What global trade deals are really about (hint: it's not trade) | Haley Edwards | TEDxMidAtlantic

Summary

This talk challenges the conventional understanding of trade deals, arguing they are less about traditional trade aspects like tariffs and more about shaping global rules and standards. It traces the evolution from post-WWII economic interdependence to modern focus on global efficiency, as seen in organizations like the WTO. The speaker emphasizes current trade debates are not just about economic gains but also about the societal values these global rules reflect, such as environmental protection and public health.

Takeaways

• 🌐 The concept of trade deals has evolved to encompass more than just traditional trade aspects like tariffs and quotas; they now significantly influence global rules and standards.
• 📈 The modern era of free trade originated in 1944 at Bretton Woods, with the primary goal of fostering world peace through economic interdependence.
• 🔄 The General Agreement on Tariffs and Trade (GATT), established post-World War II, was pivotal in creating the foundations of globalization and the modern structure of multinational corporations.
• 📉 After the initial period of rapid global GDP growth, the focus of trade discussions shifted in the late '70s and '80s towards global efficiency, leading to the Uruguay Round and the consideration of non-tariff barriers.
• 🏛 The World Trade Organization (WTO), formed in 1995, replaced GATT and further emphasized the reduction of non-tariff barriers to enhance global economic efficiency.
• 🌱 Trade disputes, such as the genetically modified (GMO) beef controversy between the US and Europe, highlight the tension between national sovereignty and global efficiency standards.
• 🐬 The 'dolphin-safe' tuna labeling case in the US illustrates how domestic regulations can conflict with global trade rules, as adjudicated by the WTO.
• 🤔 The current discourse on trade is complex and often confusing, with positions on trade agreements like the Trans-Pacific Partnership (TPP) reflecting a mix of support and opposition based on various global rules and standards.
• 🌟 The speaker emphasizes that trade discussions are fundamentally about the rules that govern our global economy, and these rules are what define the kind of world we live in.
• 📋 The rules we embrace through trade agreements shape our global economy, and it's crucial to consider whether we prioritize global efficiency or other values like prosperity for all.

Q & A

What is the counterintuitive idea about trade deals presented in the script?

The counterintuitive idea is that trade deals aren't really about trade in the conventional sense. They are not primarily about tariffs, quotas, GDP growth, or even jobs as commonly discussed.

When and where did the modern era of free trade begin as per the script?

The modern era of free trade began in 1944 at a conference in Bretton Woods, New Hampshire.

What was the main objective behind the concept of economic interdependence discussed at Bretton Woods?

The main objective was to create an economy that fosters and necessitates world peace by making nation states dependent on each other for supply chains, thus preventing war.

What significant document emerged from the idea of economic interdependence post-World War II?

The General Agreement on Tariffs and Trade (GATT) emerged about four years after the Bretton Woods conference.

How did the GATT contribute to the global economy from 1948 to the late 1970s?

The GATT contributed to an extraordinary period of disruption, convulsion, and prosperity, with the global GDP growing by about seven percent per year.

What was the focus of the Uruguay Round, considered the second Bretton Woods?

The focus of the Uruguay Round was global efficiency, aiming to continue boosting the global economy as it had been over the previous 30 years.

What is meant by 'non-tariff barriers' in the context of modern trade deals?

Non-tariff barriers refer to the idea that even if tariffs are low, a product may still face an uneven playing field once inside a country due to various domestic policies and regulations.

What major global organization was established in 1995 as a result of the shift in trade philosophy?

The World Trade Organization (WTO) was established in 1995, replacing the GATT.

What are some examples of powerful trade agreements that were influenced by the philosophy of non-tariff barriers?

Some examples include the North American Free Trade Agreement (NAFTA), the Central American Free Trade Agreement (CAFTA), and numerous bilateral investment treaties.

How does the script suggest we should view the current discussions on trade?

The script suggests we should view current trade discussions as being about global rules and standards, rather than simply being for or against free trade or globalization.

What is the key takeaway the speaker wants the audience to consider about trade?

The key takeaway is that trade discussions are fundamentally about the rules we want to embrace and how they serve our vision for the world, such as global efficiency versus global prosperity for all.

Outlines

00:00

🌐 The Origins of Modern Free Trade

The speaker introduces the counterintuitive notion that trade deals are not primarily about trade in the conventional sense, such as tariffs, quotas, or GDP growth. Instead, they suggest that trade deals are more about fostering global peace and interdependence. The historical context is set with the Bretton Woods conference in 1944, where liberal economists aimed to create an economy that would necessitate world peace by making nations economically dependent on each other. This led to the General Agreement on Tariffs and Trade (GATT), which in turn spurred globalization, outsourcing, and the rise of multinational corporations. The period following GATT's inception saw an explosive growth in global GDP, but this began to slow in the late '70s and early '80s, leading to a second Bretton Woods-like gathering known as the Uruguay Round.

