Conceptualizing the Consumer Interest in Trade Policy

ABSTRACT - Although trade policy is receiving increasing attention at national and world levels, its implications for consumer interests remain largely unexplored. In Southeast Asia, the significance of trade policy is magnified by unprecedented economic growth. This paper identifies factors that help explain why the legitimate consumer interest in trade receives so little attention, especially from consumers themselves. Exploratory comparisons between consumer roles in the United States, Malaysia, and Indonesia are drawn. Evidence suggests that consumers allow their interests to be articulated indirectly and prioritize other roles above that of their role as consumer.



Citation:

Sara U. Douglas (1994) ,"Conceptualizing the Consumer Interest in Trade Policy", in AP - Asia Pacific Advances in Consumer Research Volume 1, eds. Joseph A. Cote and Siew Meng Leong, Provo, UT : Association for Consumer Research, Pages: 196-202.

Asia Pacific Advances in Consumer Research Volume 1, 1994      Pages 196-202

CONCEPTUALIZING THE CONSUMER INTEREST IN TRADE POLICY

Sara U. Douglas, University of Illinois at Urbana-Champaign

ABSTRACT -

Although trade policy is receiving increasing attention at national and world levels, its implications for consumer interests remain largely unexplored. In Southeast Asia, the significance of trade policy is magnified by unprecedented economic growth. This paper identifies factors that help explain why the legitimate consumer interest in trade receives so little attention, especially from consumers themselves. Exploratory comparisons between consumer roles in the United States, Malaysia, and Indonesia are drawn. Evidence suggests that consumers allow their interests to be articulated indirectly and prioritize other roles above that of their role as consumer.

INTRODUCTION

It is difficult enough to define and demonstrate a clear, separate, and legitimate concept that can be called a consumer interest in domestic economic policy. However, an even greater challenge arises when one attempts to show that a specific consumer interest exists in trade policy and its formation. While the logic favoring the existence of such an interest is persuasive enough, the supporting evidence is scattered, often speculative, and largely "academic." The reasons why consumers should have an interest in trade are articulated primarily by economists, only occasionally by politicians, and almost never by consumers themselves.

This paper identifies and discusses some of the factors that, taken separately, and in various combinations, help explain why this apparently clear and legitimate consumer interest receives so little attention. A preliminary and tentative list of these factors includes the following: (1) costs to individual consumers of protectionist policies are so widely spread across multiple purchasing transactions that their magnitude is obscured; (2) consumers lack understanding of ways in which trade policy affects them because of its complex and dynamic nature; (3) given the way trade policy is negotiated in most countries, consumers lack relevant information; (4) consumers and consumer organizations have extremely limited power when it comes to state policy-making; (5) consumer interests in trade policy are not effectively articulated by consumer organizations or spokespersons; (6) economists and politicians tend to be less mindful of the interests of consumers than of the often competing and better organized interests of other actors in the politics of trade policy; (7) when it comes to trade policy, the interests of consumers qua consumers often are less well understood than their interests in other social and economic roles-such as employee or environmentalist-that they simultaneously hold.

To the extent that diverse populations do not understand the effects of trade policies on their interests as consumers, or if they or others acting in their behalf cannot articulate their viewpoints, policymakers hardly can be expected to attend to these interests in a meaningful and effective manner. Under such circumstances perhaps the best that can be hoped for is that policymakers will apply their own judgment or that of experts toward the real consumer interest in trade policy.

This sort of paternalistic relationship is especially likely to prevail in societies and cultures, such as those of East and Southeast Asia, where interest representation is a poorly developed feature of the political process. World organizations and national governments devote extensive attention and effort to international trade issues. And in the booming economies of East Asia the importance of trade policy is magnified by unprecedented economic growth and change. Yet consumers are an even less coherent and politically visible sector in these systems than they are in the more pluralistic polities of industrial countries.

With this distinction in mind, and making use of the limited data which I have thus far been able to locate, I seek to develop some exploratory comparisons between the roles-or should I say fates?-of consumers in the United States on the one hand and Malaysia and Indonesia on the other. The latter two Southeast Asian countries admittedly are different in many ways. They were selected not so much as representatives of an "Asian" type as simply two economic and political systems of considerable interest and importance and, in fact, potentially instructive variation. That having been said, however, it is worth noting that the political condition of consumers in these two nation-states turns out to be generally quite similar.

