Elizabeth Warren’s Trade Makeover
Senator Elizabeth Warren’s plan is not inherently protectionist. But if it occasionally requires some degree of trade protection – to shield labor, local communities, the tax regime, or environmental rules – it would be because there is a domestic program worth protecting.
CAMBRIDGE – US Senator Elizabeth Warren’s new trade plan solidifies her credentials as the Democratic presidential candidate with the best policy ideas. United States trade policy has long been shaped by corporate and financial interests, enriching those groups while contributing to the erosion of middle-class earnings and undermining many local communities. Warren’s plan represents a radical reimagining of trade policy in the interests of society at large.
As Warren points out, we live in a world where import tariffs are for the most part already quite low. Trade negotiators today spend most of their time arguing not about import taxes and other barriers at the border, but about behind-the-border regulations such as intellectual property rules, technical standards, industrial policies, and the like. Contemporary trade agreements seek “deep integration” rather than “shallow integration,” to use a distinction coined by my Harvard colleague Robert Lawrence.
Deep integration can foster greater levels of international trade and investment, but it is also more intrusive on domestic social bargains. It places constraints on countries’ tax and regulatory policies, and on their ability to uphold their own social and labor standards. Unsurprisingly, multinational companies, Big Pharma, and financial firms have sought access to foreign markets at the expense of the needs of labor and the middle class.