American Political Science Review Vol.98,No.1 the concept of a single undertaking:The final agree- Domestic Polltics in Japan and the EU ment texts would form a single charter for a new trade organization such that accepting all agreements was Bargaining models that incorporate domestic politics a condition of membership (Hudec 1993,193).Given imply that Japan and the EU will be less likely to lib- this strong linkage,one would expect more liberaliza- eralize agricultural policies when the government is in tion in the Uruguay Round than in other negotiation a weaker position.A negotiator whose hands are tied fora. by domestic resistance has a smaller range of possible On the other hand,less liberalization is expected agreement (Schelling 1960),and this situation may when there is no cross-sector linkage.The U.S.-Japan force the United States to accept less liberalization. talks on beefand citrus in 1983 and the U.S.-EU talks on When the government has a narrow majority it can cre- wine in 1991 are examples of single-sector negotiations dibly argue that agricultural liberalization is politically that focused exclusively on agricultural products.This impossible because politicians must appeal to the im- observable variation in the agenda,rules,and proce portant farm vote.Political strength at home,therefore, dures across negotiations in terms of the sectoral scope can translate into weakness at the bargaining table. and institutionalization of the commitment to a linkage Japan provides an interesting case for testing approach facilitates testing the linkage hypothesis. whether a stronger majority will make liberalization more likely even when the ruling party favors farm protection.Farmers have long formed one of the key ALTERNATIVE EXPLANATIONS support bases for the conservative Liberal Democratic Many factors influence why countries liberalize poli- Party (LDP).Although the LDP maintained ruling cies.In order to evaluate the relative importance of a party status from its formation in 1955 until 1993,there cross-sector issue linkage,I also consider the following nas been intense competition over district seats and alternative explanations. a continued majority has not always been a certainty. When the LDP majority is slim,the party leadership finds it difficult to persuade party members to consent U.S.Influence:Threats and Appeals to an agreement that would inflict pain on an important constituency like farmers (George 1990,133).Conse- One way for the United States to exercise its power quently,liberalization will be more likely when the LDP in economic negotiations is by threatening to close off has a stronger majority in the Japanese Diet. access to U.S.markets through retaliation.It is a re- In the case of the EU,domestic politics and inter- current pattern in U.S.trade policy for the administra- governmental politics between member nations calls tion to pursue the goal of freer trade while threatening for playing a three-level game(Patterson 1997).For the protectionism(Bayard and Elliott 1994;Gawande and sake of the aggregate analysis,however,I only exam- Hansen 1999).United domestic support for the use ine two levels by considering politics in the Council of of sanctions will increase the credibility of this strat- Ministers as representing the domestic politics of the egy (Odell 2000;Zeng 2002).Public threats would be EU.National governments in the Council approve the expected to increase the likelihood of liberalization mandate to give negotiating authority to the European because the prospect of retaliation triggers lobbying Commission.Thereafter,the Commission acts as the by targeted industries.Although implicit diplomatic sole negotiating authority.Since the final negotiation threats and linkage with alliance relations are also im- agreement must also gain Council approval,however, portant sources of leverage,they are difficult to ob- the Council continues to play a role setting limits on serve in any given negotiation.Moreover,both Japan negotiation agreements(Meunier and Nicolaidis 1999). and most EU member states have been allied with the The rotating office of the president of the Council of United States over the period of this study.Therefore, Ministers offers a proxy for variation in Council poli- I focus on threats of economic retaliation. tics.Although any member can try to build a coalition The bilateral trade balance will also influence the against an agreement,the government that holds the effectiveness of U.S.pressure.During times of large Council presidency has a stronger role as agenda-setter trade deficits,political demands in the United States (Sherrington 2000).When France,the strongest oppo- urge protectionism at home and push for export ex- nent of agricultural liberalization,holds the influential pansion.In response,industries in Japan and Europe post of Council president during the key initial or fi- dependent on exports to the U.S.market may urge their nal years of a negotiation,Commission negotiators can government to reduce trade friction with compromises more credibly argue that their hands are tied so that on agricultural trade disputes.Thus a growing deficit they cannot accept any liberalization. could increase pressure for liberalization.In addition, from the perspective of balancing the U.S.trade deficit and promoting U.S.priority items,one might expect Budget Constraints a pattern favoring liberalization of products that con- tribute most to U.S.agricultural export earnings. Liberalization may occur because a government de- cides it no longer can afford the costs of protection in terms of budget expenditures and inefficient use of eco- nomic resources.Studies of EU and U.S.agricultural policy changes broadly outlined the final agreement that was ac- reforms cite cost-cutting as a major motivation for low- cepted,although some revisions were made(Croome 1995,296) ering agricultural trade barriers and subsidies(Moyer 159 Reproduced with permission of the copyright owner.Further reproduction prohibited without permission.Reproduced with permission of the copyright owner. Further reproduction prohibited without permission