ASIA: A BILLION CONSUMERS

According to The Economist, (1993), by the year 2000 one billion Asian consumers will be living in households with sufficient consumer spending power to buy color televisions, refrigerators, and motorbikes. This figure is only slightly lower than the entire populations of North America, South America, and the European Union today. Economic growth in East and Southeast Asia between 1970 and 1990 was of such strength and significance to cause the International Monetary Fund to predict that fully half of the US$7.5 trillion growth (in 1990 dollars) in gross world product increase expected between 1990 and 2000 will occur in this region (The Economist 1993). While the success stories of Hong Kong, Korea, Taiwan, and Singapore are relatively well known, details of their success as well as what is happening in other Asian countries emphasize the extent of change and provide evidence of a number of associated benefits. In a 20-year period when the region's population was growing by two-thirds, the number of extremely poor people was reduced from 400 million to 180 million. Estimates indicate that in about five years there will be three times as many East Asian consumers as today who will have disposable incomes at least equal to the average disposable income in industrialized countries today (The Economist 1993).

Excepting Singapore, the member countries of the Association of Southeast Asian Nations (ASEAN), launched their processes of rapid economic development only in the late 1970s. Current data for the ASEAN countries (Singapore, Brunei, Indonesia, Malaysia, the Philippines, and Thailand) indicate that they are outperforming most other regions of the world in economic growth, including the North Asian countries.

Because economic development of each of these Asia Pacific countries was led by export-oriented development, these nations may be more comfortable with world trade and global markets than is the United States where for an exceptionally long period the domestic market was relied upon and outside markets largely ignored. And while now the United States may be making better progress toward improving its trade record (and this may be accelerated by recent Uruguay Round accords on trade in services, a sector in which the U.S. is exceptionally strong), Asia is not standing still. Forecasts from the World Bank indicate that between now and the year 2000 Asia will account for half of the growth in world trade.

"THE CONSUMER INTEREST"

Of the analysts who believe that consumer behavior is reshaping the global economic system, none is more enthusiastic than Kenichi Ohmae. In The Borderless World (1990) he writes as though consumers not only are well-informed in their pursuit of products and services, but also shop for these goods without regard to national allegiances:

Governments still can arbitrage information or otherwise protect their markets by forcing citizens to buy high-priced beef (as is the case in Japan) or poor-quality automobiles (the case in India and Brazil), but product labels are spreading all over the world and news of product performance is harder to suppress. Information has empowered consumers. At the same time the position of companies and competitors has been weakened. All this has made the key objective a company's ability to create new value for customers (product strategy), not to erect barriers to competitors (p. 4)

To what extent is this true, especially in less developed countries where the information flow may be less free? Are consumers really uncomfortable buying high-priced beef and poor-quality autos? What is the consumer's interest? The question is difficult partly because there is no typical, average consumer. There is, moreover, little available data.

[I]ndividuals can and do play several roles, and therefore can "wear" different interest "hats", whether as voters, taxpayers, employees, employers, investors and so on. But the consumer hat is a legitimate one, reflecting the role of individuals and families as users of funds, as spenders, as purchasers of final goods and services. The economist's distinction between sources and uses of funds is instructive. As workers or employees, we seek funds by selling services; as investors we try to improve our sources of income in one form or another. But as consumers we use or dispose of funds: we buy goods and services, and with good market information, good access and informed choice, we translate that spending/buying activity into our ultimate standard of living.

So we can and do differentiate our interests as consumers from our interests as producers, employers, taxpayers, etc. And these interests can be in conflict as they involve different needs, weights and characteristics. This does not mean that consumer interests are always at odds with other roles or interests. It simply means that they are not the same, and therefore can have something separate and additional to say about public policy issues. If this distinction is accepted, it then flows that groups representing other perspectives such as business associations, trade unions, taxpayer interest groups, etc. will not automatically ensure that consumer interests are respected on all issues at all times. They may indeed broaden their reach and address consumer concerns from time to time, and many of their interests from their own perspective will be consistent with consumer interests, but this is not guaranteed, nor should it be asserted or accepted as an act of faith (Robinson, p. 51)

The existence of such a differentiated consumer interest is evident in Indonesia, Malaysia, and the U.S. And in all three places there are various signs of consumer interest in domestic economic policy. Only in the United States, however, has there been evidence of the consumer's interest in trade policy.

THE COST TO CONSUMERS OF PROTECTIONISM

Types of Protection

Economists make a good case for consumer interest in trade policy. International trade and trade policy at least indirectly influence the economic situation of every consumer because they affect the price, selection, and quality of goods available in the market. Economists base estimates of consumers' gains from trade on the increase in consumption possibilities provided by trade. This increase derives, presumably, from the theory of comparative advantage, which encourages nations to specialize in the production of those goods and services in which they enjoy economic advantages. In addition to the lower cost of the imports themselves, consumers should enjoy more competitive prices from domestic producers, as well as other competition-induced benefits such as improved producer efficiency, innovativeness, improved service, and responsiveness to consumers. Trade thus not only enables consumers to buy goods not available in the domestic market; it generates significant improvements in the domestic market as well.

