Trade defence instruments are among a government's most powerful tools for conducting trade policy. Trade defence measures can be imposed unilaterally and are an effective way to protect the domestic industry. Moreover, because trade defence proceedings involve numerous actors with varying interests, trade defence instruments can be used to govern, i.e., to benefit certain actors to the detriment of others. Jappe Eckhardt's Business Lobbying and Trade Governance: The Case of EU–China Relations contributes to the literature that explains when and how some of these actors seek to get involved politically in the decision-making process in trade defence proceedings.

The actors in trade defence proceedings that have so far received most academic attention from international political economy scholars (such as Eckhardt) are domestic producers that compete with importers/imported products. Domestic producers usually initiate a trade defence investigation (they are the formal complainants). That investigation targets foreign exporting producers, who clearly have an incentive to lobby against the imposition of trade defence measures (they are the formal defendants). Trade defence measures also affect consumers and workers. Finally, trade defence measures also affect domestic import-dependent firms (they are the informal defendants).

Import-dependent firms have increasingly gained economic, and thus political, importance in an ever-more globalized trade environment characterized by global value chains and global production networks. This can be confirmed by looking at the two main business models of import-dependent firms. Import-dependent retailers purchase finished goods and sell these to end-users. Alternatively, import-dependent manufacturers are either outsourcing firms or import users. Outsourcing firms import finished goods produced by networks of foreign firms that use intermediate products from the outsourcing firms. Import users are domestic producers that directly import inputs to use in their own production process.

Because of their increased importance, and as they have received little academic attention so far, Eckhardt focuses on the political involvement of import-dependent firms in the politics of trade defence proceedings.

In laying out his theoretical framework (Chapter 1), Eckhardt explains that when faced with imports that are more expensive, following the imposition of trade defence measures, import-dependent firms are faced with the following choice. They have to either mobilize politically, or adjust to the new situation. This choice is the dependent variable in Eckhardt's analytical framework. The choice between mobilization and adjustment depends on (i) the expected benefit from collective action, and (ii) on the capacity to act politically. These two elements are the independent variables.

First, the expected benefit of collective action is the total additional benefit a firm expects to receive from political activities (i.e., avoiding the imposition of trade defence measures or at least lowering their impact) aside from adjusting to new market situations. In other words, the cost of adjustment largely determines whether collective action may be beneficial. Adjustment entails (i) switching to suppliers whose exports are not subjected to trade defence measures, (ii) changing the terms of the contract so that the exporter largely absorbs the additional cost, or (iii) increasing downstream sales prices. Aside from the cost of these actions, the cost of adjustment also depends on the timeframe during which the adjustment should or can be executed. For instance, existing contracts or purchase orders limit a firm's flexibility to adjust swiftly. Finally, the cost of adjustment depends on the level of dependence on and substitutability of the imports subject to anti-dumping duties. These costs are of course interrelated: e.g., if a firm is highly dependent on a product, it may prefer not to interrupt a supplier contract, even if imports from the supplier are subject to trade defence measures.

Second, the capacity to act collectively is limited by collective action problems between competing firms. For instance, suppose that domestic car producers import tyres. The car producers may hesitate to cooperate in a trade defence proceeding concerning imported tyres because cooperation requires an exchange of sensitive information on supply chains or supplier contracts. Similarly, one producer may cope better with anti-dumping or countervailing duties on tyres than its competitors (and thereby gain a comparative but relative advantage) because its technical requirements allow it to import from other sources.

Collective action problems can be expected to be overcome if firms expect to enhance their individual position. This usually is the case if (i) a sector-specific interest organizationFootnote ¹ exists, and (ii) the number of import-dependent firms concerned is sufficiently small. A small group of concerned firms reduces the free-rider problem as every firm is aware that its non-participation lowers the chances of success. Import-dependent firms have only recently set up permanent interest organizations in many sectors; in the absence of such permanent interest organizations, ad hoc coalitions may also facilitate successful political mobilization. Moreover, a wave of consolidation has reduced the number of import-dependent firms in many sectors.

Regardless of these recent trends that reduce collective action problems for import-dependent firms, import-competing domestic producers remain more capable of acting collectively than import-dependent firms. (Import-competing domestic producers may appear less in the outline of the book, but form an integral part of Eckhardt's analysis.) Import-competing domestic producers usually have a standing interest organization, and import-competing sectors typically consist of a relatively low number of firms that control a large market share. The expected benefits of mobilization are also high because the alternative to mobilization – namely, adjustment to the competition created by imports – is very costly. For import-competing domestic producers, adjustment means downsizing, specializing, or even exiting the market. Hence, the incentive to mobilize is high. Finally, because firms tend to mobilize at a time when they are faced with losses, import-competing firms have a head start: they request the initiation of a trade defence proceeding and can thus set up lobbying strategies before import-dependent firms are aware that a complaint is in the making. Overall, compared to import-dependent firms, import-competing domestic producers still have a structural advantage to mobilize politically. The question is when import-dependent firms can counter such mobilization.

