Economic interdependence and the making of trade policy: Industrial demand for an open market in Japan

Abstract

The central question of this article is how the internationalization of corporate activity has changed the trade policy preferences of Japanese corporations. Using case studies of the automobile and textile industries, the paper tests the hypothesis that as firms strengthen multinational operations, they become more committed to trade liberalization of their home market. Growing multinational operations are one of the major reasons why internationally‐oriented automakers have committed themselves to promoting the opening of keiretsu groups as well as the market access for foreign products. In the textile industry, apparel makers opposed import restrictions because of their overseas productions and intra‐firm trade. Towel manufacturers also opposed restrictions on imports of cotton yarn because they were users of imported yarn. However, large textile producers supported import restrictions in spite of their international links. Their preferences stemmed largely from their desire to maintain their domestic linkages with downstream producers.