However, most countries in the world, in spite of expressed philosophies in favor of trade that is free and unrestricted, have in place a number of barriers to trade. And, most importantly, the recent trend seems to be in the direction of greater rather than less restriction. These restrictions are defended on the macroeconomic grounds that they are needed to bolster struggling domestic industries, protect traditional or infant industries, preserve employment, and help overcome balance-of-payment difficulties, or influence monetary policy. In the short run, while trade restrictions may boost domestic industries and maintain employment levels, in the long run they encourage inefficient industries, decrease research and development, and, ultimately, can affect standards of living and the national economies. However, for consumers, the basic issue is that trade barriers that restrict supply negatively affect the price, selection, and quality of goods available.

Trade protection is provided both through tariff and nontariff barriers. Tariffs directly increase the costs of goods and services by some specified percentage. The General Agreement on Tariffs and Trade (GATT), created in 1947, made tariff reductions a trade-liberalizing objective. In approaching this goal, the organization has had a certain degree of success; in successive rounds of multilateral trade talks, many states have obligingly reduced tariffs. However, still feeling the need for protection, they have substituted nontariff barriers (NTBs), largely in the form of quotas, for tariffs. Quotas, in the eyes of the GATT, are even more restrictive to trade than tariffs. While tariffs are direct, transparent, and can be weakened by reductions in world market prices, quotas have quite different characteristics. They are, especially in some sectors such as textiles, circuitously indirect, more discriminatory than tariffs, and extremely complex and nontransparent, especially to consumers. They are also more restrictive than tariffs simply in that they place absolute quantitative limits on imports.

In addition, certain national policies, such as those that require imported products to meet specified standards for safety or labeling requirements, and ostensibly designed to protect and inform consumers, also have restrictive effects. (Whether such effects are intended or unintended by the importing country is, of course, difficult to determine.) If producers abroad have difficulties meeting the standards and requirements, the requirements serve as NTBs and may trigger intense international dispute. The question for consumers and others then becomes one of how much of a good standard-if indeed it is "good"-is too much? Moreover, in order more easily to standardize their production, multilateral corporations are pushing hard for global standards and provisions requiring countries to "harmonize" policies. With regional economic integration on the rise, multilateral trade negotiators are having to wrestle with these situations; how real is the threat to consumers that global "harmonization" will result in lower standards at their expense?

Trade restrictions ultimately come down to a redistribution of income. This income moves from consumers and taxpayers to the protected industry. Economically, it is not easy to measure the effects of trade restrictions on consumers. However, some pertinent studies were conducted during the 1980s when protectionist policies were on the rise, largely in order to turn around unfavorable trade balances and support domestic industries that had been undermined by a deteriorating world economy and declining world trade. In the textile sector (one of the most protected in the world), for example, estimates of real economic costs of protectionism to U.S. consumers, who were paying higher prices on both imported and domestic products, ranged from US$13 billion for apparel only (Dardis 1988) to US$18 billion for apparel and US$3 billion for textiles (Cline 1990). As Cline noted, this figure amounts to US$238 annually per household, a burden many consumers would consider significant.

A more recent analysis indicates that a welfare gain of US$9.6 billion would result if textile quotas were liberalized and US$16.4 billion if both tariffs and quotas in textiles were liberalized. This study concluded that consumers would not only gain directly from lower prices, but also that increasing demand would result in a domestic net output gain of about US$12 billion (International Trade Commission, 1993). This study also indicated that domestic industry output and employment would be negatively affected by up to 6%.

Protection in Indonesia and Malaysia

The protectionist policies in industrialized countries affect developing countries directly. If a developing country cannot export, that country will lack foreign exchange necessary to import. In addition, developing countries feel the need to protect themselves from certain imports, and, as a result, consumers there either cannot obtain certain goods at all or pay higher prices. GATT director-general Peter Sutherland says that "some of the most rampant protectionism in the world is in Asia" (Far Eastern Economic Review 1993). His judgment is based on the generally high tariffs on appliances, electronic goods, and personal transport (in the latter duties often exceed 200% on cars and motorcycles). He cites in addition high food prices and the implicit tax paid by Japanese and Korean consumers for farm support.

