Vassilis Ntousas, Senior International Relations Policy Advisor at the Foundation For European Progressive Studies shares his thoughts on exiting the trade maelstrom in a progressive way
Over the past decades, international trade has been a significant factor in stimulating growth, encouraging job creation and promoting better living standards. Worldwide trade liberalisation has led to the creation of new wealth, new innovation and new opportunities in the global economy, bringing substantial benefits in terms of increased productivity, efficiency and revenue. Trade agreements have emerged as a key tool for further economic integration and cooperation.
At the same time, however, the consensus that the impact of international trade can only or primarily be positive has been (rightfully) broken. Tied to a form of untamed, unregulated globalisation, its results have at times been uneven, unequal and ultimately unjust for broad swaths of the population: exacerbating economic, societal and environmental inequalities and producing ‘losers’ in terms of jobs and incomes, not compensated adequately for their losses. Trade negotiations have also been often conducted in an opaque way, with the interest of the top income groups in mind, resulting in the erosion of rights and standards.
In our rules-based open global economy, international trade is, therefore, neither a panacea nor a predicament in itself. Similarly and especially against the backdrop of the experience of the last few years, it is now clear that the consequences of international trade are never neutral: trade is essential for growth, jobs and competitiveness, as much as it can have a profoundly negative impact on the ground if left improperly regulated or managed. Put more simply, countries might benefit from trade as a whole, but these benefits are unequally distributed, with certain people almost never being the recipient end of them: being left behind, facing the spectre of sudden unemployment, often displaced by competition from cheaper imports, dealing with painful adjustments to their livelihoods, ultimately being structurally blocked from taking advantage of the prosperity that trade can offer.
Precisely because trade is not a neutral process, but its impact – positive or negative, wide or narrow, deep or superficial – depends on the policy character and direction given to it by those in power, there is profound political responsibility in recognising the challenges that exist in ensuring that global trade is truly free and fair and in ensuring that its positive side is evenly harnessed and experienced.
Solving this admittedly delicate equation puzzled the progressives for long. The last decade has exposed many fissures within the progressive camp, with parts of the movement exaggerating the benefits of trade, but underestimating its costs and others doing the precise opposite. This led to a lack of a clear political response to the gross unevenness with which many of trade’s benefits have been distributed as well as to the web of inequalities that have spun wide and deep within our societies due to this.
Learning from the mistakes of the past and, therefore, updating and modernising the content of policy to meet the challenges not of yesterday, but of today and tomorrow, has also been a difficult undertaking. Nonetheless, intelligent and intelligible compromise positions are finally arising within the progressive camp, recognising that: “between the faithful and unconditional promoters of free trade and the populist critiques defending protectionist and nationalist visions of the world, there is a critical political space for progressive forces to defend a regulated vision of globalisation”.
Credibly occupying and actively defending this space is equally critical. The Trump administration’s trade histrionics and his extremely risky tit-for-tat approach with China are only part of the picture which explains the urgency of the moment. With trade war rhetoric ramping up globally and with tariff offensives proving increasingly painful for citizens, consumers and companies, how can social justice be promoted at the national, regional and global level? With many hitherto champions of (trade) multilateralism actively working to undermine the system, including at the World Trade Organization (WTO) level, how can we ensure that the global system fairly represents the interests of all countries, big or small?
With the U.S. but also other countries seeking quick bilateral trade gains at the expense of their support towards this multilateral system of negotiations and settlements, how can we restore trust to the system instead of falling back to an almost reflexive state of protectionism?
And for that matter, in this climate, how can we guarantee increased transparency in negotiations and decrease the influence of the corporate agenda, which usually takes place through means fair or foul?
These are rhetorical questions, of course.
Allowing a resurgent, assertive form of protectionism (and its pernicious twin, nationalism) to dominate our global thinking and practices, we can bid farewell to any semblance of having important global progressive causes and objectives, such as the Sustainable Developments Goals, materialise and succeed. What is more, inaction in the face of the perilous pas de deux that is currently unfolding and falling into the trap of retaliatory actions can deepen economic anxieties and inequalities, unnecessarily stripping societies of the benefits of trade while fuelling anti-democratic sentiments in many of our countries.
This is not a Kassandra-like set of warnings; looking back to the 1930s can easily offer a bitter sense of déjà vu when considering recent developments. Trying to weather this perfect storm that seems to be brewing, progressives need to grasp both the sense of urgency and their historic responsibility in reversing the situation. Crucially, this needs to happen not in any way and at any cost.
Navigating and exiting the current trade maelstrom, these efforts should not be guided by an abiding faith in trade’s potential in spurring prosperity under any circumstances, but by a nuanced understanding that compromises need to be made so that the global trade regime is not only defended but also refashioned towards a more progressive direction; a direction that ensures that trade works for all of society.
Senior International Relations Policy Advisor
Foundation For European Progressive Studies
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