granvill 2017).
8
A recent survey of global procurement and purchasing executives suggests that the share of respondents who
agree that China is a low-cost sourcing destination has gradually declined during the past few years, dropping
from 70% in the 2012 survey to below 50% in 2016. The survey additionally points to the importance of
China as a center of global supply chains rather than a mere cheap outsourcing destination (CNBC 2017).
Zeng K. et al.
firms may have used the TPP to curry political favor, and therefore may have both
supported the TPP and located production in China or maintained sourcing relation-
ships with the country, we contend that such political considerations would have taken
a back seat to commercial interests when businesses evaluated the long-term implica-
tions of the agreement.
& Hypothesis 3: Firms in industries with a high level of GVC linkages with China
should have been less likely to support the TPP.
4 Research design
This section discusses our research design, including the data and variables used for the
empirical analysis.
4.1 Data
We test our hypotheses through an examination of the trade lobbying and cam-
paign finance contribution patterns of the Fortune 500 companies in the U.S.
between 2006 and 2012. We focus on the 2006-2012 period because the deepen-
ing of GVCs in the past decade should enable us to better highlight their impact
on business preferences and behavior. Furthermore, this also represents the years
that the TPP was mentioned in U.S. lobbying reports and for which consistent
time-series GVC data were available.
In spite of concerns about possible selection bias associated with most studies
of corporate political activities that rely on samples of larger firms, more recent
studies that examine corporate lobbying using both large-firm and randomly
generated samples (e.g., Drope and Hansen 2006) suggest that there are no
systematic differences in the results generated using these two different samples.
Furthermore, recent research on the politics of trade lobbying inspired by the new,
new trade theory (e.g., Bernard et al. 2007; Ciuriak et al. 2015; Melitz 2003;
Osgood et al. 2017) suggests that there is considerable heterogeneity in firm
behavior and that the largest firms, especially those with a high level of export
intensity, are more likely to have the resources and incentive to influence trade
policy. This may help to alleviate concerns about using a sample composed of
only the largest firms in the U.S. for our empirical analysis.
4.2 Dependent variables
We rely mainly on lobbying reports made public by the Center for Responsive Politics
(CRP),9 supplemented by other secondary sources as described below, in developing
our key dependent variable, TPP support scale. Specifically, TPP support scale is a
categorical variable with three possible values – Bclearly in favor of TPP^ (3); Blikely in
favor of TPP^ (2); and Bno public position^ (1).
9
See https://www.opensecrets.org/lobby/ (accessed February 9, 2018).
In identifying the firms that are clearly in favor of TPP, we first searched for
firms that have specifically mentioned the TPP in their lobbying reports on
OpenSecrets.org.10 This procedure yielded a total of 110 firms that have made
lobbying expenditures specifically related to the TPP. However, although the CRP
lobbying reports reveal who is actively engaged in lobbying on the TPP, they do not
provide information on the actual stance of the firm toward the TPP or on trade
liberalization. We therefore further adopted a couple of procedures to ensure that
those firms that have specifically taken a position on the TPP, or the politically
Borganized^ ones, are in favor of the agreement.
First, we coded a firm as B3^ (Bclearly in favor of TPP^) if it was a member of the
U.S. Coalition for TPP, a group of U.S. companies and associations representing a
wide variety of sectors of the U.S. economy that explicitly support and work to
secure the passage of the TPP.11 51 firms in our dataset were members of the
Coalition. Second, if a firm’s stance was not readily apparent via its membership in
the Coalition, then we further supplemented this information with accounts drawn
from a variety of sources including the New York Times, the Washington Post,
Politico, open letters to Congress signed by companies and associations12 as well as
issue oriented websites like tradebenefitsameric.org (see Appendix 3). This proce-
dure shows that there were an additional 40 firms that were in favor of the TPP
(B3^), yielding a total of 91 firms that fall into this category. For 17 of the remaining
19 politically mobilized firms, we were either unable to find any direct evidence
indicating either firm support for or opposition to the TPP or were only able to find
secondary sources indicating that the firm stands to benefit from the TPP without
any direct evidence of firm lobbying. We therefore coded these firms as Blikely in
favor of the TPP^ (or B2^). In only the cases of tobacco companies such as Altria
and Phillip Morris were we able to find specific information indicating firm
opposition against the TPP. Given the rare occurrence of explicit firm opposition
to the TPP, we did not include a specific category for such firms in our coding
scheme and dropped Altria and Phillip Morris from the analysis.
Finally, we coded the remaining 390 firms that did not specifically mention the TPP in
their lobbying reports as having taken Bno position^ on the issue (B1^).13 Since it is
possible that a firm may adopt a mixed position toward the TPP (i.e., favor certain
provisions of the agreement but oppose others), such an ordinal scale can better capture
10
In order to minimize the chances of possible omission, we used a couple of different variations of the term
BTPP^ in our search, including BTPP,^ BTrans-Pacific Partnership,^ BTrans-Pacific Partnership (TPP),^ and
BTPP (Trans-Pacific Partnership).^
11
The Coalition represents a wide range of industries in the U.S., including agriculture, manufacturing,
merchandising, processing, publishing, retailing, transportation and services. Its membership can be found at
https://web.archive.org/web/20160211173512/https://www.tppcoalition.org/about/ (accessed February 8, 2018
).
12
See open letter to the Senate signed by numerous companies and associations that form the Trade Benefits
America Coalition accessible at http://www.aaei.org/wp-content/uploads/2015/11/Trade-Benefits-America-
Coalition-Letter-May-21-2015.pdf and open letter to U.S. Representative Brad Ashford accessible at
https://www.tppcoalition.org/wp-content/uploads/2016/07/Coalition-for-TPP-Sign-on-Letters-Nebraska.pdf
(accessed February 9, 2018).
13
There are also eight members of the U.S. Coalition for TPP that nevertheless did not specifically mention
the TPP in their lobbying reports. As a robustness check, we coded these firms as having taken Bno position^
on the TPP. Regression results using this alternative measure of TPP support scale did not change the
interpretation of our central findings. These results are available from the authors upon request.
Zeng K. et al.
450
400
350
Number of ﬁrms
300
250
200
150
100
50
0
Clearly in favor Likely in favor No public posion
Source: Author’s own data.
Fig. 1 Distribution of TPP Support Scale
the nuances in firm positions compared to a dichotomous measure of TPP support.14 Our
TPP support models therefore have a total of 498 observations, with each individual firm
being the unit of analysis. We provide examples of our coding procedure for TPP support
scale in Appendix 3. Figure 1 presents the distribution of this variable for the sample of
firms, while Fig. 2 shows its distribution within each industry.
In addition to looking at whether a firm has lobbied in favor of the TPP, we analyze the
pattern of corporate campaign finance contributions to influence trade issues by all
Fortune 500 firms (trade donations) using campaign finance reports released by the
CRP.15 Specifically, we identified three congressional committees and two subcommittees
in Congress that had primary jurisdiction over matters of trade during the 109th-112th
sessions of Congress16 and collected data on the total amount of donations that a firm in
this study made to members of these committees. Firms have two methods for influencing
governmental decisions on matters of trade, lobbying or donating to electoral campaigns.
We also note if any of the Fortune 500 firms do not donate to members of these
committees. Our approach of using trade donations as a proxy of firm trade preference
is similar to that of Ludema et al. (2018) which considers lobbying expenditures as a costly
instrument for transmitting information about the value of trade liberalization for the firm.
14
It should be noted that six of these 60 firms are closely linked to a second one in the list, or are spinoffs or
subsidiaries. There were several more firms that were associated with other firms, but there were only six firms
that we collected data for a second firm they associated with because these were the only firms that also
reported a distinct federal election activity spending. CRP, http://opensecrets.org (accessed June 2015).
15
Firms are legally required to report their campaign finance contributions to the Federal Election Commis-
sion (FEC). These reports are reported on by the CRP and include the recipient of the contribution, their office
held or contested and the amount of the contribution. CRP, http://opensecrets.org (accessed June 2015).
16
These committees include the Senate Finance Committee, which has primary congressional jurisdiction on
trade matters in the Senate; the Senate Committee on Agriculture, Nutrition, and Forestry; the Senate
Commerce, Science, and Transportation; the House Subcommittee on Monetary Policy and Trade; the House
subcommittee on Agriculture, Energy and Trade. During the 109th-112th sessions of Congress, these
committees encompass 172 members of congress, including 81 members of the House of Representatives
and 94 from the Senate. U.S. Congress and Trade Policy Report, available from the Institute for International
Economic Policy at The George Washington University, online at https://www.gwu.edu/~iiep/ (accessed
September 15, 2015).
0 12 3 4 1 2 3 4 5 7
8 9 10 11 12 13
01 2 34
14 15 17 18 19 20
0 1 23 4
21 22 23 25 26 27
0 12 34
28 29 30 33 34 35
01 23 4
1 2 3 1 2 3 1 2 3 1 2 3 1 2 3 1 2 3
Density kdensity TPP_support_scale

