What’s Needed to Restore Faith in Trade and Globalization?
This presidential election season has been notable on many fronts, and one has been the bipartisan skepticism about the benefits of trade and globalization. Both major presidential candidates are on record as opposing the Trans-Pacific Partnership (TPP) agreement and both question the benefits of new trade agreements. In part these positions reflect a growing distrust and unease with trade and globalization by the American electorate. Needless to say, this has Washington’s pro-trade establishment deeply concerned.
The Information Technology and Innovation Foundation (ITIF), a Washington, D.C.-based think tank, held a discussion last month on the politics of trade and restoring faith in globalization, focusing on some of the causes as well as suggestions for where policymakers can look next.
Two core problems face proponents of free trade and globalization: Despite the existence of the World Trade Organization, many governments still don’t abide by international rule, and enforcement of those rules is lacking. There is more to free trade than simply opening up the marketplace; enforcement is just as critical as ratifying trade agreements, such as the TPP.
Caroline Freund, a senior fellow at the Peterson Institute for International Economics, said that policymakers need to better publicize the benefits of global trade. The panelists all agreed that politicians from both sides of the aisle tend to only tout the more sensational issues relating to trade, rather than giving balanced explanations of both its benefits (domestically and internationally) as well as its problems.
The director of the Herbert A. Stiefel Center for Trade Policy Studies at the CATO Institute, Daniel Ikenson, noted that the word “trade” has become a catchall for all kinds of economic anxieties, and that clarifying its meaning in the public’s eye will be essential for changing the tone of the global conversation.
“Trade policy is one piece of the puzzle” regarding the future of the global economy,” said John Veroneau, former Deputy United States Trade Representative. In order to restore faith in globalization, policymakers need to refocus and view trade policy through the eye of the consumer, while trade enforcement should be seen through the eyes of the producers to ensure that domestic manufacturing is being treated fairly. Future conversations need to address the issue of dislocated workers, many of whom are both directly and indirectly fueling the global anti-trade sentiment.
One of the major issues facing policymakers in steering the public discourse on trade and globalization is that free trade doesn’t actually have a single, definitive meaning, as was pointed out by Clyde Prestowitz, former counselor to the Secretary of Commerce. The difficulty in pinning down a single definition of free trade is one of the things that pro-trade policymakers need to address first, because communicating their aims more effectively to the public will be crucial for gaining support in the coming months and years.
The panelists all urged taking a harder stance on countries that flout the rules of the international trading system. By doing so, the open marketplace will become more effective at producing both domestic and international growth, and it will become simpler for policymakers to fix the current trade imbalances that plague the system.
ITIF President Robert Atkinson pointed out that some people are going to hate the concepts of free trade and globalization no matter what arguments are put to them. To change the minds of those people and the public at large, the only path forward is to establish robust innovation policies in parallel to efforts to enforce trade rules to push back against mercantilist trade policies around the world. Then, and only then, will we have a shot at turning the growing anti-trade tide. The review, improvement, and implementation of free trade policies must be a priority for the next administration, no matter which candidate is voted into office.