Leaders in both Indonesia and Malaysia claim to be committed to multilateral free trade and not only take favorable views of domestic trade liberalization, but also have pushed policies that have resulted in more liberalized trade in their respective countries. Malaysia, today the world's sixteenth largest trading entity, is regarded as an open country that has benefited significantly from trade. Its general level of tariff protection is relatively low. Indonesia liberalized its trade policy in the mid-1980s and, since then, its trade volume has increased dramatically. Still, its tariffs remain high. And, within GATT, both Indonesia and Malaysia have a low level of bound tariffs (tariffs that not only have been reduced in response to GATT encouragement, but also "bound" by the country involved, signifying to GATT that they will not again be raised above that level) (GATT 1991, 1993).

Nontariff barriers in each country form more persistent and difficult forms of protection. Each country has NTBs that protect its strategic industries and natural resource-based processing industries through import prohibitions, export restrictions, subsidies, local content requirements, and licensing arrangements. A complex and nontransparent import licensing system exists in both countries; in Indonesia the system includes approval of sole distributors and the major roles played by government and private monopolies (GATT 1991). Indonesia introduced a new package of trade deregulation policies in mid-1992; these decreased tariffs on some goods, but increased surcharges for others, and simplified import procedures for capital goods (Warta Cafi 1992). There is a low share of consumer goods in Indonesia's import structure, but the domestic cigarette industry is protected, as are textiles and agriculture. Annual costs transferred to producers from consumers in Indonesia have been estimated to be as high as US$6.5 billion (Far Eastern Economic Review 1993), a sum that exceeds US$144 annually per household.

CONSUMER KNOWLEDGE: THE NATURE OF TRADE POLICY AND POLICYMAKING

Consumers must be generalists in a world of specialists. In order to be educated about how to spend their money, they need to learn a little about a lot. Even for a consumer who wants to be educated in trade policy, the time and effort required is probably rarely worth what is gained. To be a generalist in knowledge of products and services is one thing; to be a generalist in policy knowledge is something else.

The foregoing section indicates a great deal about the nature of trade policy. It is, in a word, complex. The relatively easy-to-understand tariff is giving way to NTBs that come in many forms and can be "hidden" with relative ease. If consumers were to achieve an understanding of basic trade policy, presumably they then would be interested in more specific agreements. At that point, they would find that these agreements not only are difficult to understand, but also frequently not even available. U.S. consumer activitist Ralph Nader complained of difficulties he experienced in obtaining a copy of the proposed NAFTA agreement in 1992. He had to order it, pay US$41 for it, and, when it finally arrived, over a month after the official conclusion of the negotiations, he found it written "in almost impenetrable technical jargon" (Nader 1993, p. 5). Such technical jargon and other ways in which trade policy lacks transparency increases significantly its complexities.

There are also, of course, layers of policy at the national, frequently regional, and global levels. Not only do these policies themselves differ, but so do mechanisms for enforcement. Moreover, all are revised from time to time; all in all numerous intricacies exist in the interrelationships and priorities between and among them.

A consumer newsletter in the U.S. explained that the anti-NAFTA stance taken by some consumers was an expression of concerns regarding threats to existing U.S. consumer protection laws (Public Citizen 1993). For example, they believed that good protection for consumers currently is provided by federal standards for the safety of food products; however, with the NAFTA agreement would the U.S. have to lower its standards in order to obtain policy harmonization with Mexico and Canada? That this threat was not the problem it was perceived to be (that is, NAFTA explicitly says that stricter standards can be enacted at the national level and seems to say that they also can be enacted at subnational levels [Hufbauer and Schott 1993, p. 93]) attests to the problem of educating consumers about the complexities of trade policy.

Ralph Nader also has added his voice to those of others who have complained about the way trade negotiations are conducted in the U.S.: "Secrecy, abstruseness, and unaccountability: these are the watchwords of global trade policy-making. Every element of the negotiation, adoption, and implementation of the trade agreements is designed to foreclose citizen participation or even awareness" (Nader 1993, p. 3). Trade negotiations in the U.S., as in many countries, are for the most part worked out behind closed doors by individuals who are not elected public representatives, but who are members of the state bureaucracy. In policymaking negotiation sessions, it is noteworthy that consumers, who bear the real economic costs of many forms of restraints, including the "voluntary" export restraints that limit the majority of textile and apparel imports into the U.S., are not asked to observe or participate (Douglas 1992). They are "conveniently excluded" from the process (Jones 1984). But so too are other interest groups. It is not unusual for representatives from affected industries to be called upon for comment; however, it was only in the mid-1980s that a large U.S. retail coalition (with no consumer representation) began requesting representation at committee and other meetings where textile trade policy was being discussed and decisions being made. In spite of this coalition's activism then, it found itself left out once again during the North American Free Trade Agreement (NAFTA) debate and was heard voicing the same complaints.

