A Research Of How Corporate Lobbying Shapes The US Trade Politics

Now more than ever, American citizens believe that money in politics is a significant threat to our democratic republic. Polling on public opinion around the subject suggests that the percentage of individuals who believe that “the country is being run primarily by a few self-interested groups and wealthy individuals looking out for themselves” has risen to 80% over the course of the last 20 years. This opinion that private interests have major sway over public agencies and elected officials is rather unsurprising, considering the objective growth of lobbying in the United States. From 1998 to 2016, for example, the sheer amount of money spent on lobbying the U.S. government rose $3.12 billion from a much lesser initial $1.45 billion. Furthermore, the number of active lobbyists in Washington is well over 10,000 people (Center for Responsive Politics, 2017). From a strictly data-driven perspective, with all this money attempting to influence policy outcomes in Washington, it is rather evident why Americans are so uniformly skeptical of government officials and the role of corporate versus public interest in policymaking at large. But amid this skepticism, a leading question emerges - do companies and capitalistic industries, through the means of corporate lobbying, really exert the kind of impact on U.S government policy that is reflected in public opinion? As such, the goal of this paper is to demonstrate that corporate lobbying does, in fact, have an outsize influence in the tangible direction of policy in the United States. In particular, this paper will analyze how corporate lobbies go about exerting their influence over foreign policy and how corporations are a global political presence, perceiving their interests to be without borders. As a specific case study, the impact of lobbying on U.S. trade policy and the example of the Trans-Pacific Partnership (TPP) agreement as an example of how corporate lobbying definitively shapes U.S. trade politics and the international political process at large will also be examined.

When it comes to foreign policy specifically, corporate lobbies are an ever-present influence in the crafting of government policies. Whether in the European Union or the United States or other countries around the world, corporate lobbies view their interests and initiatives as truly global in nature. While corporate interests are rather explicitly investing in shaping foreign policy in a variety of issues areas such as arms sales, defense spending, and other areas with direct links to industry, one area, in particular, is especially vulnerable to corporate influence and thus valuable to analyze in-depth — trade and finance. U.S. trade politics is heavily influenced by the lobbying of business organizations and trade associations — in fact, the U.S. government itself often relies on interested corporate parties to provide it with both the expertise that shapes the agreement itself and the means by which to make the political case to the American public. Furthermore, during the eight years of negotiations over the Trans-Pacific Partnership, a major trade agreement between the U.S. and 11 other powerful nations, corporations alone paid $2.6 billion dollars to lobbyists to influence the content of the agreement and to promote trade liberalization to Congress and the American public through public protrade campaigns and costly mass media outreach efforts. As such, an examination of the case of U.S. trade shows a particular example of how corporate lobbying has a major influence on foreign policy, which can be considered a representative framework for understanding the dichotomy between corporations and government policymaking as a whole.

Those following a pluralist model of political participation may argue that multiple groups influence policymakers in any democratic system either directly through lobbying for particular interests or indirectly through participation in elections and political parties. This pluralist model of interest group influence acknowledges that different groups have varied resources at their fingertips but that on the whole, the democratic system tilts toward a broader public opinion litmus test that offsets even wealthy, well-connected interest groups or lobbies (Smith, 2000). In other words, it may be argued that almost all interested parties can have some level of influence on political outcomes if they so choose. However, it is in fact that very differentiation in levels of resources and access to political capital that demonstrates how wealthy and powerful organized interests “buy” policy outcomes through direct lobbying, political contributions, and corporate iron triangles that represent the union of business interests with political ones. This elite model of interest group influence sees an undemocratic shift in politics where those with money, such as large corporations have increasing sway over influential policymakers.

Another counterargument stems from the fact that compared to other types of interest groups, corporations spend money on lobbying and contribute to elections campaigns because they lack other significant forms of influence such as mobilizing members, appealing to constituents, or inspiring grassroots activism among the general public. This distinction is referred to as inside lobbying versus outside lobbying. Inside lobbying refers to direct lobbying of officials by insiders or lobbyists often through personal access, connections or insider-only events. Outside lobbying refers to public campaigns, appeals to members, or organized grassroots efforts encouraging constituents to mobilize and contact legislators, write letters, or voice policy support for to Congress. Because corporations intrinsically cannot be a major proponent of outside lobbying, skeptics of the idea that companies have an outsize influence on policy argue that corporate lobbyists have fewer resources for outside lobbying compared to other types of interest groups, and are thus no stronger a political force when it comes to directing policy outcomes. However, careful analysis of the policy process and the impact of the tools that corporations do have suggests otherwise.