Graphs by wiod
Source
Fig. 2 Distribution of TPP Support Scale within Industry
We focus on these committees with primary jurisdiction over trade because

Congress delegates to them broad authority over the markup of legislation related to trade
matters, including the TPP and fast-tracking the president’s trade deals. Congressional
committees are the legislative trenches where big bills on trade are handled, and often the
stakes are high, so Fortune 500 firms have huge incentives to donate to the elected officials
who have power to influence these decisions which will affect foreign commerce by, for
example, establishing tariffs and drafting and implementing trade agreements.
While the donations to the influential members of these committees may not necessar-
ily capture every dollar spent to lobby on behalf of trade liberalization, it is likely that the
bulk of the money spent to directly influence lawmakers on trade issues went to members
of Congress who were most likely to have influence over the relevant policy matter. We
also do not suggest that all of the money contributed to these committees was solely on
behalf of trade liberalization as these committees certainly address many policy issues
outside of the policy arena of trade. However, many of the issues are within the purview of
trade or have a tertiary relationship to it, with the exception of the Foreign Affairs
Committee. Therefore it is not unreasonable to infer a relationship between the level of
support for trade liberalization and the amount of money spent trying to influence trade
policymakers and lobbying on behalf of trade.
Since the trade donations data are reported biennially in even years, we take the
average of the data and use it for each of the years in the dataset.
The CRP additionally provides information on the number of lobbying reports a firm
submitted that are specifically related to trade (Trade reports) and the number of trade
issues it lobbied on behalf (Trade issues) in each of the two-year cycles between 2006 and
Zeng K. et al.
2012. We therefore use these as additional dependent variables to analyze the influence of
GVCs on businesses’ trade lobbying patterns. Appendix 1 presents the top Fortune 500
companies that are most active in lobbying for the TPP and for trade in general in 2012. Our
analyses of the above trade lobbying variables are based on time-series data, with the unit of
analysis being coded at the industry-year level. Since the GVC variables are only available
through 2011 and since we use lagged values of all independent variables, this results in a
maximum of 3500 observations for the 2006-2012 period for our estimation sample.
It should be noted that our trade lobbying measures focus on direct lobbying to
congressional candidates instead of money spent indirectly on lobbying. Therefore our
analysis does not include lobbying through some of the major industry associations that are
strong advocates of the TPP such as the Chamber of Commerce. As one of the most pro-
TPP voices in the U.S., the Chamber of Commerce represents many of the firms lobbying
for the TPP. Given that many of the Fortune 500 firms lobby indirectly through their
membership in the Chamber of Commerce or similar organizations, this might explain why
only a small number of these firms directly lobbied for the TPP. However, it is difficult to
ascertain membership in these organizations or the amount of contributions originating from
each donor as much of this information is not made public. We therefore choose to focus on
a direct lobbying measure in our analysis. Furthermore, although only about 20% of the
largest 500 firms have directly lobbied for the TPP, potentially raising questions about the
representativeness of our sample, this figure is not inconsistent with analysis conducted by
the CRP which shows that TPP lobbying was concentrated in a small number of powerful
players in Washington. Of the top 100 clients that have lobbied on all issues since 2008, 56
have lobbied on the TPP at least once during that period. Furthermore, those 56 accounted
for 18% of all lobbying spending since 2008. In contrast, only 24% of the top 1000 lobbying
spenders mentioned the TPP in their lobbying reports (Tucker 2015). Consequently, even
though our measure does not capture the large amount of money spent indirectly to
influence the TPP, it should allow us to engage in a focused analysis of the factors that
influence firms’ decision to directly lobby for a trade agreement such as the TPP.
4.3 Key independent variables
As mentioned above, we employ two alternative measures of GVC participation, drawn

from the Trade in Value Added (TiVA) Database published by the OECD and the WIOD,
respectively, to test our main theoretical propositions. Both measures express an industry’s
GVC linkages as the share of foreign input in U.S. exports and represent standard
approaches to calculating GVC linkages by international statistical agencies.17 While it
may be desirable to measure GVC linkages using the share of foreign input in U.S. sales,
both foreign and domestic, to the best of our knowledge, such a measure is not available
from existing data sources. The TiVA indicators are calculated using matrices generated
from the OECD’s Inter-Country Input-Output (ICIO) system. They are available for 62
economies and 34 industries for the 1995- 2011 period.18 We further follow the approach
17
For studies that employ similar measures, see Wang et al. (2013), Koopman et al. (2012), and Upward et al.
(2013).
18
For a detailed description of the source data and method used to calculate the TiVA indicators, see online at
http://www.oecd.org/sti/ind/tiva/tivasourcesandmethods.htm (accessed June 21, 2016). The fact that the TiVA
measures are not available for all the years in the sample results in a substantially reduced number of
observations in the models below.
proposed by Wang et al. (2013) to calculate industry GVC participation using the WIOD
input and output data.19 The use of these two alternative variables should increase our
confidence in the validity of our results. Appendix 2 provides a detailed description of the
various methods used to measure GVCs, in particular the approach developed by Wang
et al. (2013).
Our first measure of an industry’s GVC linkages with the world, GVC_World_TiVAit, is
the share of foreign value added in gross exports by industry with partner world and is
drawn from the TiVA database.20 We further calculate the logarithm of foreign value added
from TPP countries in an industry’s gross exports to these countries (GVC_TPP_TiVAi) to
test hypothesis 1 about the effect of GVC linkages with TPP countries on the pattern of
corporate support for the agreement. We follow a similar procedure in deriving the
measure used to test hypothesis 3 about the effect of GVC linkages with China
(GVC_China_TiVAi) on corporate lobbying.21 While a positive relationship is expected
between the first two variables and TPP support scale, we do not place any expected sign
on the relationship between the latter and the dependent variable.
Our second main measure of GVC linkages with the world, GVC_World_WIODit, is
the share of foreign value added contained in a given sector’s exports calculated
following the approach developed by Wang et al. (2013) using WIOD data.22 The
WIOD industry classification, which is based on the Classification of Products by
Activity (CPA), includes a total of 35 manufacturing and services industries and 59
19
Time-series WIOD data are also only available for the 1995 to 2011 period.
20
Specifically, GVC_World_TiVait is calculated as follows: EXGR_FVASHc,i,t = (∑p EXGR_FVAc,p,i,t /∑p
EXGRc,p,i,t) × 100, where EXGR_FVA refers to the foreign value added content of gross exports and
captures the value of imported intermediate goods and services that are embodied in a domestic industry’s
exports in year t. The value added can come from any foreign industry upstream in the production chain.
Specifically, EXGR_FVAc = V B(c), EXGRc,i, with B(c),c being the column block of B corresponding to
country c, with the row block corresponding to c being zero. Country c’s total gross exports for a given
industry i is in turn directly calculated from the ICIO system by summing up exports in intermediate goods and
services and exports of final demand goods and services. Specifically, EXGRc,i,t = ∑ EXGRc,p,i, t = ∑
(EXGR_INTc,p,i,t + EXGR_FNLc,p,i,t) where EXGR_INTc,p,i,t represents gross exports of intermediate
goods and services from domestic industry i in country c to country p in year t, and EXGR_FNLc,p,i, t is gross
exports of final demand goods and services in year t, where c and p ∈[1,..,N] and c ≠ p.
21
Tests using this data have a smaller number of observations because the TiVA database does not provide
GVC measures for the years of 2006 and 2007. We use the TiVA database to calculate an industry’s GVC
participation with TPP countries because, to the best of our knowledge, this is the only database that offers
industry-level GVC data with TPP member countries. We express an industry’s GVC linkages with TPP
countries (or China) as the logged value of foreign content in an industry’s exports to TPP countries (or to
China) instead of the share of foreign content in such exports as is the case with our other GVC measures
because calculating the latter would result in identical shares for individual partner countries using data from
the world input-output table.
Due to the difficulty of identifying the source country of foreign content in a country’s exports to individual
partner countries, the World Input-Output Table makes a strong assumption that foreign value added in a
country’s imports is used in its domestic production and exports at the same rate in order to better capture a
country’s production input. In other words, it is assumed that the share of foreign value added in exports is
identical for all partner countries. Specifically, these indicators measure the value of imported intermediate
goods and services that are embodied in a domestic industry’s exports and are calculated using the following
formula: EXGR_FVAc, p, i, t = 1 – EXGR_DVA c, p, i, t where EXGR_DVA c, p, i, t is the domestic value
added content of gross exports, or the value added generated by the exporting industry during its production
processes as well as any value added coming from upstream domestic suppliers that is embodied in the exports
in year t. EXGR_DVAc,p,i, t = VcBc,cEXGRc,p,i, t Where EXGRc,p,i,t is a Kx1 vector with all entries equal
to zero except the one corresponding to industry i in year t.
22
Available online at http://www.wiod.org/new_site/home.htm (accessed January 28, 2016).
Zeng K. et al.
Source
Note:
Fig. 3 Average Industry GVC Linkages with TPP Countries, TPP Support Scale, and Number of Firms by
Industry
product groups. Thirteen of these industries are manufacturing industries.23 This