05:02

📜 The Evolution of Trade Agreements

The narrative continues with the Uruguay Round, which focused on global efficiency rather than just economic interdependence. The discussion shifts to non-tariff barriers, which are challenges that a product might face even after overcoming border tariffs, such as differing regulations and subsidies. The World Trade Organization (WTO) emerged in 1995, replacing the GATT, and was accompanied by powerful trade agreements like NAFTA and CAFTA, all aimed at reducing non-tariff barriers. The speaker emphasizes that modern trade agreements are not just about economic transactions but also about aligning domestic policies with global efficiency standards. Examples are given, such as the dispute over genetically modified beef and the 'dolphin-safe' tuna labeling in the US, to illustrate how trade agreements can impact national sovereignty and local regulations.

10:03

🌟 The Future of Trade: Rules and Global Standards

The speaker concludes by emphasizing that the current discourse on trade is not just about being for or against it, but about the rules and standards that govern global trade. They highlight the confusion in the national conversation, with presidential candidates and various organizations taking different stances on trade agreements like the Trans-Pacific Partnership. The speaker suggests that the focus should be on the kind of world we want to create through these rules, whether it's global efficiency or global prosperity for all. They remind the audience that the rules we embrace shape the world we live in, and we should thoughtfully consider what kind of rules we want to govern our global economy.

Keywords

💡Trade deals

Trade deals refer to formal agreements between two or more countries or regions to reduce trade barriers and improve trade relations. In the video, it's suggested that these deals are not merely about trade in the conventional sense, such as tariffs or quotas, but are more about shaping global rules and standards. The speaker argues that trade deals are actually about influencing domestic policies to align with a global sense of efficiency.

💡Bretton Woods

Bretton Woods refers to a historic meeting held in 1944 in New Hampshire, where economists and delegates from 44 countries discussed the establishment of a new international monetary system. The video highlights how this meeting led to the idea of economic interdependence to foster world peace, which later influenced the creation of the General Agreement on Tariffs and Trade (GATT).

💡Economic interdependence

Economic interdependence is the concept where countries rely on each other for trade and economic stability, making it less likely for them to engage in conflicts. The video explains that this idea was central to the post-World War II economic order, aiming to prevent future wars by creating mutual economic dependencies.

💡General Agreement on Tariffs and Trade (GATT)

GATT is an international trade treaty that was created in 1947 with the purpose of reducing tariffs and other trade barriers. The video emphasizes that GATT was instrumental in shaping globalization, outsourcing, and the rise of multinational corporations, leading to a period of significant economic growth.

💡Globalization

Globalization is the process by which businesses, technologies, and cultures increasingly integrate and interconnect on a global scale. The video discusses how GATT and subsequent trade agreements have facilitated globalization, leading to a world with interconnected supply chains and multinational corporations.

💡Non-tariff barriers

Non-tariff barriers are measures other than tariffs that can potentially restrict international trade, such as quotas, subsidies, and regulations. The video explains that in the 1990s, the focus of trade negotiations shifted towards addressing these barriers to make the global economy more efficient.

💡World Trade Organization (WTO)

The WTO is an international organization that deals with the global rules of trade between nations. It was established in 1995, replacing GATT. The video suggests that the WTO's philosophy was to remove non-tariff barriers and promote global efficiency, which has significant implications for national sovereignty and domestic policies.

💡NAFTA

NAFTA, the North American Free Trade Agreement, is a trade agreement between the United States, Canada, and Mexico. The video mentions NAFTA as an example of a powerful trade agreement that embodies the philosophy of removing non-tariff barriers to promote global efficiency.

💡National sovereignty

National sovereignty is the full right and power of a governing body to govern itself without any interference from outside sources or bodies. The video discusses how trade deals and the WTO's focus on global efficiency can sometimes conflict with national sovereignty, as domestic policies may be challenged to align with global standards.

💡Trans-Pacific Partnership (TPP)

The TPP is a trade agreement between the United States and 11 other Pacific Rim countries. The video uses the TPP as an example of a modern trade deal that is not just about trade but also about setting global rules and standards, which can be controversial and complex.

💡Global efficiency

Global efficiency refers to the idea of maximizing the productivity and effectiveness of the global economy. The video argues that the philosophy behind many modern trade deals is to promote global efficiency, which can lead to discussions about the balance between economic efficiency and other societal values like environmental protection or public health.

Highlights

Trade deals are not conventionally about trade, tariffs, quotas, GDP growth, or jobs.

The modern era of free trade began in 1944 at Bretton Woods, New Hampshire, with the aim of fostering world peace.

Economic interdependence was seen as a way to prevent war by making nations reliant on each other's supply chains.