CONSUMERS, CONSUMER ORGANIZATIONS, COALITIONS, AND POWER

An individual's role as a consumer often comes into conflict with other roles s/he maintains. Consumers have interests as, for example, producers and employees because they are producers and employees. In arguing for policy, then, which hat does the consumer put on? Frequently, it appears, consumer interests carry less weight than other interests.

The controversy over NAFTA in the U.S. again was informative. Lists of those individuals and institutions that were either for or against NAFTA followed no very obvious patterns. To generalize, however, U.S. business interests, especially those of multinational corporations, were in favor of the agreement, that is, for trade liberalization, while most consumer, environmental, and labor groups were against it. Certainly it was not clearly in the consumer interest to be against an agreement that would liberalize trade and reduce prices of products they routinely purchased. A perusal of consumer interest group literature (e.g., see issues of Public Citizen during 1993) indicates that some consumers were donning their hats as workers themselves or in respect for the lengthy alliance that has existed in the U.S. between consumers and organized labor on many issues. While liberal traders frequently count on consumer support as a natural constituency for antiprotectionist policy, they do not get that support from the more politically active consumer advocates like Ralph Nader; the reason is that Nader does not want to offend labor (Destler and Odell 1987). In the NAFTA case, other activist consumers seemed not be taking a "typically" American stand to protect their individual consumer rights, but reacting more to protect "social" rights-primarily, in this case, the right to enjoy a clean environment (Public Citizen 1993).

These conflicting outlooks and interests may be said, more broadly, to involve the diffuse but powerful role of citizen. As a citizen of the United States, Malaysia, or Indonesia, individuals may be urged and inclined to support various social causes. Furthermore, "good" citizenship as conveyed in civics courses (e. g., in the case of Indonesia, Pancasila training) is much more likely to stress a public or national interest rather than more particularistic ("selfish") concerns of consumers about price, quality, and selection. And of course "national interest," when it comes to purchasing decisions, is easily translated into such exhortations as "Buy American."

Destler and Odell (1987) provide examples of three consumer organizations that have participated in political activity on trade policy. These examples, they say, were "significant exceptions" (p. 32). Consumers Union went to court in the early 1970s regarding NTBs on steel and also has taken a stand on freer trade for automobiles. The Consumer Federation of America has testified periodically in opposition to high sugar prices, although the focus of the group has been on prices rather than protection; only one of the reasons for the price of sugar was alleged to be import restrictions. The Consumer Federation reversed its free trade position in 1982, however, when it endorsed domestic content legislation for automobiles. Consumers for World Trade (CWT) regularly has spoken out against product-specific import restrictions. However, while this group publishes useful consumer information on costs of trade, it seems to lack a broad consumer base; according to Destler and Odell, many of its directors "have come to their liberal trade views for nonconsumer reasons" (p. 32).

To this list can be added those who became active during the NAFTA campaign in 1992 and 1993. This includes Ralph Nader and the consumer advocacy group he founded, Public Citizen, and Citizens Trade Campaign. The latter is a coalition of labor, farm, environmental, and business groups founded in 1992. The group remained largely inactive, however, until former Congressman Jim Jontz became its director in 1993. Like CWT, this group lacks a broad consumer base; unlike CWT, however, but in accordance with Public Citizen (one of its members), Citizens Trade Campaign is pro-protection-or was in the case of NAFTA.

It is even more difficult for consumers in Indonesia and Malaysia to advance arguments in opposition to those of more powerful political interest groups and groups that directly represent specific industries. In Malaysia this is true in spite of the fact that some Malaysian activists have provided notably strong leadership to other developing countries in the establishment of consumer associations and the importance of consumer protection. The Consumer Association of Penang (CAP) got its start, albeit a slow one, in 1964 when a leading opposition member of the Malaysian Parliament, Dr. Lim Chong Eu, began to speak for a rational and responsible price policy and urged that a consumers' association be formed. While the group in Penang initially was unable to gather sufficient interest even to register an association, consumer groups did get organized in other Malaysian states during the late 1960s. CAP was formally registered in 1970 and since then it has addressed a multitude of consumer causes including, in addition to price policy, consumer education programs, research, cigarette advertising and health, the environment, food and drug safety, and women and the media (Consumer Association of Penang 1973, 1978, 1982). By the end of the 1970s, consumer associations existed in every state in Malaysia and all except for CAP had become members of the Federation of Malaysian Consumer Associations (FOMCA). Malaysians also have been prominent in the International Organization of Consumers Unions (IOCU) and have been described as having "spurred the growth of consumer organisations in many other developing countries" (Rachagan 1992, p. 270).