variable is available for 29 of the 35 U.S. industries for the years between 2001 and
2011. All of the firms and their associated industries in the sample source intermediate
goods for production to some degree. The average share of foreign value added in
industry exports for our sample of firms is 11.6% for the GVC measure using TiVA
data and 10.3% for the GVC measure using WIOD data.
Figure 3 presents a bubble graph showing the relationship between
GVC_TPP_TiVAi and TPP support scale across industry, with the bubble at each
(x,y) coordinate indicating the number of firms in each industry. As we can see,
there is generally a positive relationship between GVC_TPP_TiVAi and TPP
support scale. Figure 4 further shows the Kernel density estimates of the main
GVC variables, while Fig. 5 presents the change in GVC linkages with the rest of
the world for manufacturing vs. non-manufacturing industries during the period
under consideration. As Fig. 5 indicates, while GVC linkages are stronger for
manufacturing than for non-manufacturing industries, they do vary over time for
both types of industries.
4.4 Control variables
In arriving at our control variables, we take into consideration a set of alternative

explanations of corporate lobbying. These explanations emphasize the influence of
23
For a detailed discussion of the construction of the WIOD database and its industry classification, see
Timmer 2012.
Source
Note:
Fig. 4 Kernel Density Estimates of the Main GVC Linkage Variables
multinational production, intra-industry trade, and firm interests in non-trade

related issues such as intellectual property rights (IPR).
Employment Larger firms should have not only greater stakes in the policy process due
to their more diverse and complex interests but also more financial resources available
to engage in lobbying activities (e.g., Epstein 1969). Following the lead of earlier
studies (e.g., Drope and Hansen 2006; Epstein 1969; Hansen 1990), we use the logged
value of the number of employees as a proxy for firm size to account for this
possibility.24 Data for this variable are drawn from company financial data available
from the Compustat North America database.25 In addition to this firm-level variable,
we include a number of industry-level variables that may also affect lobbying patterns.
24
Using assets or revenues as alternative measures of firm size does not change the interpretation of the main
results reported below.
25
The database can be accessed through Wharton Research Data Services (WRDS) online at https://wrds-
web.wharton.upenn.edu/wrds/ (accessed October 10, 2015).
Zeng K. et al.
0.22
0.2
0.18
GVC_World_TiVA
(Manufacturing industries)
0.16
0.14 GVC_World_WIOD
(Manufacturing industries)
0.12
GVC_World_TiVA (Non
0.1 manufacturing industries)
0.08
GVC_World_WIOD (Non
manufacturing industries)
0.06
0.04
2006 2007 2008 2009 2010 2011 2012
Source
Fig. 5 Variation in GVC Linkages for Manufacturing versus Non-Manufacturing Industries (2006-2012)
FDI We further control for the industry’s outward FDI flows to account for the
possibility that internationally oriented firms may be more inclined toward free
trade, due either to increases in the costs of internally transferred, internationally
traded inputs that arise as a result of protectionist policies or to the fear of
retaliation (e.g., Hillman and Ursprung 1993; Milner 1989). We use the logged
value of industry-level outward FDI flows taken from the Bureau of Economic
Analysis as the measure of FDI in our analysis.26
Exports and imports The analysis additionally takes into consideration the volume
of exports and imports at the industry level to account for the possibility that
industries with higher levels of exports may be more likely to support free trade
policies (e.g., Destler and Odell 1987; Milner 1989), or that those with higher levels
of imports should be more likely to demand trade protection (e.g., Marks and
McArthur 1990).
IIT The role of intra-industry trade in facilitating trade liberalization has received
some attention in the existing literature. On the one hand, it has been suggested that
sectors with high levels of intra-industry trade should be more favorably disposed
toward trade liberalization either because of the lower adjustment costs associated
with intra- than with inter-industry trade (Krugman 1981); concern that trade
barriers may threaten their business activities or invite foreign retaliation (Destler
and Odell 1987; Helleiner 1977; Milner 1989) or the role of regional trade
26
Available online at http://bea.gov/international/direct_investment_multinational_companies_
comprehensive_data.htm (accessed January 22, 2016).
liberalization in enhancing such industries’ capacity to differentiate their products

and capture niche markets (Caves 1991; Chase 2003). On the other hand, however,
it has also been suggested that such sectors may be in a better position to lobby for
protectionist policies due to their higher level of concentration (Gilligan 1997).
Consequently, it may be difficult to predict a prior the effect of intra-industry trade
on lobbying for regional trade liberalization. We thus include IIT, calculated as 1-
(|Xi – Mi| / (Xi + Mi), where Xi and Mi are sector exports and imports, respectively, in
some of the models below.
IPR industry We include a dummy variable for IPR (i.e., pharmaceutical and informa-
tion) industries in models of TPP lobbying because these industries should be more
likely to support a proposed trade agreement that promises to extend the rigorous
standards embedded in U.S. IPR laws to TPP countries.
Manufacturing industry Finally, we include a control variable for manufacturing

