The new rules of the road: a progressive approach to globalization.

September 23rd, 2016 at 3:45 pm

For the last few months, Lori Wallach (the director of Public Citizen’s Global Trade Watch) and I have been working on what we think of as new “rules of the road” for global trade. I’ve highlighted some of these ideas already in these parts, and a recent summary of our agenda just ran in The American Prospect; here’s a link to the full white paper.

The intro to the white paper (below) explains our motivation, but it’s really very simple. Like everything else, trade and globalization have upsides and downsides. They create winners and losers. They boost the supply chain of goods and services, holding down price growth, but that also shows up as real wage stagnation and job losses for significant groups of workers.

Unfortunately, both the trade debate and trade negotiations have long been co-opted by multinational corporate interests at the expense of workers and consumers both here and abroad. Fortunately, this election season has finally elevated that reality. The days when elites, both here and elsewhere, could ignore those who perceive themselves as hurt (on net) by globalization are hopefully gone, if not for good, than for a number of years.

That leaves a hole. Trump fills it with nostalgia for a period when America was less exposed to global trade, immigrant flows, and non-whites. Such nostalgia may appeal to certain voters, but that America isn’t coming back (nor, for the record, would I want it to). What should fill the gap? Read on:

The emergence of trade as a top election issue shows that the economic and social costs imposed by our current trade policy model have reached a tipping point. For purveyors of the status quo, this is a crisis, as the inherent inequities in their approach to trade have finally surfaced. For those of us who have long recognized such inequities, the current moment presents an opportunity to craft a new model, a new set of “rules of the road.” Far from trying to set back the clock on globalization, it is only through this new, far more inclusive, non-corporate-centric approach that we can rebuild American support for expanded trade.

This will not occur by continuing to assert that, despite their experiences, those who perceive themselves and their communities as having been hurt by exposure to the forces of globalization are just plain wrong. Or that the next trade agreement will be the one that fixes everything. Or by offering the increasingly large portion of the population who find themselves on the losing side of the current rules some temporary adjustment assistance.

It will only change if we change the content of our trade agreements and, in turn, the process by which we negotiate them. The “new rules of the road” must reflect the economic realities and needs of a much broader group of stakeholders. Crucially, to achieve such rules will require much greater transparency and inclusiveness in the policymaking process, helping to ensure that the resulting substantive rules represent the needs of the majority. This memo focuses on the substantive and procedural changes needed to realize these goals.

Globalization will surely proceed apace. Neither Donald Trump, Brexit voters, nor anyone else can put that toothpaste back in the tube. Nor should they. It is through expanded trade that we seek new markets for U.S. products, expand the supply of goods and services, and provide emerging countries with opportunities to grow by trading with wealthy countries.

But trade and contemporary free trade agreements (FTAs) are far from synonymous. The recent U.S. International Trade Commission (ITC) report on the “likely impacts” of the Trans-Pacific Partnership (TPP) underscores that these agreements are not mainly about cutting tariffs to expand trade nor about jobs, growth, and incomes here in the United States. Rather, they’re about setting expansive rules that determine who wins and who loses.

For years, those advocating for the “winners” that have been able to capture the negotiating process essentially said to those hurt by the resulting agreements: “Don’t worry, this will be great for you too. And, hey, if it isn’t, we will make it all better with adjustment assistance and some training.” The hollowness of these false promises is finally evident to the broad electorate. The rules must be written for all the cars on the road, not just the Lamborghinis.

Our new framework starts from the premise that the current “trade” agreement process has been co-opted by corporate interests whose goal is to establish binding, enforceable global rules that protect their investments and profits. This corporate capture comes at the expense of both peoples’ rights to democratically govern their own affairs and the ability of sovereign governments to effectively enforce worker, consumer, and environmental safeguards.

What follows describes a new set of rules of the road, one that puts the economic needs of working families at its core while excising corporate, protectionist influences from the rules. Achieving such inclusive policies will require a new policymaking process to replace the current system of opaque negotiations, a system heavily influenced by hundreds of official corporate trade advisors while the Fast Track process limits Congress’ role and the public is largely shut out.

Continue here…

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5 comments in reply to "The new rules of the road: a progressive approach to globalization."

  1. Smith says:

    This why we have Trump. It’s Obama and Clinton’s fault. Obama still wants to pass TPP, and Clinton called it the gold standard of trade agreements before Bernie Sanders forced her hand.

    The easy part would be just saying no to any new trade agreements. Learn from the Republicans, just say no. The hard part is undoing the damage already done (like giving China “most favored nation status.” No one could conceive in the 1980s that Russia and China would change as quickly as they did in the next ten years. But China is progressing faster than India and has no reason to turn democratic, establish the rule of law, become a liberal democracy. But their leaders will realize that the two systems of government can not coexist. Western thinkers have repeatedly claimed increased trade, modern communication, travel, will open closed societies up to the idea that it doesn’t have to be that way. My question is, don’t you think the leaders in less democratic countries know that too? We still have big trade deficits with Mexico, Japan, Germany, and Saudi Arabia (and pre fracking with Canada)

    With a billion people, and even more concentrated wealth, they’ll just buy America. After Europe.

    • Smith says:

      I should have tempered the remark above by first saying I agree with everything in the report. The implication of my remark echos further the position in the paper about choosing trade partners wisely. I’m saying we definitely don’t. We do need an anti-trade agreement, an international movement for worker rights that boycott countries with out basic freedoms. Boycott, divest, and sanction those countries.

    • Paul Fagan says:

      Agree 100%

  2. JF says:

    The point of all trade agreements is the agreement on both sude and all around that the economic systems all need to move to consumer led economies where the bulk of production is done domestically, the transition that China stanced to accomplish apparently.

    The US population has assisted the Chinese population in getting to this transitional point. The US cannot take credit for having done this with intention and thoughtfulness as the dislocations that occurred in the US are unfortunate.

    The US too must look do the same thing; that is, ensure it can produce and supply most of what its consumers need via domestic work/production. If all sides agree, and the US policymakers understand perhaps we can reach these better conditions without undue harm perhaps even sooner if there are intentional efforts.

    US laissez faire is not thoughtful, its the opposite. It is certainly true that the multi-generation trade agreement policy advocated here requires the other societies to agree themselves that their purposes are to obtain economies that serve their own people with goods and services based on jobs for their own people for the bulk of this production. Hard to deal with some countries where the purposes are oligarchic wealth and power concentration. But it would be ok for the US to be first to say that its purposes are those too. The fundamental point of reaching trade agreements – trade helps in transition and in the future when the purposes of these new, current agreements are accomplished, as measured by employed people serving themselves well.

  3. Ken Wallace says:

    This is the road map we have been missing since 1980. The idea, pushed by the elites, that globalization is some natural, unstoppable force to which we must adapt defies the reality that it is really just a set of trade rules determined by powerful corporate lawyers for the benefit of a few. Now we know better.

    It has taken over a generation to see the devastation caused by bad trade policy. Whole manufacturing sectors have disappeared for no better reason than to exploit foreign labor/environment. Lower cost foreign goods have been attractive to the ruling class but of no benefit to the many on the down escalator. This accounts for the lack of corrective action to date and, finally, the populist uprising that now support Sanders or Trump.

    I just hope this sane approach to trade has not come too late.