There is no evidence that CAP or other consumer groups in Malaysia have been active in trade policy issues-unless, of course, they were arrived at indirectly through efforts to achieve lower prices. As mentioned above, however, Malaysia has low tariffs and is considered to be an open trading nation; most of its restrictions are in NTBs that would not be readily visible to consumers.

And in spite of this impressive record, Malaysian consumers apparently feel they have made few significant inroads domestically (Rachagan 1992). A recent study of Malaysian law governing contracts, advertising, credit, product safety, and product liability concluded that, while some laws were on the books, consumer organizations had not had the impact that they should have had given their efforts. The consumer cause has not been adopted by any of the political parties (Rachagan 1992). So, politically, Malaysian consumers have not been able to achieve what they have desired.

Indonesia has been slower in its development of consumer activism, largely because its economy continues to be state-dominated. MacIntyre (1991) recently argued, however, that "policy formation is not monopolized by the state; the reality involves a blend of conflict and cooperation between both state and societal actors" (p. 191). Unfortunately, the societal actors continue to involve consumers to an extremely limited extent. In 1973, Yayasan Lembaga Konsumen Indonesia (the YLKI or Indonesian Consumer's Institute) was created as a non-governmental organization in Jakarta. Its current leader, Zumrotin, maintains a visible presence in consumer interests, although her task is complicated by the goal not only to protect consumers, but to do so in a way that is never directly critical of domestic producers. Beyond the YLKI, it is notable that ad hoc consumer groups occasionally form in Indonesia and have been effective regarding at least some attempted price increases. An example is student groups who seem regularly to become active when rumors of price increases in public transportation systems begin to surface.

ASIA AND AMERICA: ECONOMISTS, POLITICIANS, AND CONSUMERS

Six of the seven factors mentioned at the outset have been discussed in preceding sections. Each focuses primarily on economics or politics, and a number of similarities between the Asian consumer interest and the American consumer interest have surfaced.

Asian and American economists generally seem to be in agreement about the effects of trade on consumers; if asked, they probably would conclude that it would be in the interest of consumers to be involved in trade policymaking, and also to push for antiprotectionist legislation. Their reasons might be different, however. James Fallows (1993, 1994), in an analysis of differences between Anglo-American and Asian economic philosophies, suggests that Anglo-American economists would say the consumer interest in trade policy should lie in increasing consumption because that is the purpose of an economy. The economy needs "to grow so that we can all buy more and keep the world economy spinning" (1994, p. 76). But, for Asians Fallows says the purpose of an economy is "to grow so that a country can produce more-whoever buys the goods-and keep the country's, not the world's, economy spinning" (1994, p. 76).

American public philosophy probably would agree that consumers should be involved in trade policy and should adopt either a protectionist or antiprotectionist stance, whichever they choose. According to Fallows, U.S. reasons might include the following: the importance of the market mechanism, freedom, the game (process) is important and the government's role is that of a referee-to make sure everyone plays fairly (1993, 1994). Indonesian and Malaysian politicians might agree that it would be in the consumer interest to be antiprotectionist. Again, however, it is likely that Asian reasons would be different and include the following: the government needs to set standards, determine the strategy (results as well as process), and to pay more attention to the welfare of the group and less to the individual (1993, 1994).

Singapore's Lee Kuan Yew, in comparing Japanese and American political styles, supports some of the differences Fallows discusses:

I do not see them [Japan] becoming a fractious, contentious society like America, always debating and knocking each other down. That is not in their culture. They want growth and they want to get on with life. . . Americans believe that out of contention, out of the clash of different ideas and ideals, you get good government. That view is not shared in Asia (The Economist, 1993, p. 21).

What is striking about this comparison is not the differences, but the fact that both economists and politicians tend to look at the consumer indirectly-that is, not in terms of what is best for the consumer, but, given what is assumed to be best for the economy and the state, then what is the role of the consumer and what does this say about the consumer interest in trade policy? Americans would say the role of the consumer is to buy, and that, because trade enhances consumer choices, the consumer has an interest in trade policy. And Indonesians and Malaysians would say the role of the consumer is to support long-term benefits of production and economic growth, and that, because trade supports both, the consumer has an interest in trade policy. The consumer interest is put in terms of the objectives of economic policy rather than consumer policy.