industry to control for the possibility that GVC involvement may exert different
effects on the trade lobbying pattern of manufacturing versus non-manufacturing
industries.
Since both our theory and the GVC data are cast at the industry instead of the firm
level, it is necessary to match the industry-level GVC data with our firm-level trade
lobbying data. Fortunately, Compustat North America database27 from which we draw
our firm-level employment data provides for industry codes at the 6-digit North
American Industrial Classification System (NAICS) level. Data for most of our control
variables are also recorded according to NAICs codes. This made it possible for us to
further match data recorded in NAICs codes with the GVC data which are reported in
both WIOD and NACE codes using the appropriate concordance table between NACE
and NAICs codes. Our empirical analysis was therefore conducted at the industry-
instead of the firm-level. Appendices 4 and 5 provide the descriptive and correlation
statistics of the estimation samples for TPP lobbying and for general trade lobbying,
respectively.
5 Models and results
Since our main TPP lobbying variables capture firm stance toward the agreement during
the period under investigation and is not specific to the year while our trade lobbying
models have time variation, we use a cross-sectional design for our TPP support models
and a cross-sectional, time-series design for our trade lobbying models. A few alternative
estimation strategies are adopted to analyze the pattern of corporate support for the TPP.
We first estimate multinomial logit models of firm support for the TPP (TPP support
scale) using the period averages of all variables (see Table 1). To increase confidence in
the validity of our results, we re-estimate models of corporate support for the TPP using a
dichotomous variable TPP lobbying, coded as B1^ if a firm is clearly or likely in favor of
27
The database can be accessed through Wharton Research Data Services (WRDS) online at https://wrds-
web.wharton.upenn.edu/wrds/ (accessed October 10, 2015).
Zeng K. et al.
the TPP and B0^ if it has not taken any public position (Table 2).28 We also run OLS
regressions of corporate support for the TPP using TPP lobbying as the dependent variable
as an additional robustness check (Table 3). In addition, we estimate Tobit models of TPP
support that first look at whether or not the firm takes a position on the TPP, and then the
firm’s position (whether clearly or likely in favor of the TPP) for the ones that have
publicly lobbied for the agreement (Table 4). Finally, the CRP reports the number of times
a firm mentions the TPP in its petitions. We therefore estimate negative binomial models
of the effect of GVC linkages on the firm’s number of TPP mentions (Table 5). Our TPP
support models can be expressed as follows:
TPP Support i ¼ Φðα0 þ α1 AVE GVC s þ λ1 AVE Z i þ λ2 AVE T s Þ þ i
In the above equation, i is the firm identifier; TPP Supporti represents firm support
for the TPP during the period under consideration; Φ(.) is a monotonically increasing
function and can take different forms according to different dependent variables and
model selections; AVE_GVCs represents the period average of the GVC linkages with
TPP countries and with China, respectively, of the industry to which the firms belongs;
AVE _ Zi represents firm-level control variable(s); AVE _ Ts is the set of industry-level
control variables; α0 represents the constant; and is the error term. All of the TPP
support models include robust standard errors clustered at the industry level.
To analyze the pattern of federal election activity, we estimate ordinary least squares
(OLS) regressions of the total amount of donations contributed to trade committee
members by all Fortune 500 firms (Table 6). We further estimate negative binomial
models of the number of trade issues lobbied and the number of trade reports submitted
in order to increase confidence in the validity of our results (Tables 7 and 8). Our trade
lobbying models can be expressed as follows:
Trade Lobbying it ¼ Φðβ0 þ β 1 GVC st þ K 1 Z i þ K 2 Ts þ φt Þ þ it
Whereby i and t denote the firm and year, respectively; Trade Lobbyingit represents
firm lobbying to influence trade issues; Φ(.) is a monotonically increasing function and
can take different forms according to different dependent variables and model selec-
tions; β0 represents the constant; GVCst represents the GVC linkage with the rest of the
world of the industry to which the firm belongs; Zi represents firm-level control
variable(s); Ts is the set of industry-level control variables; φt is the yearly fixed effect;
and is the error term. All of the trade lobbying models include two-way robust
standard errors clustered on industry and year to take into consideration both
heteroskedasticity and potential serial correlation within panels over time and within
years across industries. The sample size varies across specifications as some of the
control variables have a smaller number of observations due to data availability.
28
We further experimented with coding the dependent variable as a dichotomous variable that equals B1^ only
if the firm is clearly in support of the TPP and B0^ otherwise in order to examine the conditions under which
firms are more likely to take a clear position on the issue. The results, while not reported in the paper, are
consistent with our central findings.
Table 1 Multinomial logit analysis of the level of corporate support for the TPP
Dependent variable: TPP (1) (2) (3) (4) (5) (6)

support scale
No public position (base outcome)

Likely in favor
GVC_TPP_TiVA 0.378* 0.216 0.741 0.747 1.384* 1.095
(1.68) (1.04) (1.06) (1.00) (1.76) (0.96)
GVC_China_TiVA −0.197 −0.066 −0.327 −0.364 −0.632 −0.465
(−0.93) (−0.34) (−1.10) (−1.10) (−1.07) (−0.60)
Manufacturing industry 2.047*** 1.712** 1.708* 1.604* 1.694 1.633
(2.81) (2.38) (1.85) (1.69) (1.24) (1.18)
Employment 0.0456 0.0801 0.121 0.223 0.244
(0.15) (0.25) (0.35) (0.64) (0.68)
Exports_TPP −0.512 −0.513 −1.393* −1.245
(−0.76) (−0.74) (−1.64) (−1.28)
Imports_TPP 0.323 0.295 0.566 0.568
(0.94) (0.84) (1.42) (1.32)
IIT_TPP 4.022 5.332 5.452
(1.31) (1.28) (1.32)
FDI 0.724* 0.723*
(1.67) (1.69)
IPR industry 0.654
(0.61)
Constant −5.130*** −4.837*** −4.748*** −8.015** −14.56** −15.32**
(−5.36) (−4.12) (−3.30) (−2.43) (−2.22) (−2.41)
Clearly in favor
GVC_TPP_TiVA 0.311** 0.340** 1.741*** 1.841*** 1.341** 0.932
(2.33) (2.16) (3.73) (3.22) (2.05) (1.29)
GVC_China_TiVA −0.204 −0.224 −0.773*** −0.870*** −0.839** −0.602
(−1.31) (−1.33) (−2.76) (−2.64) (−2.36) (−1.58)
Manufacturing industry 0.959*** 0.941** 0.531 0.502 1.082 1.038
(3.35) (1.98) (0.71) (0.61) (1.47) (1.45)
Employment 0.631** 0.657*** 0.787*** 0.810*** 0.831***
(2.52) (2.61) (2.89) (3.13) (3.16)
Exports_TPP −1.404*** −1.536*** −1.347** −1.159*
(−3.00) (−2.75) (−2.22) (−1.88)
Imports_TPP 0.744*** 0.814** 0.651* 0.691**
(2.62) (2.45) (1.93) (2.11)
IIT_TPP −0.451 −0.581 −0.271
(−0.21) (−0.24) (−0.11)
FDI 0.406** 0.404***
(2.42) (2.59)
IPR industry 1.004*
(1.76)
Constant −2.242*** −4.293*** −3.333** −2.781 −4.914* −6.273**
(−3.29) (−4.27) (−2.42) (−1.18) (−1.90) (−2.35)
N 408 349 349 279 252 252
t statistics in parentheses; * p < 0.1, ** p < 0.05, *** p < 0.01; all models include robust standard errors
clustered at the industry level
Empirical results provide substantial support to our hypotheses that firms with a higher
level of GVC integration should not only be more likely to lobby for the TPP, but also to
Zeng K. et al.
Table 2 Logit analysis of the likelihood of corporate support for the TPP
De pe nd en t v ar ia bl e: TPP (1) (2) (3) (4) (5) (6)

lobbying
GVC_TPP_TiVA 0.294** 0.305** 1.685*** 1.774*** 1.407** 1.020

(2.35) (2.06) (3.92) (3.43) (2.27) (1.45)
GVC_China_TiVA −0.181 −0.184 −0.671*** −0.745*** −0.759** −0.534
(−1.25) (−1.16) (−2.84) (−2.72) (−2.29) (−1.49)
(4.00) (2.24) (0.69) (0.53) (1.33) (1.31)
Employment 0.543** 0.575** 0.676*** 0.711*** 0.732***
(2.38) (2.46) (2.72) (2.93) (2.97)
Exports_TPP −1.387*** −1.510*** −1.474*** −1.292**
(−3.24) (−3.03) (−2.60) (−2.22)
Imports_TPP 0.678*** 0.727*** 0.624** 0.658**
(2.84) (2.60) (2.05) (2.19)
IIT_TPP −0.485 −0.627 −0.375
(−0.25) (−0.29) (−0.17)
FDI 0.453*** 0.452***
(2.60) (2.75)
IPR industry 0.946
(1.63)
Constant −2.154*** −3.846*** −2.719** −1.957 −4.327* −5.576**
(−3.42) (−4.22) (−2.29) (−0.90) (−1.73) (−2.18)
N 408 349 349 279 252 252
fund elections in order to influence trade issues. In analysis of TPP support scale (Table 1),
we see that firms in industries with a higher level of foreign value added in their exports to
TPP countries are more likely to be clearly in favor of the TPP. GVC_TPP_TiVA signif-
icantly affects the likelihood of a firm being in the Bclearly in favor of the TPP^ versus the
Blikely in favor of the TPP^ category. Tables 2-5 present alternative model specifications of
the pattern of TPP support. Results from these regression models continue to lend support
to our main hypotheses, suggesting that firms in industries with strong GVC linkages with
TPP countries are more likely to be in favor of the TPP and that the opposite is true for those
that draw a high level of foreign content in their exports to China. Furthermore, in
regression models of the pattern of trade lobbying (Tables 6-8), both GVC_World_TiVA
and GVC_World_WIOD demonstrate the expected positive sign and are statistically
significant in almost all model specifications, suggesting that firms in industries with a
higher level of GVC integration are indeed more likely to support trade liberalization.
Regression results additionally lend substantial support to hypothesis 3 that busi-
nesses with substantial GVC linkages with China are less likely to support the TPP. In
multinomial analysis of the level of corporate support for the TPP (Table 1),
Table 3 OLS regression analysis of the likelihood of corporate support for the TPP
Dependent variable: TPP lobbying (1) (2) (3) (4) (5) (6)
GVC_TPP_TiVA 0.0459** 0.305** 0.269*** 0.292*** 0.231** 0.151

