Liberalized Trade Is Under Attack. Can It Be Saved?

Liberalized Trade Is Under Attack. Can It Be Saved?
Demonstrators protest against the Transatlantic Trade and Investment Partnership, TTIP, and the Comprehensive Economic and Trade Agreement, CETA, Hannover, Germany, April 23, 2016 (AP photo by Markus Schreiber).

Trade is essential to every economy in the world. But policies to further liberalize trade are under attack. Both U.S. presidential candidates oppose the Trans-Pacific Partnership (TPP) agreement negotiated by President Barack Obama with 11 other Pacific Rim countries, though Democratic candidate Hillary Clinton has supported it in the past. The Republican candidate, Donald Trump, has threatened to withdraw from the World Trade Organization and impose steep tariffs on imports from China and Mexico if they do not comply with his demands. In June, a majority in the United Kingdom—albeit a slim one—voted to leave the European Union, the world’s largest trade bloc. Although the U.S. and Europe are already major trading partners, negotiations to more closely bind their economies seem to be making little progress in the face of stiff resistance from civil society groups in major EU countries. So what is behind the backlash?

In the wake of the Great Recession, the euro crisis, and a spate of attacks from Paris to San Bernardino linked to the so-called Islamic State, it is not surprising that many people are tempted to turn inward. Migration, especially with the surge of refugees desperate to escape conflicts in the Middle East, Central America and other hotspots, is a growing source of cultural as well as economic anxiety. And many in Europe are frustrated with the EU’s handling of the crises there and of the economy in general. In a spring 2016 Pew Global Attitudes poll, half or more of the respondents in seven of 10 European countries said their governments should focus on domestic problems and let other countries deal with theirs as best they can. Nearly six in 10 Americans agreed with that sentiment.

Even free trade’s most strident critics usually assert that they are not opposed to trade per se. But they are concerned about where trade agreements are headed, and whether the benefits of trade are broadly shared. While the net benefits of trade are generally positive, there are losers as well as winners, and the losses are getting more attention in a period with globally stagnating middle-class incomes and rising inequality.

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