Series: Global Views
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Report

Why Trade Matters

Miriam Sapiro

This policy brief explores the economic rationale and strategic imperative of an ambitious domestic and global trade agenda from the perspective of the United States. International trade is often viewed through the relatively narrow prism of trade-offs that might be made among domestic sectors or between trading partners, but it is important to consider also the impact that increased trade has on global growth, development and security. With that context in mind, this paper assesses the implications of the Asia-Pacific and European trade negotiations underway, including for countries that are not participating but aspire to join. It outlines some of the challenges that stand in the way of completion and ways in which they can be addressed. It examines whether the focus on “mega-regional” trade agreementscomes at the expense of broader liberalization or acts as a catalyst to develop higher standards than might otherwise be possible. It concludes with policy recommendations for action by governments, legislators and stakeholders to address concerns that have been raised and create greater domestic support.

It is fair to ask whether we should be concerned about the future of international trade policy when dire developments are threatening the security interests of the United States and its partners in the Middle East, Asia, Africa and Europe. In the Middle East, significant areas of Iraq have been overrun by a toxic offshoot of Al-Qaeda, civil war in Syria rages with no end in sight, and the Israeli-Palestinian peace process is in tatters. Nuclear negotiations with Iran have run into trouble, while Libya and Egypt face continuing instability and domestic challenges. In Asia, historic rivalries and disputes over territory have heightened tensions across the region, most acutely by China’s aggressive moves in the South China Sea towards Vietnam, Japan and the Philippines. Nuclear-armed North Korea remains isolated, reckless and unpredictable. In Africa, countries are struggling with rising terrorism, violence and corruption. In Europe, Russia continues to foment instability and destruction in eastern Ukraine. And within the European Union, lagging economic recovery and the surge in support for extremist parties have left people fearful of increasing violence against immigrants and minority groups and skeptical of further integration.

It is tempting to focus solely on these pressing problems and defer less urgent issues—such as forging new disciplines for international trade—to another day, especially when such issues pose challenges of their own. But that would be a mistake. A key motivation in building greater domestic and international consensus for advancing trade liberalization now is precisely the role that greater economic integration can play in opening up new avenues of opportunity for promoting development and increasing economic prosperity. Such initiatives can help stabilize key regions and strengthen the security of the United States and its partners.

The last century provides a powerful example of how expanding trade relations can help reduce global tensions and raise living standards. Following World War II, building stronger economic cooperation was a centerpiece of allied efforts to erase battle scars and embrace former enemies. In defeat, the economies of Germany, Italy and Japan faced ruin and people were on the verge of starvation. The United States led efforts to rebuild Europe and to repair Japan’s economy. A key element of the Marshall Plan, which established the foundation for unprecedented growth and the level of European integration that exists today, was to revive trade by reducing tariffs. Russia, and the eastern part of Europe that it controlled, refused to participate or receive such assistance. Decades later, as the Cold War ended, the United States and Western Europe sought to make up for lost time by providing significant technical and financial assistance to help integrate central and eastern European countries with the rest of Europe and the global economy.

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