In a comparative study of Japanese and European trade policy, this paper explains how the institutional context of negotiations affects political outcomes. I examine two pathways by which negotiation structure promotes liberalization: issue linkage and legal framing. Broadening stakes through issue linkage mobilizes domestic lobbying for liberalization. Use of GATT/WTO trade law in dispute settlement legitimizes arguments favoring liberalization. This study on international institutions addresses the theoretical debates in the field regarding how interdependence and the legalization of international affairs change the nature of state interaction.
I test my argument in the sensitive area of agricultural trade policy. Statistical analysis of U.S. negotiations with Japan and the EU from 1970 to 1999 indicates that an institutionalized issue linkage makes liberalization more likely for both Japan and Europe. This is the most important source of leverage for bringing major policy reform. However, the effect of GATT/WTO legal pressure interacts with the political context. I conclude that domestic political processes make Japan more responsive to pressure from trade rules than the European Union.