By understanding the legislative process and when and how it is open to input from interest groups, one can understand how lobbies try and shape outcomes. The policy process can be described best as the following set of phases: agenda-setting, policy formation, decision making, implementation, and ultimately evaluation and feedback. In the policy formation and implementation parts of the process, which is where actual legislation is written and enacted, corporate lobbies tend to be more successful and often heavily involved compared to other entities such as citizen action or grassroots groups, which generally only have more significant influence over the agenda-setting stage. For example, the banking and financial sectors have been steady donors to members of the Financial Services Committee in the U.S. House of Representatives, where financial legislation typically gets started. During the 2014 Congress, for example, Financial Services Committee Chairman Jeb Hensarling (R-Texas), received 13 seperate donations from PACs run by Bank of America, Citigroup, Goldman Sachs, and JPMorgan Chase. On the contrary, non-corporate entities and private citizens without characteristically large sums of money and direct access to legislators cannot gain the same leverage in government. Indeed, it is this influence of business interests on setting the very parameters, providing the expertise for, and often formulating critical parts of any given policy that most prominently sounds the alarm with regards to corporate influence on politics.

This argument is further exemplified by the existence and significance of the U.S. Business Roundtable, which represents the most internationally competitive sectors of American business, and at its inception, “served as a kind of all-purpose political consulting organization to develop long-term strategic thinking for corporations faced with declining rates of profit” (Cox, 2012, p. 18). A coordinated effort by businesses across prominent American industries, the Roundtable was designed to counter deep discontent among American workers and organized labor with large corporations. Furthermore, with trade associations and organized business coalitions like the Roundtable, large corporations could work together and pool their capital to create a unified and actionable message about the role of business in the American economy. As Alcoa CEO and initial leader of the Roundtable said in 1975, “Overall, it becomes clear to me that business must take an active, aggressive role in developing an understanding of and support for the free-market system by reestablishing the public’s confidence in business.” (Waterhouse, 2013). Groups like the Roundtable are often immensely critical in the early stages of legislation development, as government officials rely on these kinds of groups for advocacy, expertise, and marketing of what at times are publically unpopular initiatives, such as NAFTA. At the policy formation stage of NAFTA, for instance, the President of Mexico, Carlos Salinas, worked directly alongside the Business Roundtable to convince then-President George H. W. Bush that the formation of a free trade agreement with Mexico was a top policy priority. In an indication of the unparalleled potency of business interests as policy prerogatives in Washington, President Bush subsequently formed the Advisory Committee for Trade Policy and Negotiations. This committee, unsurprisingly, was made up primarily of CEOs, corporate presidents, and members of the Business Roundtable, in addition to a few institutions of organized labor. Groups like the Business Roundtable were critical in pushing NAFTA onto the agenda as well as facilitating policy recommendations for the trade legislation. As such, money is not the only measure of corporate influence on policy outcomes, contrary to the suggestion of the aforementioned claim that there is an implicit weakness in corporations’ political power due to lacking outside lobbying capabilities. Actively engaged in policy formation, corporate lobbies exert an unprecedented amount of influence on what foreign (and domestic) policy looks like before it ever even reaches the floor of the House or Senate.

This example of trade is one in which corporations have a vested interest in shaping political and legislative outcomes. Corporations and industry entities are in particular impacted directly by the political choice to either liberalize or protect trade with other countries. Policymakers face a dilemma when deciding to support or reject free trade—on the one hand, the support of business is often critical for reelection campaigns; but on the other hand, there are various winners and losers when it comes to free trade including constituent jobs, local businesses, and big and small agricultural industries. The case of the Trans-Pacific Partnership regional trade agreement, in particular, is an effective and tangible means by which to illustrate how corporate lobbies have immense power in influencing foreign policy outcomes and understand the nuances in that process. The TPP, the largest regional trade accord in history, was designed to establish new guidelines and terms for trade and business investment among the United States and 11 other nations in the 21st century. As a whole, the group has a cumulative annual GDP of nearly $28 trillion and represented just about one-third of world trade.

