Trade’s resilient and doesn’t escalate – ev is IP-specific.

In both U.S.-China intellectual property and textile trade negotiations, American negotiators failed to make good on threats to impose sanctions on Chinese products primarily because of opposition from the U.S. importing and retailing community. Some analysts may contend that, unlike in the MN debate, U.S. business interests enjoy a much higher level of unity in both of these cases. But while opposition interests in these cases were far less vocal and prominent than in the MFN case, they nevertheless influenced the policy orientation and position of the executive in a way that made an open trade confrontation less likely. Despite efforts by U.S. IPR-related industries and textile manufacturers to penalize China for its trade infringements, active opposition from a large constituency dependent on low-cost, labor-intensive products made it far more difficult for these industries to achieve their negotiation objectives in China. U.S. importers and retailers of such products as footwear, toys, apparel, and consumer electronics made the familiar argument that they would suffer severely if restrictions were placed on these Chinese imports, in effect constraining the IPR industries and textile manufacturers from escalating the conflict to a trade war. Table 6.1 presents a profile of the major U.S. interest groups involved in the U.S. China negotiations over IPR and textiles.

The mutual imposition of sanctions in the textile case in the early 1980s constitutes an exception to the general pattern described here. But it can be explained in terms of the relatively low level of Chinese textile and apparel exports to the United States and hence the absence of organized political opposition on the part of textile importers and retailers during that period. As the volume of Chinese textile exports to the United States rose rapidly in the 1990s, textile importers and retailers became a more active political force in opposing the threats against China. In a context of generally protectionist U.S. textile policy, such opposition at least prevented U.S. negotiators from pursuing overly aggressive trade policies, lessening the chances of trade war between the United States and China. Due to these domestic divisions generated by trade complementarity, U.S.-China trade disputes have preserved a degree of cooperativeness.

The finding that U.S.-China trade disputes have not evolved into bruising trade wars is particularly salient in view of the fact that trade conflicts between the United States and China were not governed by democratic norms of conflict resolution, which, from the perspective of the "democratic peace" theory, would likely aggravate misunderstandings or otherwise increase the risk of a trade war. That the exact opposite of the pattern predicted by the democratic peace thesis has come to characterize U.S. China trade negotiations suggests that institutional qualities of states, such as whether they are democracies or not, are not as relevant to trade bargaining outcomes as some analysts have assumed. Even in the absence of democratic institutions and norms, states' trading relationships can be considerably resilient if they are structured in a way that cushions the influence of domestic rent-seeking groups.