Trade can reduce inequality, but Americans seek cure for something else

Trade can reduce inequality, but Americans seek cure for something else
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The World Bank and World Trade Organization (WTO) recently released “Women and Trade: The Role of Trade in Promoting Gender Equality.” The 188-page report “gathers new data to show how trade and trade policy can affect men and women differently – in terms of wages, consumption and welfare and in the quality of jobs available to them.” If this was an attempt to get Americans to rally for trade, it misses the mark. Whether we like it or not, the China question dominates today’s trade landscape.

The report is a nice rally for trade and the role of the multilateral regime. Trade has long been a force for social progress, and the organizations lay out how it can expand women's rights, increase female labor force participation and contribute to gender equality in other ways. After all, every nation trades to one degree or another, and over time, that helps ideas and opportunities find their way to more people. It’s a win-win. 

By the end of the story, you almost forget about the unfortunate present-day reality: a war-like state of international trade tensions.

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Perhaps those tensions are actually the reason behind the timing of this report. The United States is among the founding members of the General Agreement on Tariffs and Trade (the WTO’s predecessor) and is a long-time champion of free trade. But its president now famously touts tariffs and threatens to leave the WTO. There are real concerns across the trade policy community that our multilateral institutions as we know them are not going to make it. Times are tough in Geneva, where WTO members are so prickly that they cannot even decide on something as simple as an interim director general.

Yet it turns out that most Americans don’t need much persuasion. Despite the increase in protectionist sentiment over the past few years, Americans generally like trade. In fact, 56 percent say U.S. free-trade agreements with other countries have been a good thing, about the same as pre-2016 levels. What’s more, Americans increasingly don’t like tariffs

Look more closely at other polls and you’ll see that Americans like trade because they want to buy from whomever they want and sell to whomever they can. One recent survey of 1,000 Americans showed that 36 percent want to leave the WTO. But over half of those who strongly support leaving acknowledge that the WTO can help U.S. companies compete. These results point to a deeper discontent.

So while 91 percent of Americans say gender equality is very important, the link to trade is unlikely to reignite America’s support for globalization. The root of America’s ill will toward multilateralism these days is not trade but rather Beijing. Not, of course, China’s civilization or its people, but rather the intruding communist regime.

Americans don’t like the Chinese government participating in the theft of their intellectual property, advancing costly cyberattacks on U.S. companies and more recently hiding information that might have staved off the pandemic. Americans increasingly believe China is trying to censor not only their own people but also the rest of the world. All of these things impinge on our freedom to trade and our freedoms more generally — and we don’t like that. 

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So, trade and gender equality? Absolutely — give us more of that. But if multilateral institutions want America to rally behind globalization and multilateralism like we did before populism arose, WTO members need to have some of the difficult conversations WTO Deputy Director-General Alan Wolff laid out recently.

WTO leaders must determine what degree of support members still have for its foundational values, which promote not just trade and markets, but peace, stability and the impartial rule of law. They must consider structural reforms, a rewrite of the subsidies chapter or a big re-think of what countries can and cannot do in response to foreign subsidies, state-owned enterprises and government-backed cybertheft. And they must figure out how to address the actions of the Chinese government that influence the global economy in unfavorable ways. 

Freedom to trade is what Americans really want, and anything that compromises that is a deal breaker.

Christine McDaniel is a senior research fellow with the Mercatus Center at George Mason University.