Constituency interests and delegation in European and American trade policy

Trade policy in the EU and the United States is to a large extent delegated to executive agents. Existing explanations claim that legislators delegate because they wish to liberalize but are unable to achieve this on their own. The authors show that legislators delegate powers to obtain foreign market access for exporters and protection for import-competing interests. Confronted with heterogeneous demands from both groups, principals delegate to two sets of agents to confer concentrated benefits on these constituencies, and install control to avoid concentrated losses, while maintaining the flow of resources from lobbying. The authors derive the empirically observable implication that with the increase in the share of tradables in the overall economy, delegation as well as control should steadily increase with time. They then test the validity of this proposition for U.S. trade policy since 1916 and for European trade policy since 1958.