Actions and words of consumers themselves are far less explicit. This might be expected in Indonesia and Malaysia, both of which have well-established and official ideological reservations about interest group politics; but it is only slightly more true in these countries than in the United States, its conflict-laden pluralist tradition notwithstanding. The clear focus on trade policy issues in the cases mentioned (as "significant exceptions") by Destler and Odell (1987) resulted from a combination of unusual circumstances. And even in those instances, advocates were sending mixed messages about the type of policy they perceived to be in consumers' best interests and why. Public Citizen involvement in NAFTA was relatively impressive, but the stand that was taken, while it may have been in the interests of labor or the environment, was not clearly in the interests of consumers. Coalitions such as Public Citizen have more power than individuals or groups acting alone, but if consumer participation in coalitions results in sacrificing their own interests-as it did in the case of the NAFTA debate-the result for consumers obviously is a net loss.

Of course this raises the broader question of social issues and the possibility that trade policy may have an increasing effect on consumers' social situations as well as their economic and political circumstances. We have been assured that social issues will be high on the agenda of the new World Trade Organization. While what that means exactly is unclear, undoubtedly labor and environmental issues will be included. So, too, may be human rights and other quality-of-life factors such as health services, AIDS, and cultural contamination. Economics and politics always have had implications for trade policy; but now it seems that some social issues are becoming more directly linked to trade. To some extent it is a symptom of this linkage that various national trade and foreign policies seem increasingly ambiguous, indicating internal indecisiveness. An example is President Clinton's Asia policy that extends, according to the Far Eastern Economic Review (Awanohara 1994) from confrontation to "enhanced engagement" on the question of linkage between trade and human rights.

CONCLUSIONS

Should consumers become interested in trade policy issues? The preponderance of evidence suggests that they choose to focus their resources on other issues and objectives. At best they allow their interests to be articulated indirectly, and they prioritize their other roles above that of their role as consumer. Some of the factors discussed help explain why consumer activism is limited in general; they do not pertain only to consumer activism on trade policy issues. For example, a wide range of consumer interests in domestic economic policy generally are poorly articulated because individuals tend to prioritize roles other than the consumer role.

Murray Edelman's (1967) analysis of groups and political quiescence helps explain the obstacles to effective political action by consumers. He identifies two general patterns of interest representation: the type A group is relatively small in size, well-organized, well-informed, uses rational, cognitive procedures, has effectively identified sources of support, and enjoys a positive strategic position in relation to reference groups; the type B group is relatively large, not so well-organized, possesses inexact information, is relatively ineffective in identifying sources of support, and has a negative strategic position in relation to reference groups. Members of the type B group share an interest in improving their status through protest activity, but are politically quiescent.

Consumers obviously approximate type B. In general they lack power and are poorly organized into effective pressure groups. Their main goal, to work for the "common good" of consumers, is easier to achieve when the policy objective is focusee-say, for example, on getting an unsafe product modified or off the market. But trade policy is broad and complex rather than focusee-in a sense much like consumer behavior. And these characteristics are shared by Asian consumers and American consumers alike.

If for no other reason than the increased attention which economists, jounalists, and others are directing toward international trade, consumer interest in trade policy can be expected to grow in the U.S. as well as in such trade-dependent countries as Indonesia and Malaysia. This trend will be all the more likely if Whalley (1993) is correct in foreseeing pressures for more transparent trade policy. But it remains to be seen whether consumers will be more aware of and concerned about the way trade policy affects their economic lives or the way trade policy may begin to affect their quality of life more generally.

In this regard a reversal of the typical American-Asian patterns may occur. Already certain U.S. government agencies are pursuing a strategy (rather than focusing on process and the way the game is played) of inserting environmental issues and labor standards into trade negotiations, and Asian negotiators are playing the game (rather than sticking to strategic goals) of focusing on economic growth. American consumers, if they are influenced by their government's lead in this direction or perhaps for reasons of their own, may move a little closer to what Fallows describes as the Asian style and place what is good for everyone-the environment, product standards, wages and workplace conditione-ahead of what may be good for themselves as individuals. Conversely, Indonesians and Malaysians, in accord with the argument of Dr. Mahathir among others, may be primed to assert a narrower focus on their "economic rights" and the ways in which these translate into lower prices, better selection, and higher qualite-all easily associated with freer trade.

In the face of such differences, it is problematic whether international consumer groups will be able to work together with increasing ease in the future. On the other hand, there is no compelling reason why the same transnational forces encouraging transnational production and marketing should not lead to transnational consumerism. All people share the desire for a wide assortment of good quality products at reasonable prices; more and more of these products are global products that have been put together in more than one country and are distributed worldwide. In principle, at least, surely all people would like to see their capacity to educate themselves on trade policy eased by increased transparency. Some of the forces of economics that are most global may represent powerful and moneyed interests which are "naturally" unfriendly to consumerism. But, however ironic it may seem and however gradual a process it may be, the economic success of such entities as transnational corporations inevitably will alert consumers to the vulnerability created by their atomistic and parochial outlook.

