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The Sustainable Equitable Trade Doctrine

Building Progressive International Cooperation to Counter Right-Wing Economic Authoritarianism

Report by

Todd N. Tucker PhD

March 13, 2017

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COPYRIGHT 2017 BY THE ROOSEVELT INSTITUTE | ROOSEVELTINSTITUTE.ORG

Acknowledgements

I received wisdom and/or comments on earlier iterations from Paul Adler (Harvard University), Heather Boushey (Washington Center for Equitable Growth), Thomas Hale (University of Oxford), Jennifer Harris (Council on Foreign Relations), Michael Pyle (Blackrock), and Nell Abernathy, Andrew Hwang, Lenore Palladino, Dave Palmer, Tim Price, and Marshall Steinbaum at Roosevelt. Any errors are my own. Thanks to Cherrie Bucknor for help with data provision.

About the Author

Todd N. Tucker, PhD, is a Fellow at the Roosevelt Institute, where he researches global economic governance, including dispute settlement and the domestic regulatory implications of international trade, investment, and tax treaties. His work has appeared in

International Studies Perspectives

,

Journal of International Dispute Settlement

,

Politico

,

Time Magazine

, and various other academic and popular publications.

About the Roosevelt Institute

Until economic and social rules work for all, they’re not working. Inspired by the legacy of Franklin and Eleanor, the Roosevelt Institute reimagines America as it should be: a place where hard work is rewarded, everyone participates, and everyone enjoys a fair share of our collective prosperity. We believe that when the rules work against this vision, it’s our responsibility to recreate them. We bring together thousands of thinkers and doers—from a new generation of leaders in every state to Nobel laureate economists—working to redefine the rules that guide our social and economic realities. We rethink and reshape everything from local policy to federal legislation, orienting toward a new economic and political system: one built by many for the good of all.

This report was made possible by the generous support of the Open Society Foundations.

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COPYRIGHT 2017 BY THE ROOSEVELT INSTITUTE | ROOSEVELTINSTITUTE.ORG

Executive Summary

U.S. foreign policy and the need to cultivate international alliances increasingly conflict with U.S. domestic politics, particularly with regard to trade. The 2016 election featured an outgoing Democratic administration insisting the Trans-Pacific Partnership (TPP) was the U.S.'s last hope to show its commitment to the Asia-Pacific, a Republican candidate blaming it and other trade deals for all that ails the U.S. working class, and a Democratic candidate caught in the middle. Given the rise of right-wing economic authoritarianism that co-opts certain aspects of the trade policy critique of progressives, the latter are struggling with whether to pivot right, left, or center on trade questions. This report outlines a Sustainable Equitable Trade (SET) doctrine that can make international cooperation more domestically palatable. I use "doctrine" not in the sense of "dogma," but rather as a broad set of policy goals through which specific policies (old and new) can be evaluated. The doctrine has three pillars: I.

Flip the class bias: Flaws in the legacy approach to trade policy go back much further than the 1990s fights over the North American Free Trade Agreement (NAFTA). Rather, the U.S.' business-friendly approach to global governance— detailed in this report— is over 100 years old. It is characterized by an excessive faith that international rule-making could function like domestic rule-making, without the checks and balances between branches of government that make the latter sustainable. While international economic cooperation agreements are essential to addressing shared global challenges, policymakers must focus intensely on ensuring their legitimacy with working-class voters. This requires flipping the class bias of international arrangements so that the working class majority is favored over elite minorities. II.

Promote systemic participation: The international economic policies policymakers advocate must create and nurture their own political constituencies if they are to survive attack. This requires greater democratic participation and checks and balances in international bodies, as well as new ways of using domestic institutions. Active engagement with domestic and international institutions will allow policymakers to accomplish more comprehensive and rapid reform than will debates over individual treaties. III.

Win power: In a continent-sized country with complex electoral institutions like the United States, political geography matters greatly. If the South and the coasts remain uncompetitive, the Midwest is a critical battleground, and as the last election shows, it can be won through fear-mongering. But a progressive game plan would focus on building cross-racial class power and institutions. The report makes the following concrete recommendations: 1.

Cooperate internationally on bigger-ticket items than tariff reductions. The benefits of international cooperation on fighting tax evasion, monopoly power, unstable financial markets, climate change, and macroeconomic imbalances from misaligned currencies far outstrip even the most optimistic projections for agreements like the TPP. In a policy environment where tariffs are low, the gains from further tariff liberalization are limited. This report makes detailed recommendations on changes to international trade agreements and domestic law that will focus foreign policy on the highest-value targets, not the meager and divisive.