Political Trends

Global Trade can Work for All to Build Equitable Societies

For open, global trade to continue to work, technological losers need to be compensated.

Trade can magnify vulnerabilities in the social fabric of communities just as surely as climate change intensifies existing weakness in our food and water supply. In areas where quality of life has fallen behind the rest of the world due to political disregard or technological challenges, job loss is the first to draw interest. Much of the support given to Donald Trump and Brexit came from people who felt the injustices and damaging impact of open competition from foreign countries.

However, the cost of closing open, global trade could far outweigh the benefits. This view is behind the World Trade Organisation’s (WTO) decision to transform into a body that puts social issues at the heart of its processes.

CAPTION: Equitable Global Trade mechanisms will put social concerns a the heart of economic discussions (Photo by Markus Spiske on Unsplash)

Basic economics recognises there are winners and losers in trade, yet overall countries win. The discipline was, and still is, right in this assumption. However, the supposition of natural wealth redistribution was incorrect. The idea of ‘trickle-down’ economics has been proven to be a pipe dream.

For a global economy to survive – and serve all of humanity – losers from technological and trade changes must be recognised and assisted to access and benefit from new market conditions. The other option is to forfeit trade, a sure way for countries to earn the wealth needed to address poverty, and secure critical resources in times of crisis such as natural disasters or pandemics.

International institutions can be sluggish when it comes to change. The WTOs rigidity has been further impaired by strained US-China relations. This year, however, they intend to acknowledge the benefits of global trade are not being felt by the countries most in need of it. The feasibility of a multifaceted global trading system hinges on its ability to reduce the pressure on developing economies by more developed ones and directly address trade’s detractors.

To do this, WTO members will be asked to evaluate and report on the readiness of trade from multiple dimensions – not just an economic viewpoint. A multidimensional approach will force politicians and other governing bodies to truthfully address the gains and losses their trade engenders and the distribution of wealth. This level of transparency and analysis is likely to encourage responsible action regarding supply chains and the partnership between economy and society in terms of local resilience, an example of which is the Athens digital strategy to address rising unemployment and distrust in the city’s governing bodies.

Closing borders to trade simply creates new winners and losers, just as open markets do. No governing body can change these basic rules of economics, but the WTO is able to promote greater honesty and transparency with trade to encourage more equitable domestic policy that mitigates social challenges and supports more vulnerable populations. This is likely to lead to the creation of a new global fund for addressing social-justice issues associated with trade and equity.

Global trade is in crisis, its future depends upon the renegotiation of our social contracts. In 2021, the WTO will be central in putting social concerns at the heart of discussions about global trade.