REFERENCES

Awanohara, S. (1994, February 3), "Collision Course," Far Eastern Economic Review, pp. 18-20.

Cline, William R. (1990), The Future of World Trade in Textiles and Apparel, Washington, DC: Institute for International Economics.

Consumers' Association of Penang (1982), Abuse of Women in the Media, Penang: CAP.

Consumers' Association of Penang (1978), Five Traditional Technologies in Malaysia, Penang: CAP.

Consumers' Association of Penang (1973), Consumerism-The Penang Experience, Penang: CAP.

Dardis, Rachel (1988), "International Trade: The Consumer's Stake," in The Frontier of Research in the Consumer Interest, eds. S.E. Maynes & ACCI Research Committee, (pp. 329-359), Columbia, MO: ACCI.

Destler, I. M. and Odell, John S. (1987), Anti-Protection: Changing Forces in United States Trade Politics, Washington, DC: Institute for International Economics.

Douglas, Sara U. (1992), "The Administration of Textile and Apparel Quotas: A Case Study of Malaysian Policy and Its Implications for the U.S." Clothing and Textiles Research Journal, 11(3), 1-9.

Edelman, Murray (1967), The Symbolic Uses of Politics, Urbana, IL: University of Illinois Press.

Fallows, James (1994, January), "What Is an Economy For?" Atlantic Monthly, pp. 76-92.

Fallows, James (1993, December), "How the World Works," Atlantic Monthly, pp. 61-87.

Far Eastern Economic Review (1993, September 16), "Make or Break," p. 67.

General Agreement on Tariffs and Trade (1991), Trade Policy Review: Indonesia, Vols. I and II, Geneva: GATT.

General Agreement on Tariffs and Trade (1993), Trade Policy Review: Malaysia, Geneva: GATT.

Hufbauer, Gary C. and Schott, Jeffrey J. (1993), NAFTA: An Assessment, Washington DC: Institute for International Economics.

Jones, K. (1984), "The Political Economy of Voluntary Export Restraint Agreements," Kyklos, 37(1), 82-101.

Nader, Ralph, (1993), "Introduction: Free Trade and the Decline of Democracy," The Case Against Free Trade, pp. 1-12 San Francisco, CA: Earth Island Press.

Ohmae, Kenichi (1990), The Borderless World: Power and Strategy in the Interlinked Economy, New York: HarperBusiness.

Public Citizen (1993, November/December), Various articles.

Rachagan, S. Sothi (1992), "Protection Against Unfair Trade Practices in Malaysia-Law, Enforcement, and Redress in a Developing Country, Journal of Consumer Policy 15: 255-274.

Robinson, T. Russell (1986), "The Effect of Trade Policy on Consumer Interests," in International Trade and the Consumer, (pp. 51-55), Paris: OECD

The Economist "Asia Survey," October 30, 1993, pp. 3-22.

U.S. International Trade Commission (1993, November), The Economic Effects of Significant U.S. Import Restraints (Investigation No. 332-325, USITC Publication 2699), Washington, DC: USITC.

Warta Cafi (July 6, 1992 Special Edition), "The July 1992 Package," Jakarta: Yayasan C.A.F.I.

Whalley, John (1993), "The Uruguay Round and the GATT: Whither the Global System?" in Pacific Dynamism and the International Economic System, eds. C. Fred Bergsten and Marcus Noland, (pp. 65-109), Washington, DC: Institute for International Economics.

----------------------------------------

Authors

Sara U. Douglas, University of Illinois at Urbana-Champaign



Volume

AP - Asia Pacific Advances in Consumer Research Volume 1 | 1994



Share Proceeding

Featured papers

See More

Featured

F8. Dual Routes for Consumer Responses to Corporate Social Responsibility: The Role of Positive Moral Emotions, Attitudes, and Empathy

Chunyan Xie, Western Norway University of Applied Sciences
Richard P. Bagozzi, University of Michigan, USA

Read More

Featured

Consumers’ Attitudes Towards Their Rights and Responsibilities in the Sharing Economy: An Ideological Perspective

Marylouise Caldwell, University of Sydney, Australia
Steve Elliot, University of Sydney, Australia
Paul Henry, University of Sydney, Australia
Marcus O'Connor, University of Sydney, Australia

Read More

Featured

J2. Consistence vs. Variety: The Effect of Temporal Orientation on Variety Seeking

YUAN ZHANG, Xiamen University
SHAOQING ZHANG, Quanzhou Normal University

Read More

Engage with Us

Becoming an Association for Consumer Research member is simple. Membership in ACR is relatively inexpensive, but brings significant benefits to its members.