(2.08) (2.06) (4.45) (3.96) (2.77) (1.49)
GVC_China_TiVA −0.0316 −0.184 −0.111*** −0.128*** −0.118** −0.078
(−1.25) (−1.16) (−3.11) (−3.00) (−2.32) (−1.39)
(3.95) (2.24) (0.81) (0.59) (1.05) (1.15)
Employment 0.543** 0.0929** 0.112*** 0.114*** 0.116***
(2.38) (2.66) (3.01) (3.40) (3.42)
Exports_TPP −0.221*** −0.246*** −0.233*** −0.195**
(−3.91) (−3.62) (−3.33) (−2.68)
Imports_TPP 0.109*** 0.121** 0.107** 0.113**
(2.85) (2.70) (2.19) (2.53)
IIT_TPP −0.090 −0.079 −0.049
(−0.25) (−0.20) (−0.12)
FDI 0.047*** 0.050***
(2.82) (3.12)
IPR industry 0.188*
(1.77)
_cons 0.100 −3.846*** 0.036 0.153 −0.076 −0.305
(1.49) (−4.22) (0.21) (0.39) (−0.19) (−0.79)
N 408 349 349 279 252 252
GVC_China_TiVA demonstrates a negative and statistically significant effect on the

likelihood that a firm will clearly support the TPP in the models shown in Table 1, but
does not have the same effect on the likelihood that it will likely be in favor of the
agreement. Alternative models of the pattern of TPP support (Tables 2-5) continue to
point to a negative association between GVC_China_TiVA and TPP support. These
results complete those reported for businesses with a high level of supply chain
linkages with TPP countries and reinforce the argument that the level of GVC
integration plays an important role in shaping industry trade policy preferences.
Based on the results for model 6 in Table 1, Figs. 6 and 7 present the conditional
marginal effects of GVC linkages with TPP countries and with China, respectively, while
holding all other independent variables at their mean. As Fig. 6 indicates, a firm is more
likely to be clearly in favor of the TPP the greater the share of foreign value added in its
exports to TPP countries, while it is less likely to do so the greater the share of foreign
value added in its exports to China. A change in the value of GVC_TPP_TiVA from half a
standard deviation below its mean to half a standard deviation above its mean will lead to
an 8.1% increase in the predicted value of TPP support, holding everything else at their
mean. In contrast, a similar change in GVC_China_TiVA will result in a 7.0% decrease in
the predicted value of TPP support, holding all other variables at their mean. In Table 6, a
one-unit increase in GVC_World_TiVA results in a 3.285% increase in the predicted
Zeng K. et al.
Table 4 Tobit models of the pattern of corporate support for the TPP
Variable (1) (2) (3) (4) (5) (6)
GVC_TPP_TiVA 0.407** 0.419** 1.760*** 1.695*** 1.095* 0.719

(2.29) (2.38) (3.70) (3.34) (1.92) (1.10)
GVC_China_TiVA −0.247 −0.238 −0.791*** −0.789*** −0.700** −0.504
(−1.22) (−1.27) (−2.97) (−2.96) (−2.48) (−1.60)
Manufacturing Industry 1.394*** 1.101** 0.753 0.597 1.031 1.022*
(4.16) (2.41) (1.01) (0.81) (1.60) (1.69)
Employment 0.652*** 0.663*** 0.722*** 0.712*** 0.718***
(2.94) (3.19) (3.91) (4.40) (4.50)
Exports_TPP −1.360*** −1.366*** −1.108** −0.922*
(−2.95) (−2.77) (−2.17) (−1.76)
Imports_TPP 0.756*** 0.741*** 0.542** 0.579**
(2.99) (2.74) (2.01) (2.24)
IIT_TPP −0.249 −0.293 −0.020
(−0.11) (−0.13) (−0.01)
FDI 0.435*** 0.432***
(3.34) (3.56)
IPR_industry 0.860
(1.64)
Constant −1.966** −3.763*** −2.819** −1.999 −4.325* −5.482**
(−2.12) (−4.18) (−2.15) (−0.85) (−1.75) (−2.24)
Sigma 2.452*** 2.227*** 2.161*** 2.020*** 1.917*** 1.904***
_cons (14.32) (10.81) (10.09) (8.73) (8.08) (8.00)
N 408 349 349 279 252 252
t statistics in parentheses; * p < 0.1, ** p < 0.05, *** p < 0.01; all models include standard errors clustered at the
industry level
amount of corporate donations to influence trade issues in Model 8, whereas a similar

increase in GVC_World_WIOD leads to a 3.012% increase this amount in Model 9.
Turning to the effects of the control variables, there is strong evidence that larger firms
are more likely to have the capacity to actively lobby for trade issues. There is also some
limited evidence that firms with a greater amount of foreign direct investment and those in
IPR industries are more likely to support trade liberalization. However, it is difficult to
draw definitive conclusions about the effect of exports and imports at the industry level on
support for trade liberalization as these variables have demonstrated contradictory signs in
different model specifications. Additionally, results for intra-industry trade are inconclu-
sive, suggesting that intra-industry trade may affect industry support for trade liberaliza-
tion in different directions as posited by existing theoretical hypotheses. Overall, the above
results complement the findings of earlier studies on the effect of global supply chains in
influencing trade preferences (e.g., Meckling and Hughes 2017; Osgood et al. 2017) by
showing that industries with a higher level of foreign content in exports are both more
likely to support the TPP and to make contributions to influence trade issues. The nature of
an industry’s involvement in global trade and production networks plays an important role
in shaping its position on trade policy issues.
Table 5 Negative binomial analysis of the number of TPP mentions
Dependent variable: number of TPP (1) (2) (3) (4) (5) (6)
mentions
GVC_TPP_TiVA 0.299** 0.327** 0.991* 0.901* 0.805* 0.288

(2.03) (1.98) (1.76) (1.89) (1.65) (0.44)
GVC_China_TiVA −0.091 −0.069 −0.346 −0.331 −0.370* −0.148
(−0.55) (−0.47) (−1.18) (−1.30) (−1.79) (−0.59)
Manufacturing industry 0.333 0.405 0.361 0.358 0.273 0.317
(0.81) (0.98) (0.50) (0.59) (0.48) (0.56)
Employment 0.721*** 0.748*** 0.781*** 0.878*** 0.875***
(5.84) (3.58) (4.49) (4.49) (4.59)
Exports_TPP −0.692 −0.693 −0.965** −0.686
(−1.19) (−1.37) (−2.05) (−1.28)
Imports_TPP 0.371 0.326 0.398 0.417*
(1.11) (1.04) (1.63) (1.94)
IIT_TPP 0.328 −0.458 0.994
(0.16) (−0.21) (0.40)
FDI 0.559*** 0.574***
(2.86) (2.98)
IPR industry 1.077
(1.41)
Constant −0.382 −3.263*** −2.773** −2.469 −5.628** −8.112***
(−0.66) (−4.64) (−2.14) (−1.19) (−2.38) (−2.65)
Lnalpha 2.599*** 2.287*** 2.273*** 2.125*** 1.951*** 1.929***
_cons (20.54) (16.34) (10.43) (9.74) (8.00) (7.93)
N 408 349 349 279 252 252
t statistics in parentheses; * p <0 .1, ** p < 0.05, *** p < 0.01; all models include robust standard errors
6 Robustness checks
A set of robustness checks are conducted in order to increase confidence in the validity
of our results. We first take into consideration a couple of variables that may affect
corporate lobbying over the TPP and trade issues. Theories of collective action suggest
that highly concentrated industries should be more likely to overcome free riding
problems to successfully engage in collective action (e.g., Hansen 1990). Consequently
we include the concentration ratio of the industry, or the Herfindahl-Hirschman index
for the 50 largest firms in an industry published by the U.S. Bureau of Census, as a
measure of the industry’s ease of organization.29
29
Available online at https://www.census.gov/econ/concentration.html (accessed January 30, 2016). Since
these data are published at five-year intervals (e.g., 1997, 2001, and 2002, etc.), with the most recent data
going back only as far as 2007, we had to use 2007 data for the other years in the dataset.
Table 6 Regression analysis of the amount of corporate donations to influence trade issues
Dependent variable:trade (1) (2) (3) (4) (5) (6) (7) (8) (9)
donations
GVC_World_TiVA −0.152 4.981*** 4.055**

