Though changes in trade policy create winners and losers within a given country, the net effect of lowering import tariffs is generally positive for the country’s economy as a whole. Now, however, tariffs are already low, so the trade agenda involves mostly addressing regulatory and other “technical” barriers to trade generated by countries’ domestic policies, with a core principle of international trade rules being to ensure that these domestic policies do not discriminate against imports.
But using legally binding trade agreements to influence the substance of policies that apply to both imports and domestic products alike can create friction between trade facilitation goals and broader public interests. Concerns that trade goals could inappropriately interfere with other public priorities is especially salient when larger, more powerful countries negotiate with weaker trading partners.
There are several problems with using trade agreements to constrain policies that are primarily domestic in their effects and affect trade flows only incidentally. First, the general presumption that trade liberalization brings overall net benefits does not necessarily apply when the subject of negotiations is regulatory policies that seek to strike a balance between public and private interests. Second, the business community in most countries has disproportionate influence with policymakers when it comes to trade policy, which makes striking the appropriate balance more difficult. Third, while corporate lobbying for provisions that constrain regulatory autonomy usually focuses on the trading partner, trade agreements are reciprocal, so any such provisions will impinge on regulatory authority at home as well.