As previously discussed, corporate lobbies have particular impact on not just the final outcomes, but in very development and initial shaping of policy in early stages in a way that is maximally favorable to business interests. With trade policy in particular, legislators often rely on business groups for expert information and experience. Thus, investing in lobbying during the early stages of development gives sizeable advantages to corporate lobbying organizations over other types of interest groups. This was especially the case for the TPP, as the first six of the eight total years of negotiations (2008–2013) remained secret from the public. During this lengthy initial period, corporations had unique and unprecedented influence with regards to the crafting of the trade agreement, far beyond the purview of the public eye and other interest groups. Considering the fact that the final agreement was 5,000 pages in length, it is more than feasible to imagine that lobbyists had countless opportunities to integrate their specific corporate interests into the legislation itself. Corporate interests were also conveyed during the decision-making (Congressional legislation) phase of the TPP policy development process, as evidenced by the sheer amount of direct cash donated to congressional members as they deliberated over the extensive agreement. The Guardian, using data from the Federal Election Commission, analyzed all donations that were received by candidates and incumbents for the U.S. Senate in early 2015 from corporate members of the U.S. Business Coalition for TPP, just before the consequential vote itself. In a further reaffirmation of the strong link between corporate lobbying and political outcomes, out of the $1,148,971 given to Senate campaigns, an average of $17,676.48 was donated to each of the eventual 65 yea votes.

Despite a long and expensive lobbying campaign on the part of prominent businesses nationwide, the Trans-Pacific Partnership encountered several unexpected and insurmountable obstacles that ultimately led to its downfall in the United States. Those who argue that the vast amount of corporate lobby groups or spending does not actually achieves outcomes, may suggest that the outcome of the TPP is a clear indication that corporate lobbying is not the political behemoth that public opinion would suggest. After all, despite billions of dollars spent to pass the TPP, it failed. However, the failure of the TPP was in fact another example of the realizable power of corporate interests in the political process, but as opposed to getting something desirable passed, companies demonstrated their ability to quickly turn their backs on government when the political climate and their own interests deemed it necessary. When the text of the agreement became available for public scrutiny in November 2015, more interest groups naturally began to engage with policymakers to influence the final legislation, leading to an eventual rise in countervailing lobbies opposing the TPP. Additionally, once the final draft was revealed after 8 long years of negotiations with 11 other countries, not all early corporate champions were satisfied with the outcome entailed in the agreement. Some of the most generous corporate spenders and involved lobbyists were unhappy with the final text, and quickly switched positions to vehement opposition, despite spending millions of dollars promoting the TPP. For example, the Pharmaceutical Research and Manufacturers of America were one of the earliest TPP supporters and had a major role in the policy negotiations, spending $110 million in just the first year of development (Tucker, 2015). However, once the final text mandated a shorter period during which corporate data on biologic drugs may be kept secret than the companies desired, the group pulled its support of the agreement. Joining forces with the AFL-CIO, the Sierra Club, and other corporate and public interest groups, they began actively lobbying against TPP in Congress, eventually securing its demise.

Through in-depth analysis of the traditionally referenced role of corporate money in politics, and the lesser explored day-to-day impact of lobbyists in every step of the legislative, policymaking, and agenda-setting processes, it is clear that corporate entities have an unparalleled and outsize influence on the general direction and tangible economic and social outcomes of US government policy at large. As evidenced by the presented examples of NAFTA and the Trans-Pacific Partnership, as well as the discussion of the historical and contemporary significance of organized business groups such as the Business Roundtable, there are many avenues by which corporations have and continue to shape all components of legislation and the American political system itself.

Works Cited

  • Center for Responsive Politics. (2017). Lobbying. Retrieved from https://www.opensecrets.org/lobby/.
  • Cox, R. (2012). Corporate power and globalization in U.S. foreign policy. New York: Routledge
  • Gibson, C. R., & Channing, T. (2015, May 27). Here’s how much corporations paid U.S. senators to fast-track the TPP bill. Guardian. Retrieved from
  • https://www.theguardian.com/business/2015/may/27/corporations-paid-us-senators-fasttrack-tpp.
  • Godwin, K., Ainsworth, S. H., & Godwin, E. (2012). Lobbying and policymaking. Washington DC: CQ Press.
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  • Tucker, W. (2015, October 6). Millions spent by 487 organizations to influence TPP outcome. Center for Responsive Politics. Retrieved from https://www.opensecrets.org/news/2015/10/millions-spent-by-487-organizations-to-influence-tpp-outcome/.
  • Waterhouse, B. (2013). Lobbying America: The politics of business from Nixon to NAFTA. Princeton, NJ: Princeton University Press.
  • Weisman, J., & Lipton, E. (2015, January 13). In new Congress, Wall St. pushes to undermine Dodd-Frank reform. New York Times. Available at https://www.nytimes.com/2015/01/14/business/economy/in-new-congress-wall-st-pushes-to-underminedodd-frank-reform.html?_r=0.  
16 December 2021
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