(−0.07) (2.82) (2.58)
GVC_World_WIOD 0.558 4.187*** 3.543***
(0.36) (4.60) (4.18)
Employment 0.443*** 0.441*** 0.447*** 0.376*** 0.407*** 0.405*** 0.438*** 0.451*** 0.450***
(7.55) (7.30) (7.40) (5.87) (5.73) (6.10) (7.37) (7.02) (7.23)
Exports_world 0.494*** 0.482* 0.542** 0.385 0.456 0.418 0.429** 0.408** 0.372**
(3.69) (1.89) (2.40) (1.38) (1.63) (1.49) (2.39) (2.39) (2.15)
Imports_world −0.347** −0.331 −0.394* −0.288 −0.384 −0.306 −0.268* −0.313** −0.244*
(−2.26) (−1.21) (−1.68) (−1.25) (−1.57) (−1.28) (−1.90) (−2.09) (−1.71)
IIT_world −8.691 −8.420 −9.927 −13.39* −19.58** −20.13** −13.69*** −17.33*** −17.95***
(−1.57) (−1.13) (−1.33) (−1.71) (−2.39) (−2.52) (−2.73) (−3.31) (−3.47)
FDI 0.155** 0.153** 0.152** 0.150** 0.167** 0.170**
(2.20) (2.19) (2.16) (2.19) (2.44) (2.47)
IPR industry 0.724** 0.689** 0.606* 0.856*** 0.773*** 0.697**
(2.60) (2.36) (1.90) (4.57) (2.99) (2.32)
Manufacturing Industry −0.412 −1.049*** −1.006*** −0.339 −0.930*** −0.928***
(−1.58) (−4.46) (−4.40) (−1.48) (−3.62) (−4.13)
Constant 14.40*** 14.13** 15.55** 21.33*** 27.23*** 27.43*** 19.20*** 23.05*** 23.34***
(2.74) (2.01) (2.22) (3.03) (3.64) (3.81) (4.43) (4.98) (5.27)
N 1631 1628 1631 1933 1930 1933 1631 1628 1631
t statistics in parentheses; * p < 0 .1, ** p < 0.05, *** p < 0.01;

all models include yearly fixed
effects, with two-way standard errors clustered at the industry
and year level
Zeng K. et al.
Table 7 Negative binomial models of the number of trade
issues mentioned
Dependent variable: trade issues (1) (2) (3) (4) (5) (6) (7) (8) (9)
GVC_World_TiVA 3.655*** 0.138 3.375*

(4.37) (0.06) (1.72)
GVC_World_WIOD 3.390*** 1.024 3.265**
(6.84) (0.65) (2.56)
Employment 0.404*** 0.412*** 0.415*** 0.475*** 0.471*** 0.476*** 0.416*** 0.410*** 0.413***
(5.11) (4.90) (5.05) (4.88) (4.85) (4.90) (4.92) (4.83) (4.96)
Exports_world −0.872*** −0.527*** −0.534*** −0.0423 −0.0524 −0.0415 −0.436** −0.457** −0.485**
(−6.23) (−3.07) (−3.26) (−0.19) (−0.24) (−0.18) (−2.21) (−2.45) (−2.51)
Imports_world 0.802*** 0.415** 0.448** 0.171 0.184 0.163 0.408** 0.367* 0.414**
(4.87) (2.11) (2.45) (0.87) (0.92) (0.83) (1.97) (1.89) (2.16)
IIT_world 13.00** 4.866 3.191 −4.477 −4.344 −5.881 4.811 2.538 1.384
(2.29) (1.09) (0.68) (−0.82) (−0.79) (−1.08) (0.97) (0.51) (0.27)
FDI 0.202** 0.170** 0.173** 0.147* 0.152* 0.161*
(2.41) (2.15) (2.17) (1.79) (1.84) (1.95)

IPR industry 0.650*** 0.644*** 0.620** 0.391* 0.306 0.247
(2.82) (2.63) (2.40) (1.71) (1.32) (1.00)
Manufacturing Industry 0.864*** 0.832* 0.708* 0.581*** 0.0713 0.0340
(3.91) (1.80) (1.76) (2.74) (0.17) (0.10)
Constant −15.28*** −6.963 −5.626 0.948 0.801 2.341 −7.497 −4.778 −3.920
(−2.64) (−1.43) (−1.12) (0.19) (0.15) (0.46) (−1.38) (−0.87) (−0.72)
Lnalpha 0.346 0.237 0.214 0.332 0.328 0.318 0.263 0.222 0.204
_cons (1.41) (0.80) (0.70) (1.21) (1.18) (1.12) (0.92) (0.75) (0.68)
N 1429 1422 1429 1690 1683 1690 1429 1422 1429
t statistics in parentheses;
* p < 0.1, ** p < 0.05, *** p < 0.01;
all models include yearly fixed effects, with two-way standard errors clustered at the industry and year level
Table 8 Negative binomial models of the number of trade reports submitted
Dependent variable: trade reports (1) (2) (3) (4) (5) (6) (7) (8) (9)
GVC_World_TiVA 3.695*** −0.423 3.470*

(4.33) (−0.16) (1.77)
GVC_World_WIOD 3.536*** 0.844 3.541***
(7.03) (0.48) (2.77)
Employment 0.369*** 0.380*** 0.381*** 0.441*** 0.436*** 0.442*** 0.381*** 0.376*** 0.377***
(4.01) (3.80) (3.95) (4.19) (4.14) (4.18) (3.85) (3.72) (3.86)
Exports_world −0.793*** −0.443** −0.438** 0.108 0.0871 0.116 −0.362* −0.373* −0.392*
(−5.12) (−2.30) (−2.42) (0.43) (0.36) (0.47) (−1.69) (−1.82) (−1.92)
Imports_world 0.738*** 0.346 0.364* 0.062 0.095 0.048 0.354 0.300 0.335
(3.95) (1.56) (1.80) (0.28) (0.40) (0.22) (1.58) (1.36) (1.61)
IIT_world 11.12* 2.673 0.815 −8.253 −7.449 −9.390 2.357 0.311 −1.130
(1.76) (0.50) (0.15) (−1.31) (−1.14) (−1.48) (0.41) (0.05) (−0.19)
FDI 0.225*** 0.199** 0.203** 0.175** 0.181** 0.190**
(2.67) (2.44) (2.45) (2.07) (2.12) (2.25)
IPR industry 0.693** 0.695** 0.671** 0.411 0.321 0.264
(2.54) (2.39) (2.26) (1.50) (1.16) (0.93)
Manufacturing industry 0.887*** 0.928* 0.765* 0.573*** 0.059 0.004
(3.79) (1.79) (1.78) (2.72) (0.15) (0.01)
Constant −13.61** −5.074 −3.532 4.423 3.558 5.557 −5.376 −2.875 −1.710
(−2.12) (−0.88) (−0.62) (0.78) (0.57) (0.93) (−0.88) (−0.46) (−0.28)
lnalpha 0.700** 0.626* 0.608* 0.752** 0.748** 0.745** 0.644** 0.616* 0.600*
_cons (2.40) (1.90) (1.80) (2.51) (2.49) (2.43) (2.01) (1.86) (1.78)
N 1429 1422 1429 1690 1683 1690 1429 1422 1429
t statistics in parentheses; *
p < 0.1, ** p < 0.05, *** p < 0.01;
all models include yearly fixed effects, with two-way standard errors clustered at the industry and year level
Zeng K. et al.
We further include industry-level applied tariffs (tariff) out of expectation that

