International trade will be featured in many of the elections in 2024 and will be presented as a ‘problem’ that administrations are expected to ‘resolve’. Specialists need to update their story as to why this is wrong: we need a new story for different times.
There are understandable fears in the trade policy community about many of the elections this year.
Most obviously, Donald Trump’s plan, if he returns to presidency, to impose across-the-board tariffs and withdraw most-favoured nation status from China. This direct attack on world trade rules threatens the World Trade Organization.
Most candidates in the coming EU elections will express less negative positions but overall the new European Parliament is expected to be more sceptical of open trade.
Even in a UK that is now moving on from erecting new barriers to trade with the EU, support for major change will be limited.
There was more positivity, though less attention, to trade in previous elections. Typically for example this included commitments to completing new free trade agreements – something which will be scarcely seen this year.
Specialists of international trade and its policies had less need to worry about elections when trade was broadly seen as positive.
A narrative that it brings broad benefits with some concern for losers was widely shared. That is no longer the case and cannot simply be recreated.
What is now needed is a new story for different times.
Politicians in Europe and elsewhere need to be shown that trade is and will remain an essential part of their communities.
Trade is not just about the economic benefits. It can also be used to tackle other issues such as climate change – more below.
Similarly, there is a need to look beyond the factories that will not be returning towards the new economic opportunities.
Changing political attitudes will be an uphill struggle.
Voters are traders
Simply demonstrating how many people are engaged in trade is a good start to forging a new story of trade.
Major factories that export are of course already known to politicians. That these no longer exist in all areas of the territory they are in charge of governing is part of the problem.
There are however smaller exporters virtually everywhere. Many individuals and small businesses will, for example, be selling goods through online platforms.
Such traders won’t just be the usual suspects. They are likely to be found across all demographics. Showing how digital trade has created new opportunities for young and female entrepreneurs, for example, should be part of the trade story.
Making imports popular has of course always been the harder part.
There is almost certainly an assumption held by many politicians that nearly everything could be produced locally without negative consequences. In this way they seem to reject one of the key components of the case for open trade, i.e. greater choice and lower prices.
Focusing on services may be the best place to start changing attitudes. Thanks to the ubiquity of smartphones many people can now be direct importers through ‘app stores’.
Showing how large manufacturing plants use imported intermediate goods is also important. More restrictive trade policies would thus harm their global competitiveness.
These are basic arguments that trade specialists may feel unnecessary. Changing times however require them to be restated.
Demonstrating advantages beyond economics
Traditionally the trade policy community emphasises aggregate economic benefits to politicians.
With so many countries struggling to achieve growth, this message is no longer widely believed.
Studies modelling positive effects of trade are now greeted sceptically. For example, supporters of the UK leaving the EU continue to argue there was little or no economic impact.
There is no greater challenge for supporters of open trade than once again showing trade as central to policy objectives starting with the economy.
Ironically, the path to doing so might best come via showing how trade is crucial to supporting wider policy goals.
Climate change is the most obvious example. Europe’s ability to influence and regulate globally is dependent on its global trade engagement.
Its landmark deforestation initiative or new due corporate sustainability diligence reporting will have little global effect unless companies are trading and investing internationally.
Some free traders have never been comfortable with linking trade and wider political or policy objectives.
As recent obituaries to Jacques Delors the founder of the EU’s single market, remind us, such linkages were at the heart of his project. Opening trade and protecting communities were seen as going hand in hand.
That example is worth recalling. Indeed, showing such past successes is probably a better approach than reliance on abstract economic studies.
This also shows the need for new thinking on how to update the presentation of trade’s economic benefits.
Political involvement in trade
An under-stated reason explaining why trade has become less popular with politicians is the feeling that they have little say on what happens in their areas. To them, this can suggest some out-of-control corporate monster is operating.
Stakeholders need to show that the rise of global supply chains has changed but should not reduce the role of politicians at different levels.
Many elected representatives already see the importance of making their areas attractive locations for growing trade. Whether this is through good infrastructure, skilled labour or regulatory stability their actions should be recognised.
Politicians can have a more direct role still. Potential investors often want reassurance from meeting those who will represent their area.
As part of a larger body, such as the European Parliament, there is a wider role to ensure trade is considered appropriately alongside other policy areas.
Finding the balance between regulations and competitiveness will continue to be a major debate in the future.
Similarly, managing the net-zero transition without significant economic costs is an issue that is likely to grow.
In the past, trade specialists have perhaps not given sufficient thought to the role of politicians. That needs to change.
Just as we can’t go back to the days of factories in every town, so many elected representatives won’t be convinced by old arguments. There is a need to show them in so many more ways the importance of trade.
David Henig runs the column ‘Perspectives’ on the politics of global trade for Borderlex. He is also a UK director at the think tank ECIPE.