Handbook of the International Political Economy of Trade, Edited by David A. Deese


[MUSIC PLAYING] So this book is about
the most important areas of research that are
going on right now on the politics and political
economy of international trade. So it tends to cut
deeply into 15 or 20 different topic areas that
fall into clusters, logically. So my introductory chapter
tries to map out a little bit about the evolution of
the politics of trade, especially, where international
agreements are going, where they haven’t gone. But the book as a
whole really tries to look at the most
important research that’s gone on in the last decade
or so and to highlight those areas of research. Trade is one of those elements
of human interaction which seems to be very important
historically, culturally, economically, and politically. So part of globalization
led by trade is challenging people
with foreign ideas, foreign influence tendencies
to try to become more like other societies’
consumer goods and products and so forth and so on. But at a deeper
level, trade seems to push people to
reconsider their identities, to perhaps vary or
extend their identities to incorporate
some of the foreign and also to press
back and push more towards writing in their
own language or products in their own country. So trade is both an integrating
force and a divergent force– a force causing divergence
on the part of people and companies. A lot of the more
recent research shows that trade tends to
bring countries together in terms of income. Very slowly over time, there is
a convergence in income levels that’s caused by trade. We know that trade adds
to growth nationally. And that tends to reduce
poverty over time. And we know, also, that
the more advanced Western and other
industrialized countries are being tied together
more and more tightly by trade that companies do
within their own frameworks, within their own corporate
framework and network. And this tends to
unite economies across corporate
boundaries in what we call intraindustry trade. That in turn makes it easier for
these industrialized countries to make trade agreements. But it also tends to create some
divergence between the products and the markets of developing
countries and the more advanced westernized and
post-industrial countries, if you want. So trade is
integrating countries. It’s advancing regions
and regionalism a lot. Most of the trade deals that
have been done politically in the last 10 years have
been bilateral and regional. And in fact, trade is
increasing the integration and the connectedness of
regions around the world even more than it is globally. So for example, in Asia,
Asian countries now actually are pretty integrated in trade. In Europe, of course, they’re
extremely integrated in trade– North America. So with the exception
of sub-Saharan Africa, most regions are benefiting
from evermore intense trade connections within their region. The problem globally,
of course, is that we need strong global
arrangements and institutions too. And we need to
keep updating those to keep up with bilateral
deals and regionalism because otherwise certain
countries in certain regions are left out. So at the moment, the
United States, actually, and the European countries are
emphasizing a transatlantic trade deal that the United
States would like to complete. And the United States is
also actively pursuing a Trans-Pacific trade deal
that it would also like to complete– and has been highlighted
in the newspapers recently the Trans-Pacific Partnership
would exclude China. So China’s pushing
its own version, trying to have a more whole
Pacific basin agreement that it would be included in. So even the United
States at the moment is really pushing these two
large Asian and European regional deals to the
exclusion, really, of a lot of high-level
political capital and emphasis on the
international trade round through the World
Trade Organization. So inequality is an extremely
important topic right now. And Thomas Piketty’s
book this summer, the French economist’s
the book, was I think a very important
addition to this debate. We know that, in
part pushed by trade, inequality is growing
perhaps not even as much across countries as it
is within countries. And so the advance of technology
and education and training is probably the most
important driver of inequality because it tends to
segment economies into lower-skilled and highly
skilled or highly educated workers. And that process continues. But trade, then,
tends to privilege highly productive
companies and products that are made very efficiently and,
again, intraindustry trade. So to an extent, while the
long-term process of trade helps income convergence
across countries, in the short and
medium term, trade, while it helps reduce
poverty, is also likely adding to inequality. And again, it’s
adding to inequality because it tends to reward
high-productivity companies, high-productivity sectors,
and highly educated, highly skilled workers and to create
more intense competition among low-skilled or lower-wage
sectors of the economy, professions, and so forth. So trade is good in the
sense of reducing poverty, but it’s not helpful
in terms of inequality. And that emphasizes the politics
and the governance of it again because
countries really have to regulate trade, encourage