lobbying levels may be low in industries with initial low tariffs (Madeira 2016).30
Finally, to account for the potential for counter lobbying from labor, we include the
share of workers who are union members in an industry (union members) in the
analysis.31 Our results once again sustain the addition of these variables.32 Since
these variables have a smaller number of observations due to data availability, their
inclusion will result in smaller sample sizes. Consequently, we report our model
estimates including these variables in the Appendix instead of the main text.
It is possible that businesses that currently have modest export penetration in
TPP countries may be attracted by the potential of expanded market access in their
lobbying activities. To address this possibility, we created a one-year lead for the
logged value of industry exports to TPP countries (export potential) and re-run the
TPP lobbying models including this proxy. The results, presented in Appendix 6,
point to a strongly positive effect of GVC_TPP_TiVAi in affecting the likelihood
that a firm will be clearly in favor of the TPP. They additionally suggest that firms
in industries with strong GVC linkages with China are less likely to support the
agreement.
As explained above, 51 firms in our dataset which are members of the U.S. Coalition
for TPP are coded as Bclearly in favor of TPP.^ To address the possibility that the stance
of firms who are members of the Coalition may not be independent, we re-ran our main
TPP support models, specifically the multinomial logit and logit models, with robust
standard errors clustered at the Coalition level. The results, presented in Appendices 7
and 8, once again lend strong support to our main hypotheses.
As further robustness checks, we re-estimated our trade lobbying models with robust
standard errors clustered at the industry-year level in order to address potential concerns
about serial correlation across firms within industry years (Appendices 9A-9C). We
also estimated these models with robust standard errors clustered as the industry level to
deal with concerns about potential serial correlation within industries over time (Ap-
pendices 10A-10C). Our main findings again sustain this set of exercises.33
A potential limitation of our approach is that even though our main lobbying data are
recorded at the firm level, we were only able to test our argument at the industry instead
of the firm level because our main GVC measures are recorded at the industry level.
This may raise questions about whether the different levels of aggregation for the
dependent and independent variables may be capturing values for different populations
30
Available online at http://tariffdata.wto.org/Default.aspx?culture=en-US (accessed April 26, 2017). Tariff
data is taken from the Tariff Download Facility of the World Trade Organization (WTO).
31
As labor tends to be immobile between sectors, production sharing within a regional trade agreement should
reduce the demand for unskilled labor in high-wage countries, leading to lower wages and heightened
unemployment for labor (Chase 2003). Data for this variable are drawn from the Union Membership and
Coverage Database compiled from the monthly household Current Population Survey (CPS) and are available
online at www.unionstats.com (accessed 16 April 2016). Using the percentage of workers covered by
collective bargaining agreements in an industry yielded essentially the same results.
32
These results are available from the authors upon request. Since these variables have a smaller number
of observations due to data availability, including these variables in the model estimates will result in smaller
sample sizes.
Consequently, we choose not to report these results in the Appendix.
33
Results remain similar when we estimate two-way standard errors clustered at both the firm and year level
(Appendices 10D-10F).
Zeng K. et al.
TPP Support Scale = 2 TPP Support Scale = 3

TPP Support Scale =1
1.5
.6
1
.4
TPP Support Scale
TPP Support Scale

1
TPP Support Scale
.5
0 .2
.5
0
-.2
0
-.5
-.4
-1 0 1 2 3 4 5 6 7 8 9 -1 0 1 2 3 4 5 6 7 8 -1 0 1 2 3 4 5 6 7 8
GVC_TPP_TiVA GVC_TPP_TiVA GVC_TPP_TiVA
Source
Fig. 6 Conditional Marginal Effects of GVC Linkages with TPP Countries (with 95% Confidence Intervals)
of firms. In response, we argue that the Fortune 500 companies that are the focus of this
study tend to be larger firms that are more likely to be more embedded in GVCs. The
industry-level GVC measures used as explanatory variables in the empirical analysis
may therefore have potentially underestimated the companies’ level of GVC linkages
and increased the difficulty of finding a significant relationship between GVC integra-
tion and lobbying behavior. The fact that our results nevertheless yielded a significant
finding should therefore help to increase our confidence in the validity of our findings.
Nevertheless, to address the above concern, we developed weighted GVC measures
by taking the share of a firm’s employment in total industry employment and
interacting it with the main GVC variables used in the analysis. We then re-estimated
the main models using the weighted GVC variables. Since larger firms should be more
likely to wield greater influence over an industry’s overall activities, these weighted
GVC measures are expected to capture a firm’s influence over an industry’s GVC
linkages instead of its actual level of GVC embeddedness.34 Empirical results, present-
ed in Appendices 11A-11C, once again lend strong support to our main argument as the
GVC measures have demonstrated the expected sign and achieved statistical signifi-
cance almost across model specifications.
Finally, the industries represented in our analysis include not only manufacturing
industries, but also non-manufacturing industries such as retail and services for which
the logic of production fragmentation seems less immediately relevant. However, the
above argument about the role of GVCs in affecting trade preferences should still hold
even for these non-manufacturing industries. For example, services can not only be
considered as the glue that holds supply chains together, they also constitute part of
many production and sales processes and have been incorporated into supply chain
production as traded inputs. As manufacturing firms increasingly purchase, produce,
and export services, we are witnessing a gradual movement toward the Bservicification
of manufacturing^ whereby service inputs are used in the manufacturing process, a
process that is increasingly blurring the distinction between trade in manufacturers and
services. Furthermore, the fragmentation of services production into services inputs is
also giving rise to services network or services value chain. Recent trade in value added
statistics captures both the servicification of manufacturing and services networks as it
takes into account the contribution of the domestic and foreign services content in
goods and services (Lanz and Maurer 2015; Low 2013).
34
For studies that adopt a similar approach, see, for example, Yu (2015).
TPP Support Scale =1 TPP Support Scale =2 TPP Support Scale =3
1.5
1
1
TPP Support Scale
TPP Support Scale

TPP Support Scale
.5
.5
1
.5
0
0
-.5
-.5
0
-1 0 1 2 3 4 5 6 7 8 -1 0 1 2 3 4 5 6 7 8 -1 0 1 2 3 4 5 6 7 8
GVC_China_TiVA TPP Support Scale =2 GVC_China_TiVA
Source
Fig. 7 Conditional Marginal Effects of GVC Linkages with China (with 95% Confidence Intervals)
Nevertheless, to address this issue, we developed an interaction term between the

