Free Trade After the 2016 Elections

| March 13, 2018
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Did the 2016 election represent a revolt of a significant segment of the U.S. electorate against a seven-decades-long U.S. policy consensus that American interests are best served by promoting free trade and crafting durable free trade pacts with key American security partners? This was one of the themes addressed at the recent William B. Ruger chair workshop held at the Naval War College this past week, “U.S. trade policy: what should the future be?”

The Pew Research Forum data confirms that trade issues, along with other foreign policy matters, are not the leading issues of concern to American voters—but trade issues can intersect with more general concerns about the health and dynamism of the U.S. economy. And while the theory of free trade may be supported by a majority of Americans in the abstract, how it is executed in practice is critical. Loss of jobs due to outsourcing or competition from cheaper imports, for instance, tend to be critical drivers of opposition to free trade. On the other hand, to the extent that a person identifies his or her prosperity with the importance of preserving and maintaining global supply chains and trading networks, there will be stronger support for U.S. engagement.

In the past, the standard narrative for supporting the U.S. role in expanding free trade was that free trade created jobs or boosted wages for U.S. workers. One of the areas where there appears to have been some dissonance between the raw data observed by the economists and the reality of what has occurred on the ground is that while some of the benefits of free trade were passed along (notably in lower prices for some goods and services), other savings that might have been channeled into higher wages, reinvestment, or in redistributive measures to compensate those sectors and regions of the country that experienced losses due to free trade agreements were not always passed along. In general, Americans tend to see the benefits and losses from free trade as generally balanced out.

If Americans do not accept the standard narrative used by those politicians who are in favor of promoting free trade pacts with other states—that such agreements increase jobs and wages—does this mean that there are no arguments that can be marshalled to create a new narrative? Participants suggested that there is one—stressing the value and benefit of creating and sustaining a transparent, predictable rules-based order. The United States has played and continues to play an outsized role in setting the rules—which then help to limit the costs we might have to pay in a global order that would be more chaotic, random, and capricious. In other words, a world where the U.S. is less willing to help set standards and enforce them would be less stable and bring higher costs.

One of the key conclusions I drew from the discussions is that it is imperative for other states that want the United States to continue to play a major and leading role in maintaining the current liberal world order to realize that taking steps that may serve their short-term interests but that contribute to a perception among Americans that the U.S. is being taken advantage of by free-riders ends up undermining U.S. voters’ confidence in the value and efficacy of the international trading regime and by extension the global order as a whole. The theme of fairness and reciprocity is an important component of any renewed narrative about U.S. engagement in the world.

Congressman Michael Turner (R-Ohio) notes the importance of reclaiming a narrative on U.S. involvement in the world that appeals to U.S. voters, telling Josh Rogin of the Washington Post, “Democracies lead by their electorates coming along and supporting the agenda and the direction of the Western structure.” On matters of trade, there is still work to do.

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