multinational corporations and foreign direct investment
that’s helpful to their country and generally discourage other
forms of investment and trade. And of course, part
of the reaction is you don’t want to cut
back on your trading. But what countries do need to
do is increase their education processes, their trade
adjustment assistance programs, their training for workers. So a lot of the things that
economies and societies are seeking to do anyway
are very positive and will help countries
take advantage of trade, rather than have trade
accelerate the income gap and the income inequalities. So at the moment, again,
a lot of the trade– the politics of trade is
holding countries back from making arrangements. And part of that is
because globalization has increased the number
and the duration of crises. So we had the Great
Recession of 2008, 2009. And then we had a major
economic sovereign debt crisis in Western European. And countries have been
scrambling, on the one hand, to manage severe economic
and financial crises and, on the other hand,
trade and other aspects of globalization have reached
further into countries and are affecting occupational
health and safety regulations and rules. And so now the politics of
trade is really as domestic as it is foreign
and international. And what that
means is that trade is evermore political in
the context of especially democratic countries. And it also means
that trade is also connected, at least indirectly,
with these increasing crises. So the combination of
having to manage crises and having to cope with the
domestic political pressures means European Union countries,
Brazil, India, and the United States have a hard time actually
coming together and agreeing on major global agreements. It takes small group
leadership– something I wrote a book on in 2008 called
World Trade Politics– where you need groups of three,
four, or five prominent leaders or trade negotiators from some
of the most important countries actually providing international
political leadership in that direction. Absent that, which has been our
situation for the past 10 years or so, what we’re
getting is just a proliferation of bilateral
and multilateral regional deals that, again, are good if they
lead to evermore intensely interconnected
regions and opening up of trade markets for
developing countries. But regionalism and
bilateralism has its limits because it empowers the larger
countries that have bargaining leverage– makes it harder
for smaller countries that are important to everybody to
bargain in groups and to even the playing field. And it also means that
we have this spaghetti bowl of agreements that are not
all consistent with each other across different
regions of the world. So one of the main avenues
of possible cooperation but more competition
is around the ideas that structure and frame trade. And in the West, we adhere to a
capitalist, highly competitive notion of pushing for
trade liberalization. And developing
countries and countries like Russia, China,
for example, adhere to a more state-led growth,
a more state-supported growth strategy. So the competition
around ideas is important because the Western liberal
consensus, the Washington Consensus, is being
pushed, pressed, questioned in some important
ways by developing countries. And the role of the state
and state-supported growth is itself a major challenge,
particularly because of the rise of China. Now ironically, then,
one of the main cleavages in international politics
is that the most liberal, most open international
trade markets are precisely those among the
Western and industrialized countries and in
manufactured products, where trade barriers
tend to be very low, intraindustry
trade is very high, and there’s a very intense
competitive, but also very productive and
productivity-enhancing type of trade. In agriculture,
however, the markets are segmented into some
that are relatively open and where there are a lot of
exports from Brazil, the United States, European
Union countries, but a lot of other
export markets that are highly protected. So the irony is the West
pushing and sometimes even a bit lecturing other countries about
liberalizing and being more capitalist in their framework,
while we protect heavily some of the key
markets that are most important to the
developing countries. So for example, about 2%
of Western countries’ GDP comes from agriculture,
whereas for many African, a good number of even Latin
American and South Asian countries, agriculture
is really– shapes the culture, the economy,
even the political system much more importantly. But we’ve shut a
lot of those doors. And part of it is
because we have such powerful political
interests in the EU and in the US and also
in India and Brazil and China that protect– so for example, the sugar
sector in the United States is as powerful as
the banking sector. And the lobbies
that lobby Congress and the executive
branch and the agencies are very, very powerful. So places like sugar and
cotton is another area– and a lot of the niche
markets, everything from Florida citrus to
strawberries in California or potatoes in Maine or
especially the dairy industry, for example, is very
highly protected. So most consumers
in the West don’t realize that we’re
doing substantial damage to developing and many
