I'm always up for a good debate about trade and globalization, so when the folks at American Compass asked me to comment on some of their recent work, I agreed to do so. American Compass is run by Oren Cass, a former Mitt Romney adviser who has moved in a protectionist and interventionist direction on economic issues. Robert Lighthizer is on their board of directors, which help makes their perspective clear.
The problem I had with engaging in this particular debate, besides a word limit which constrained me like a tariff quota, was that I feel as though some critics of the system are not completely clear about how the system works. I'm a critic of some parts of the system myself (get rid of the TRIPS Agreement!), but it seems to me that many critics are putting forward arguments that don't really match the system as it exists today. So, in this case, I focused all my comments on the larger issue of properly understanding the trade regime. We all need to have a similar understanding in order to have a productive debate.
My three main points were:
- I know there's lots of talk about "free trade agreements," but actual trade agreements result in mutually agreed constraints on protectionism rather than the "unfettered" free trade that Cass is concerned about.
- Some people worry about power being shifted from governments to international bureaucrats, but having been one of those myself, I feel confident in saying there's not much power over at the WTO headquarters in Geneva (smart people, but they are hardly running the world!).
- People complain about various aspects of China's behavior, but there are tough China-specific WTO rules that are designed to address just about all the things people complain about, and I wish governments would make better use of them.
I concluded my comment this way:
In practical terms, the globalization debate is not an all-or-nothing proposition between pure free trade and total autarky. Rather, it is about achieving a sustainable political balance that trades off the protectionist demands of corporations and other interest groups against the broader economic interests of the American people. The current global trading system reins in those protectionist demands to some extent, but it also accommodates many of them, leaving us with a particular balance of free trade and protectionism.
Whether we should shift towards the free trade side or towards the protectionist side is an important debate, but in order to have that debate, it is necessary to understand the carefully constructed balance that currently exists and where exactly we lie on the free trade-protectionist continuum.