From this description of the variables follows the main hypothesis of the book: import-dependent firms only mobilize politically if (i) the expected benefit of collective action is high, and (ii) the capacity to act collectively is also high. If this is not the case, import-dependent firms will make adjustments to avoid losses following the imposition of trade defence measures.

Eckhardt tests this hypothesis empirically through case studies of EU trade politics in trade three defence proceedings (Chapters 2 to 4). The case studies are (i) the safeguards investigation on textile and clothing from China in 2005, (ii) the anti-dumping investigation on shoes from China and Vietnam in 2005, and (iii) the anti-dumping investigation on bicycles from China and Vietnam in 2004–05. Each case study sets out the market situation and the relevant actors (import-competing and import-dependent firms), the actors’ expected behaviour on the basis of the hypotheses, and an empirical account of their actual behaviour on the basis of semi-structured interviews, as well as academic and press writings.

The case studies confirm the book's perhaps rather commonsensical main hypothesis. (This should not be taken as criticism; the proof of the pudding is in the eating.) The case studies’ main strengths lie in putting the variables into practice so that the reader better understands how they interact in three diverse real-life scenarios. In the first case study, differences in the level of import-dependence and the capacity to act collectively between the textile sector and the more downstream clothing sector stand out. The second case study discusses a clear-cut variation in the capacity to act collectively between similar firms that operate in different market segments (i.e., firms that manufacture sports and outdoor shoes as opposed to those who manufacture dress shoes or are shoe retailers). In the third case study, import-dependent firms consist mostly of retailers that import different product types from various sources. These different scenarios result in varying adjustment costs.

To conclude, Eckhardt summarizes the main findings of his study and briefly touches on its broader ramifications (Chapter 5). The main takeaway of the book is that import-competing firms can usually successfully mobilize to push for the imposition of trade defence measures, but that import-dependent firms can succeed in mitigating the impact of the imposed measures (e.g., by changing the precise scope of the measures, lowering the level of the duty, shortening the period of application) if they overcome their collective action problems and mobilize. As noted, this is the case where adjustment costs are higher than the cost to mobilize.

It is clear from the above that Eckhardt's book delivers on its promise: it sets out, tests, and confirms the main hypothesis. The book is also highly structured, well written, properly documented, and commendably concise (140 pages). The topic merits the attention of trade policy scholars and trade law practitioners. But understanding the behaviour of import-dependent companies in trade defence proceedings should perhaps be of most interest to (EU) trade policymakers. Indeed, although outside of the scope of analysis, the book asserts that EU competence over trade policy has not insulated trade policymakers from societal pressures – as one would expect in every jurisdiction.

Eckhardt acknowledges that he does not analyze how these actors influence policymakers as this would requires further research. Although Eckhardt's focus is understandable, it leaves the reader thinking about some interesting questions. For example, how is the legal leeway available to investigating authorities influenced in practice by political pressure from import-competing firms? Which is the most successful strategy for import-dependent firms to mitigate the effects of trade defence measures? Or, coming back to the above example, how would domestic car producers lobby to influence the said trade defence proceeding on tyre imports, and how could they best go about doing so?

That said, Eckhardt's book not only raises further research questions, but also prompts policymakers to ask one concrete question: If it is true that the structural advantage of import-competing firms to mobilize politically is turned into more consistent and effective influence on investigating authorities, then should this advantage be mitigated? In the specific EU context, one could think about attaching more weight to the ‘Union interest test’, which aims precisely at assessing the effects of EU trade defence measures on actors other than the domestic industry, for instance, the downstream users of the imported product. Eckhardt's findings could inform policymakers on how to structure trade defence proceedings to ensure that welfare implications of imposing trade defence measures are properly addressed.

In conclusion, Eckhardt's book confronts readers with the dynamics of lobbying by import-dependent and import-competing firms and thereby brings to the fore the divergent interests of the various domestic actors in trade defence proceedings. In line with its rather limited scope, there is perhaps not that much food for thought in the book. Aside from the interesting empirical account of three important EU trade defence cases, the case studies reveal few unexpected findings. But Eckhardt appears to acknowledge in the conclusions that, to some extent, the greatest contribution of this book is building a very solid foundation for responding to the questions it leaves unanswered. With this book, Eckhardt paves the way to pursue a very interesting research agenda.