least-developed countries by being very
non-capitalist, protective of some of these areas. So the challenge
for the future is to live by the slogans
about slow food, local growth, advancing farming
and farmers while understanding that a lot of the money
that the fed gov spends goes into a small number of
very large agro industries, very large businesses
in the United States. They don’t need subsidies. They don’t need high
tariff protection, and yet Congress continues
to give it to them. So it really is
a process of sort of trying to walk
our talk in the West and yet understand the
challenges in terms of the role of the state
and development policy and the role of
alternative ideas in terms of
development strategy. So trade cuts across
every issue area in international
political economy, in national economic policy
from investment to regulation. And so it affects our lives
in a very important way. And every year, it affects
our lives more directly. So the future of
trade, in addition to trying to
liberalize trade, is to understand how it
affects everything from labor rights
and human rights to the internet and immigration. So for example, on the
movement of people, one of the grand bargains,
which in theory should happen and practice is
extremely difficult, is the most important
product for a lot of least-developed countries is
their people, it’s their labor. And people, in
some ways, in order to be able to work
and earn a living and support their families,
need to be able to move around. And sometimes that
movement is across borders. So the acceptance of people
for a temporary or longer-term purposes for work, especially,
is a very hugely important part of trade for many countries. And of course, it’s a huge issue
in the United States right now. It’s extremely hot and
difficult, complex political issue. And in other countries
of Western Europe, as well, they’re feeling
the pressure of immigration. The politics, in some
weight, shifts to the right. And there are some trends– some
of them not very nice trends– that come as a result of the
pressure from immigration. But the larger picture is that,
really, the movement of people is part of trade. We see it as the movement
of goods and ideas. But it isn’t just that. It’s also about people being
able to move around and support their families. On the internet,
the United States and Canada and
even Western Europe have not really worked
together effectively to develop a clear set of
policies and a proposed set of regulations to keep
the internet free and open. We don’t have clear ways
of approaching this. We haven’t made
a clear framework to propose to other countries. And so the internet itself
that’s so central to trade is an aspect of trade– how we connect with
other societies, not just how we
sell goods but how we interact with other societies
and the movement of ideas, communication, and so forth. And we’re really not
doing a good job yet of trying to project
for other people how the internet should be
seen, how it should be used, and, especially, how it
should be kept open and free. And then finally, also
in terms of labor rights and how people work, of
course, part of what happens is we consume goods
in the West, but we don’t look at the working
conditions for the workers that are producing those goods. So that’s been a
principal connection as looking back down
the supply chain and looking at labor rights. And so one of the things that’s
happened in the last 20 years, particularly since the passage
of the North American Free Trade area in the mid-’90s
and the Uruguay Round of international talks
under President Clinton, is that we’ve begun to connect
environmental protection and labor rights with
trade agreements. And so part of the
future of trade is really kind of
having countries decide how labor rights and
the regulation of labor should be integrated into trade. And if countries are
pretty clear violators of labor rights, should there
be consequences in terms of the trade arrangement? Should we pull back on trade? Should there, ultimately,
even be trade sanctions against countries
that are really abusing their workers when
we’re consuming the products that they’re producing? And again, part of
it, like the internet, is a decision that
countries have to make explicitly
about whether we’re going to coordinate policies. At the moment, the United
States and the European Union, for example, have
very different ways of integrating labor standards
into their trade agreements. Both think that labor rights
are an important part of trade agreements, but we do it in
quite dramatically different ways when we carve
out those agreements. So it would be helpful to
actually have an understanding. And again, part of
that will be done if we reach this Trans-European
sort of trade agreement and the Trans-Pacific
Partnership– part of that will be done. Not so much in the Trans-Pacific
one because those countries sort of reject the
idea of regulating environment and labor as
part of a trade agreement. But when the US and the
European Union do an agreement, then, clearly, there’s going to
be some commonality on the way that we see environment
and labor rights integrated into trade agreements. And that could be
a very good thing. [MUSIC PLAYING]

Maurice Vega

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