Building an Economy that Works for Everyone

Good Trade Policy: Three ‘Thought Experiments’

By Stan Sorscher, from the Huffington Post

Stan Sorscher

Stan Sorscher,
EOI Board Member

The U.S. and 10 other countries are negotiating ournext big trade agreement, called TPP. It’s time to re-examine what works and what doesn’t work.

Imagine a thought experiment, where we put environmentalists in each country in charge of negotiating the next trade agreement. Preposterous! I know. Stick with me. This is a thought experiment.

So, in this thought experiment our environmental negotiators would prioritize their interests — CO2 in the atmosphere, deforestation, endangered species, renewable energy, safe food, clean air and clean water.

As negotiators, each side would “trade” something it has, for what it wants. In a trade deal, the other countries want access to our markets. At a TPP meeting last summer, a negotiator from New Zealand made this very clear to me. She was adamant that New Zealand absolutely must have access to US consumers for her country to prosper.

So, in my thought experiment, our environmental negotiators will grant New Zealand and other countries favorable access to our economy, on the condition that they endorse sustainable environmental practices and agree to abide by international standards for fishing, access to fresh water, and carbon reduction and whatever other green provisions we can negotiate.

If New Zealand or other countries in the agreement fall short of their commitments, the deal would invoke a new Global Environmental Organization (GEO) for dispute resolution, comparable to dispute settlement tribunals that have already handled hundreds of cases in the World Trade Organization (WTO).

If environmentalists negotiated a web of such agreements with all major trading countries, they would steadily achieve their environmental goals, in exchange for access to our markets.

OK. Impractical. I know. Still, in my thought experiment, China might avoid 750,000 pollution-related deaths per year. We would amplify global efforts to produce abundant renewable energy and preserve sustainable conditions so our children could enjoy life on our planet. This would be no mean feat.

Wouldn’t that be admirable and perfectly aligned with the public good and our national interests?

Imagine a second thought experiment. This time, we let labor and human rights activists negotiate trade agreements. Preposterous! I know. Remember — this is a thought experiment.

Labor and human rights negotiators would grant access to our markets, but only on the conditionthat other countries agree to basic international standards for labor rights, human rights and public health. Through a web of such agreements, workers in other countries would gain political and market power to claim a fair share of the gains from trade and improved productivity. This would be huge, by the way.

Negotiators would create a global institution, perhaps a World Social Organization (WSO), with its own dispute settlement process, comparable to trade tribunals in the WTO, to enforce language for stronger social cohesion.

An agreement negotiated by labor and human rights advocates would redeem two very powerful promises of globalization. Good trade policy would strengthen democracy in other countries and good trade would press other countries to raise living standards of workers, families and communities. This would be no mean feat.

Wouldn’t that be admirable and perfectly aligned with public good and our national interests?

In actual fact — not a thought experiment at all — we now negotiate our trade agreements in the interests of investors and global companies. They prioritized their interests: higher profit margins, “flexibility” to do what they want, maximum possible trade, and a shield against local, regional or national policies that might reduce their economic prospects.

They actually do use the WTO and various trade tribunals to enforce investor interests, independent of any national courts or political accountability. The global economy can grow and produce great wealth. And to be sure, this is no mean feat.

Economic growth could arguably align with public interest, at least in a trickle down sort of way. Please hold your fire on this one, for a moment.

But what if — and here is the third thought experiment — we could write trade agreements thatprotect investor rights and help grow trade AND protect the environment, AND honor human rights and labor rights, and raise living standards. A balanced global agreement will produce prosperity and redeem the promise of globalization.

Senator Merkley from Oregon recently outlined two reasonable trade practices that would raise living standards, promote democracy and preserve the environment. It’s not hard to come up with more.

This has been a key issue over 20 years of failed trade policy. These agreements focus almost entirely on investor rights. Negotiators steadfastly resist language about environment, labor rights, human rights, public health, or prudent regulation in the public interest. Trade negotiatorsexclude the voice of civil society from the process.

More to the point, we have now granted access to our markets through a web of free trade deals. That deal is done. All we got was investor rights and a fabulously wealthy top 1 percent within our own society. We have spent our opportunity to negotiate for higher environmental standards, or raise market power for workers (who are also customers for local businesses, don’t forget), or strengthen democratic institutions in other countries.

As a result, we put ourselves under steady pressure toward the weakest environmental standards around the world. We are in a race to the bottom in terms of market power for our domestic workers. To be globally “competitive,” we are forced to give up social safety nets and job security. Our democratic processes are giving way to global governance without global government.

If my first two thought experiments seem preposterous, it’s only because we allow ourselves to think they are preposterous.

A good trade policy will come from democratic, accountable, balanced political processes, and it will share the gains from trade equitably and sustainably. That’s what will work.

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