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Progressives and Trade

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While many issues divide the progressive coalition—which I understand as an umbrella term for the center-left, left-liberals, democratic socialists, and various social-justice movements—international security and international political economy provide some of the most intractable disputes. Disagreements about health policy, for example, primarily revolves around the wisdom of incrementalism and the specific mix of policies best positioned to produce universal health care. But, at least on face, there are very serious divides about, for example, US involvement in global affairs, the use of force, and open trade. My view is that many of these divides are exacerbated and used as wedge issues by what I call the “paleoleft,” and that it should be possible to work out compromises on many of them. But I know that view is controversial.

When I write about these issues, I usually focus on international security or broad propositions about international order. These are my areas of academic expertise. Moreover, the nexus of domestic labor, foreign labor, and trade is usually Erik’s beat at LGM. Nonetheless, even before recent developments, it’s been obvious that progressives need to think much harder about international political economy in general, and trade in particular, than, say, engaging in knee-jerk support of protectionist measures. Many of the most pressing economic concerns for progressives—domestic inequality, the financialization of American political economy, corruption, and reducing carbon emissions—are transnational in character.

Given this, I found Jennifer Harris’ piece at Democracy interesting, and worth a look. Readers might also consider Sean Ehrlich’s new book, The Politics of Fair Trade: Moving Beyond Free Trade and Protection, which is on my list.

Overall, though, I find the focus on trade, as well as the institutions of trade governance, as a bête noire somewhat misguided. For one thing, given the transnational character of our challenges, we absolutely need solutions that use the machinery of global economic governance. No matter how much progressives want to reform or overhaul these institutions, we must recognize (as commentator Yestobesure notes) that the goal of the Trump administration is to tear them down.

Officials have indicated they see little chance that Trump will continue exempting EU companies from the duties of 25 percent on imported steel and 10 percent on aluminum. “Our task is to find a collective response,” Macron said, adding that “only a reformed WTO can give us this framework.”

Meanwhile, the WTO is being slowly strangled to death, a retiring trade judge whose replacement has been blocked by the United States, said in his farewell speech, delivering a thinly-veiled rebuke to the Donald Trump administration.

Ricardo Ramírez-Hernández served two terms as a judge on the WTO’s Appellate Body, which acts as the final court for trade disputes between countries. Since his departure last year, the United States has been blocking the process to replace him and other judges, throwing the WTO into crisis.

“This institution does not deserve to die through asphyxiation,” Ramírez-Hernández said. “You have an obligation to decide whether you want to kill it or keep it alive.”

In a speech introducing Ramirez-Hernandez, WTO Deputy Director-General Karl Brauner said there was “no movement in sight” to unblocking appointments.

“This is frightening,” he said, adding that it was an illusion to believe the WTO could manage without its appeals judges. It remained to be seen if the WTO was an achievement of civilization or only a temporary experiment, he added.

The alternative sought by the Trump administration—bilateral deals focused on transactional goals, regional arrangements with sunset clauses, and the like—will ultimately prove incompatible with broader progressive goals. They also raise the specter—as we have seen with Trump’s ham-fisted handling of the Trans-Pacific Partnership—of the US being locked out of important segments of international trade. When and if the US seeks to gain access to these arrangements, it risks finding itself with significantly reduced bargaining leverage. The nightmare scenario: Washington becomes reliant, by necessity, on using Trump-style “protection racket” threats to compensate for that reduced economic bargaining power, and that at some point our allies decide the game isn’t worth the candle.

So, should progressive resent being pushed into defending trading arrangements that they blame for increasing inequality? I don’t think so. And not just for the reasons that I’ve already discussed.

It may seem odd, given my insistence on the need for internationally-oriented progressivism, but my sense is that the problem really isn’t open trade, per se. Rather, it is the coupling of open trade with, for instance, the rollback of social insurance, inadequate investment in human capital and economic infrastructure, tax policy, and an unwillingness to really confront the downsides of capital mobility and offshoring. These policies ensured that the gains from trade have gone disproportionately to the wealthy, that losers were inadequately compensated, and that the US is much less able to exploit areas of competitive advantage that should be available to an extremely wealthy country.

In brief, most of the policies that progressives like about social democracy are simply not incompatible with, in general terms, a more liberalized trade environment. The things that progressives want to achieve require the very instruments that Trump is trying to blow up. This does not mean that everything Trump has done is wrong. We do need to be tough on intellectual property theft. But progressives should feel no qualms about opposing the overall thrust of Trump trade policy. In the meantime, we need to invest significant effort into developing progressive thought on international political economy. Which is, alas, not a project that I can contribute much to.

Image by James 4 [CC BY-SA 4.0 (https://creativecommons.org/licenses/by-sa/4.0)], from Wikimedia Commons

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