key GVC variables and the dummy variable for manufacturing industries and re-
estimated our models of the pattern of corporate lobbying for trade liberalization by
adding this interaction term. The results, presented in Appendices 12A-12B, show that
our main empirical findings again sustain this set of exercise. Both GVC_World_TiVA
and GVC_World_WIOD continue to demonstrate positive and statistically significant
relationships with the dependent variables in most models. Furthermore, the sum of the
coefficients for the each of the main GVC variables and the interactive terms remains
positive, indicating that GVC linkages exert an overall positive effect on trade lobby-
ing. Somewhat interestingly, the interaction terms between the GVC variables and the
manufacturing industry dummy variable shows up as having a negative and statistically
significant relationship with the lobbying variables in some of the models, suggesting
that the GVC logic may operate even more strongly in non-manufacturing than in
manufacturing industries. Overall, results from this set of robustness checks are
consistent with our central theoretical propositions.
7 Conclusion
Despite the substantial growth in GVCs and ongoing discussions among trade
policymakers about the need for more in-depth study of its implications (Baldwin
2012; Hoekman 2014; WTO 2014), relatively little scholarly attention has been
directed to how GVC integration may affect firms’ incentives to lobby for trade
protection (or liberalization). This paper addresses this gap in the literature. Our
research yields a couple of important findings. First, it shows that GVCs alter business
preferences over free trade by erasing the distinction between foreign- and home-made
goods and by severing the link between the location in which final goods are produced
and the country of origin of the value-added that these goods embody. By reducing the
costs of its main inputs and supplies and helping to ensure unimpeded access to
essential supplies across national borders, a high level of foreign content in an
industry’s exports should increase its support for trade liberalization. Our value-added
approach allows us to develop a more general model of the impact of the fragmentation
of production across national borders on industry trade preferences, one that goes
beyond the emphasis of previous literature on ownership concerns such as FDI or
Zeng K. et al.
outsourcing (e.g., Bradford et al. 2015; Johns and Wellhausen 2016; Osgood 2017,
2018).
Second, to the best of our knowledge, the preferences of industries toward those
countries excluded from a PTA have not received any attention in the existing literature.
We address this lacuna. In addition to emphasizing how GVC integration with members of
a potential trade agreement may increase businesses’ propensity to support trade liberal-
ization, we show that firms in those industries with close GVC relations with non-PTA
members tend to mobilize against the proposed agreement, possibly due to concerns about
the costs of adjusting supply chain relationships in response to the tariff liberalization
provisions of the agreement. While our finding may need to be put into perspective in that
we focus on an excluded country that is emerging as a center of manufacturing activities in
the world, it should nevertheless help to shed light on the potential consequences of PTA
exclusion for industry trade preferences in an era of growing global supply chain
integration.
Third, our findings provide original insights on the preferences underlying the nego-
tiation of PTAs. We go beyond the emphasis of earlier studies on the role of political
institutions, multinational production, or investment discrimination (e.g., Baccini and Dür
2015; Chase 2003; Manger 2009; Mansfield et al. 2002) to develop an argument about
how GVCs may influence industry preferences for PTAs. Using the case study of the
negotiation over the TPP as an example, we are able to demonstrate the importance of
GVCs in driving PTA negotiations.
Taken together, these results reveal an important cleavage in contemporary trade
politics that goes beyond earlier explanations of industry support for trade liberalization
that emphasize an industry’s dependence on exports, multinational production, or produc-
tion sharing (e.g., Chase 2003; Milner 1989) and help broaden our understanding of the
political implications of international production segmentation and value chain integra-
tion. Although recent developments in U.S. politics have raised serious doubts about the
future of the TPP, the heated debate surrounding the agreement and the politics behind it
may still provide us with valuable data with which to assess conventional theories about
industry demand for free trade and help us better understand the pattern of business
support for modern preferential trade agreements and emerging industry cleavages at a
time of growing protectionist pressure in the United States.
This study focuses mainly on the political implications of GVC participation, in
particular an industry’s linkages with its suppliers in foreign countries without also
considering those of GVC participation that links an industry with its overseas buyers.
We are also unable to use more nuanced measures of GVC participation that break
down exports or imports of intermediate goods according to their final use35 to further
validate our argument because, to the best of our knowledge, such measures are still
being developed and are thus not publicly available for empirical research. Moreover,
this study mainly analyzes the effect of GVC participation on corporate support for free
trade agreements without also considering its implications for other trade policy issues.
With greater data availability, future studies could more systematically address these
35
For example, firms in a given industry may participate in international production chains in a few ways: (1)
exporting value-added in intermediate exports used in the production of other countries’ domestically
consumed final products; (2) exporting value-added in intermediate exports used by other countries to produce
exports directly or indirectly; (3) using other countries’ value-added to produce products for domestic
consumption; and (4) using other countries’ value-added to produce products for exports.
issues and further assess the validity of the claims made in the paper by examining the
effect of GVCs on business preferences in other trade policy areas such as antidumping,
tariff and non-tariff barriers, and dispute resolution.
Acknowledgements We thank Xiaojun Li for valuable comments on earlier versions of this article, and
Clayton Tumlison and Austin Wilkins for research assistance. Ka Zeng gratefully acknowledges financial
support from the Chiang-Ching Kuo Foundation for International Scholarly Exchange. Yue Lu acknowledges
funding from the National Natural Science Foundation of China (Project number: 71873031; 71503048) and
the National Social Science Foundation of China (Project number: 17ZDA098).
Publisher’s Note Springer Nature remains neutral with regard to jurisdictional claims in published maps and
institutional affiliations.
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The Review of International Organizations

Global value chains and corporate lobbying for trade

Ka Zeng 1 & Karen Sebold 1 & Yue Lu 2

# Springer Science+Business Media, LLC, part of Springer Nature 2018

Keywords Global value chains . Trans-Pacific Partnership . Trade lobbying . Trade

JEL codes F13 . F14 . F15

Electronic supplementary material The online version of this article (https://doi.org/10.1007/s11558-018-

Production segmentation across national borders is becoming an increasingly salient

3 Theoretical framework and argument

3.1 GVC participation and industry preferences for trade liberalization

We build on earlier studies of the political economy of the endogenous competi-

3.2 Preferential tariffs and GVC participation

3.3 Non-tariff barriers and GVC participation

3.4 GVCs and firm preferences for PTAs

In emphasizing the benefits accruing to the Bwinners^ of trade liberalization, the

In contrast to multilateral trade liberalization, PTAs allow member countries to extend

4.2 Dependent variables

Fig. 1 Distribution of TPP Support Scale

Density kdensity TPP_support_scale

We focus on these committees with primary jurisdiction over trade because

4.3 Key independent variables

As mentioned above, we employ two alternative measures of GVC participation, drawn

product groups. Thirteen of these industries are manufacturing industries.23 This

4.4 Control variables

In arriving at our control variables, we take into consideration a set of alternative

multinational production, intra-industry trade, and firm interests in non-trade

liberalization in enhancing such industries’ capacity to differentiate their products

Manufacturing industry Finally, we include a control variable for manufacturing

5 Models and results

TPP Support i ¼ Φðα0 þ α1 AVE GVC s þ λ1 AVE Z i þ λ2 AVE T s Þ þ i

Trade Lobbying it ¼ Φðβ0 þ β 1 GVC st þ K 1 Z i þ K 2 Ts þ φt Þ þ it

Dependent variable: TPP (1) (2) (3) (4) (5) (6)

No public position (base outcome)

De pe nd en t v ar ia bl e: TPP (1) (2) (3) (4) (5) (6)

GVC_TPP_TiVA 0.294** 0.305** 1.685*** 1.774*** 1.407** 1.020

GVC_TPP_TiVA 0.0459** 0.305** 0.269*** 0.292*** 0.231** 0.151

GVC_China_TiVA demonstrates a negative and statistically significant effect on the

Variable (1) (2) (3) (4) (5) (6)

GVC_TPP_TiVA 0.407** 0.419** 1.760*** 1.695*** 1.095* 0.719

amount of corporate donations to influence trade issues in Model 8, whereas a similar

Table 5 Negative binomial analysis of the number of TPP mentions

GVC_TPP_TiVA 0.299** 0.327** 0.991* 0.901* 0.805* 0.288

GVC_World_TiVA −0.152 4.981*** 4.055**

t statistics in parentheses; * p < 0 .1, ** p < 0.05, *** p < 0.01;

GVC_World_TiVA 3.655*** 0.138 3.375*

(2.41) (2.15) (2.17) (1.79) (1.84) (1.95)

GVC_World_TiVA 3.695*** −0.423 3.470*

We further include industry-level applied tariffs (tariff) out of expectation that

TPP Support Scale = 2 TPP Support Scale = 3

TPP Support Scale

TPP Support Scale =1 TPP Support Scale =2 TPP Support Scale =3

TPP Support Scale

Nevertheless, to address this issue, we developed an interaction term between the

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GVC_TPP_TiVA 0.294 0.305 1.685* 1.774* 1.407** 1.020

GVC_TPP_TiVA 0.0459 0.305 0.269* 0.292* 0.231** 0.151

GVC_TPP_TiVA 0.407 0.419 1.760* 1.695* 1.095* 0.719

GVC_TPP_TiVA 0.299 0.327 0.991* 0.901* 0.805* 0.288

GVC_World_TiVA −0.152 4.981* 4.055

t statistics in parentheses; * p < 0 .1, p < 0.05, * p < 0.01;