David Rothkopf declares free trade one of the decade's "losers":
Globalists and free traders: Remember back during those Clinton days when we loved the world, NAFTA, the WTO, and cutting trade deals with everyone? You don't remember? You had nothing to do with that? A failed model? Yeah, yeah ... no one remembers now. Quick: Name a trade deal we're likely to approve in the next three years. Globalization hasn't stopped ... but with the United Steelworkers directing elements of U.S. trade policy (tires, anyone?) and a country built by immigrants that is now squeamish about inviting anyone in to join us ... it looks like we've got a brewing national consensus to be on the wrong side of history. Next up: President Dobbs?
By contrast, Arvind Subramanian thinks the trade response to the recent economic crisis has been surprisingly good:
And, most surprisingly, despite the unprecedented collapse in trade, few countries resorted to beggar-thy-neighbour policies. For sure, there were large-scale currency changes, but these were mostly market-driven, except in the case of China where the hand of policy in manipulating competitiveness has been more evident. It is also true that several countries raised trade barriers. But these were small in magnitude, limited in geographic scope and product coverage and mostly WTO-consistent. The exception to this rule was the large-scale assistance to the financial and automobiles sectors especially in the US which had the extenuating argument that the assistance was aimed at averting extinction rather than providing a competitive boost. Overall, it was clear that this forswearing of beggar-thy-neighbour policies stemmed in large part from the awareness of its devastating consequences.
I mostly agree with the latter view. There's no question that the short period where NAFTA was signed and the Uruguay Round was completed was a momentous period for trade negotiations. But I don't think it's necessarily right to look at a subsequent period without big trade deals and conclude that things are going terribly.
First of all, many people are still trying to digest what happened with NAFTA and the WTO (a lot happened in these two agreements (e.g., investor-state, TRIPS, GATS)), to see if the results need some refinement. It would be surprising if they were perfect -- is anything ever perfect? The stalling of FTAs in recent years is partly for this reason.
Second, there was plenty of trade conflict during the Clinton years. (Remember autos and film, and the Seattle Ministerial?) Sometimes the flaws of the past are glossed over.
Third, trade remedies (like the tires safeguards mentioned in the first piece) generally come during economic downturns. We can debate the reasons for it, but the Clinton years were pretty good in terms of economic growth, which perhaps explains why there were not as many big trade remedy actions. By contrast, the Bush recession had the steel safeguards and the recent financial crisis resulted in the Obama tire tariffs.
All in all, I'm pretty happy that when trade remedy actions and other trade measures are taken, countries generally try to play by the rules. And when the WTO decides that the measures are in violation, these countries usually try to bring them into compliance. That's as much as I expect from the system, and I'm impressed that we have a multilateral trade system that continues to deliver this, even in times of serious economic crisis.
On the other hand, I admit that I have some doubts on occasion. The failure to make much progress in the Doha Round, and the continued focus on bilateral/plurilateral/regional trade agreements, are pretty negative developments, in my view. It seems to me that some countries are not trying that hard to complete Doha. And bilateral/plurilateral/regional agreements are not "free trade" in the sense I think of it. Calling them "free trade agreements," as the U.S. and some other countries tend to do, is a bit deceptive. (In that regard, I was pleasantly surprised to see that the latest U.S. trade initiative is being referred to as the "Trans-Pacific Partnership." I'm not sure this was a conscious shift in word choice, as it may have been based more on what the existing parties to the agreement were calling it, but it's an improvement nonetheless.) Still, even with the negative aspects of such agreements, and the fact they are mostly stalled in the U.S., there are positive developments, such as the coming into effect of the China-ASEAN FTA, which will be the "the world’s third-largest free-trade area." Perhaps actions like this from the rest of the world will force the U.S. and others to move forward on their own trade agreements and to push Doha to completion.
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