Explaining protectionism and liberalization in European Union trade policy: the case of textiles and clothing

The political economy of trade policy models and theories of European Union (EU) policy-making can explain only the incidence of protectionism or inertia in EU trade policy. To address this weakness, this article proposes an alternative approach based on state-society interaction under different degrees of issue transparency/divisibility. In this perspective, four endogenous policy outcomes may emerge: strict protectionism, selective protectionism, selective liberalization and dominant liberalization. The conclusion is that the level of protectionism is determined by the level of issue transparency/divisibility rather than the level of protectionist demands. This conclusion — based on the functionality of European integration in equalizing the rates of returns on societal loyalty to a territorial jurisdiction — is tested against evidence on the evolution of the EU's textiles and clothing policy during the Multifibre Arrangement and Uruguay Round negotiations. The evidence lends support to this argument and suggests that regional integration, in contrast to the unqualified claims of its opponents and proponents, is conducive to both protectionism and liberalization — depending on the extent to which trade policy issues are treated as transparent/divisible.