On trade, Warren is more pragmatist than populist

On trade, Warren is more pragmatist than populist
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The progressive economic policies of Elizabeth WarrenElizabeth Ann WarrenZuckerberg launches public defense of Facebook as attacks mount Warren, Yang fight over automation divides experts Warren says making Israel aid conditional on settlement building is 'on the table' MORE are facing increased scrutiny as she improves in the polls. Curiously, her tough talk on free trade has led to comparisons with Donald Trump. Like Trump, Warren’s critics label her a “populist” whose policies will increase trade barriers and leave the U.S. economy worse off.

In fact, Warren and Trump share only a small piece of ground. They are both frustrated with decades of U.S. trade policy. They both argue that free trade fails to serve America’s interests and that average workers are being left behind.

That’s where the similarities end.

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When it comes to economic policies, Trump is a dyed-in-the-wool deregulator. Trade is no exception. Trump argues that America’s trade deals contain unfair, burdensome rules that infringe on U.S. sovereignty. His solution is to loosen trade deals. He tried to remove key dispute provisions during recent NAFTA renegotiations, and he threatened to leave the World Trade Organization because the U.S. so often winds up on the wrong side of trade disputes.

While Trump argues that trade deals do too much, Warren thinks they do too little.

To her, trade agreements fail to fulfill their promise. Trade agreements are supposed to do more than just trade promotion. They are also about setting standards across a wide variety of trade-related issues, including labor rights and environmental protections. In Warren’s view, efforts to improve working conditions and environmental standards have been futile.

It’s difficult to argue with her. Starting with NAFTA, all of America’s trade deals have included provisions relating to labor and the environment. Interest groups lobbied hard for these regulations. The purpose of these provisions is to help ensure that trade gains don’t come at the expense of worker welfare or sustainability.

Unfortunately, there’s very little evidence that these rules make a difference. Organized labor groups, human rights organizations and environmental watchdogs all claim that trade makes things worse. Not better.

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The poor performance of past trade deals is exactly why Warren wants countries to meet stricter standards up front, before a trade agreement negotiation can even take place.

These standards include basic compliance with international labor organization guidelines, respect for fundamental human rights, efforts to prevent human trafficking and ending fossil fuel subsidies.

Just reading that list, it’s hard to imagine why it’s controversial. Set trade aside for a moment. Each element of Warren’s eligibility list is something countries should be doing anyway. So, what’s the problem?

Warren faces criticism partly because she departs from the previous orthodoxy. The traditional story goes like this: Liberalize trade first and positive political changes will follow. Once an economy starts to enjoy the wealth created by trade, there will be increasing demand for regulatory reforms. Workers will start asking for more rights and liberties to accompany their thicker wallets. There should also be louder calls for environmental sustainability.

That story sounds good on paper, but history reveals that it’s largely a fairytale. Free markets can’t be relied on to induce meaningful political change.

Warren recognizes this problem. She wants countries to meet some basic standards before realizing the gains from trade. Those gains – which no one denies can be substantial – should be the reward for making positive reforms. Only then will governments be incentivized to improve working conditions or environmental protections.

That’s doesn’t sound much like Trumpian populism. Instead, it sounds an awful lot like simple pragmatism. Reform first. Get the reward later.

And that’s the core difference between Warren and Trump. The White House continues to champion deregulation and the virtues of free markets. Warren understands that the interests of the market don’t overlap with the interests of workers or the environment. That’s why we need rules. 

Of course, there are those who remain concerned that Warren’s policies will limit opportunities to open new trade routes. That’s true. Warren admitted that the U.S. fails to meet her own tough standards. Fine. If we want more open trade then we should start with making meaningful policy changes at home. Maybe then there wouldn’t be a “populist backlash” against globalism in the first place.

Jeffrey Kucik is an associate professor in the School of Government and Public Policy at the University of Arizona.