U.S. credibility in trade has been undeniably damaged in recent years but perhaps not yet beyond repair, argues a new trade monograph from the Chicago Council on Global Affairs. Delving into the forces shaping trade policy for the last three decades, the research highlights a way forward to repair a bipartisan coalition of support for trade and trade agreements.
The monograph, “Rebuilding a Bipartisan Consensus on Trade Policy,” offers a primer on the United States’ rapidly shifting trade crisis, how the country can navigate out of this trade mess, what options are there for new and different approaches, and what happens if those fail. The report details the largest trade developments of the last few years including Brexit, the U.S. withdrawal from the Trans-Pacific Partnership and the renegotiation of NAFTA culminating in USMCA.
“Trade has fallen apart largely because of a misunderstanding of how trade agreements work,” said Phil Levy, senior fellow on global economy at the Chicago Council on Global Affairs and former White House trade economist. “Attitudes towards trade in both political parties have resulted in policies with short-term costs, but the more serious, long-term penalties are still to come.”
Exploring paths the country might take to move toward a nonpartisan consensus on trade, the report outlines potential solutions ranging from easy to difficult.
Simple and viable
- Transparency in Negotiations
- The current impotence of advisory groups limits the extent to which the represented groups may feel their concerns have received a fair hearing.
- Education and Advocacy
- Amending the lack of trust in expertise that characterizes modern policy discussions by creating a middle ground between negotiations being held in public and the current, closely held approach.
- Trade Adjustment Assistance (TAA) rethink
- Create programs to help workers who have been harmed by trade. While there is a reasonably broad consensus that the United States should work to help those displaced by trade, the difficulty lies in identifying those people and figuring out an effective means of help.
- Investor-State Dispute Settlement (ISDS)
- Both US and European trade agreements have made use of the ISDS system for decades, but the ISDS clause was the basis of TPP objections in the United States and of large protests in Europe against TTIP.
Reworking both the TAA and ISDS legal standards is anything but easy, but there are sufficient common objectives from opponents and proponents that compromise could be reached.
“The Trump administration has put trade policy – and tariffs in particular - at the forefront of our national policy discussions for the first time in decades," said William Ruger, Vice President of Policy and Research at the Charles Koch Institute. "We are pleased to support Levy’s contribution to this critical conversation. Unfortunately, many thought leaders took the post-war trade liberalization consensus for granted. But we now recognize the need to reinvigorate the study of trade and to make the case for free and open trade in the current era. Thankfully, Levy is a careful advocate of freer trade whose thoughtful arguments guide his readers through these nuanced issues.”
Download the full report here.
The monograph was made possible through a grant from the Charles Koch Foundation.