The General Agreement on Tariffs and Trade (GATT) emerged from Bretton Woods, shaping globalization and multinational corporations.

From 1948 to the late '70s, global GDP experienced explosive growth averaging about seven percent annually.

The Uruguay Round in the '80s focused on global efficiency rather than just world peace and economic interdependence.

Non-tariff barriers became a central concept, emphasizing the need for a level playing field beyond just low tariffs.

The World Trade Organization (WTO) replaced GATT in 1995, reflecting a shift towards global efficiency.

Powerful trade agreements like NAFTA and CAFTA were influenced by the philosophy of non-tariff barriers.

Trade discussions have evolved to include domestic policies, environmental laws, and pharmaceutical data exclusivity periods.

The debate between the US and Europe over genetically modified beef highlights the conflict between local rules and global efficiency.

The 'dolphin-free tuna' labeling issue in the US shows how domestic regulations can conflict with global trade rules.

The current confusion in national trade discussions reflects a deeper debate about global rules and standards.

The Trans-Pacific Partnership (TPP) faces opposition from various groups, indicating complex views on trade agreements.

Trade is not simply about being for or against it; it's about the rules that govern the global economy.

The rules we embrace through trade agreements shape the kind of world we live in, influencing global prosperity.

The audience is encouraged to think about the rules of trade and what kind of global economy they want to support.

Transcripts

Translator: Mirjana Čutura Reviewer: Peter van de Ven

Hello, everybody.

I want you all to come away from the next 10 minutes

with a single counterintuitive idea,

and that is that trade deals aren't really about trade,

not in any conventional sense of the word.

They're not about tariffs, they're not about quotas,

they're not about GDP growth,

they're not even really about jobs.

That's how we tend to talk about it: job loss and job gain,

and that's what's in the news, and that's what's at the DNC,

but that's not what they're really about.

Not really.

And we'll get to that,

but for now, I want to start at the very beginning.

The modern era of free trade, as we think of it today,

started in about 1944,

when all the great lights of liberal economics got together

in a little place called Bretton Woods, New Hampshire.

And at the time, the world was in a pretty dark place.

You know, all the people there remembered World War I,

they lived through the Depression,

World War II was still raging across the Atlantic,

and at the top of everyone's mind at the time was world peace:

how do we create an economy that fosters and necessitates world peace?

That was the entire idea.

And they seized on this idea of economic interdependence.

The idea was that if nation states were dependent on each other

for their supply chains,

then they couldn't go to war with each other.

If Germany needed France for its coal and France needed Germany for its steel,

then they couldn't go to war with each other.

So, that was the idea behind what became, about four years later, the GATT,

the General Agreement on Tariffs and Trade.

And this little document created the world as we know it today.

It created globalization, it created outsourcing,

it created multinational corporation as we think of it.

It's hard to imagine a world

in which there weren't, you know, McDonald'ses and global corporations

and the sort of structure that we have now.

But the General Agreement on Tariffs and Trade is what did it.

We created this.

And it brought on this period of extraordinary disruption

and convulsion and prosperity.

From about 1948, when the GATT was first signed, till late '70s,

the global GDP grew by about seven percent per year - just explosive growth.

And for a while, people thought that wouldn't end,

that was just it - we had cracked the code.

But then it began to wane.

And in the late '70s and early '80s,

you had the great lights of a new generation of liberal economics

get together for a second time:

a new Bretton Woods.

Only this time, it was the Uruguay Round, and it lasted for eight years.

And the scenario there was a little different.

Instead of world peace and economic interdependence,

they were really motivated by this idea of global efficiency:

so basically, How do we continue to boost the global economy

as it has been boosted over the last 30 years?

What do we do?

And the scenario was different.

So, in the 1940s, there were just really, really high tariffs and quotas

and really protectionist policies at all the borders.

And so, lowering those could have this profound influence,

but by the '80s, a lot of those quotas were pretty low,

a lot of those tariffs were already pretty low.

So, they began to think outside the box,

and they seized on this idea of non-tariff barriers.

And now, this leads into the modern era of trade I'm talking about now.

Now, non-tariff barriers are the idea

that it doesn't really matter

how low a tariff is around a country's border

if, once a product gets inside, it has to compete at an uneven playing field.

So, once you have, you know, Jim Bean, for example,

it doesn't matter if Japan doesn't have a tariff on liquor

if, once it's inside Japan,

it has to compete on the same shelf next to a Japanese liquor

that's subsidized by the Japanese government.

So, the idea now was, you know, we just strip away all that other stuff

and make the world's economy as efficient as possible.

And that is the philosophy that governed trade beginning in the 1990s.

In 1995, we got rid of the GATT,

and we replaced it with something you've probably heard of:

the World Trade Organization.

And around that time, before and after,

we had these extraordinarily, enormously powerful trade agreements -

the NAFTA, the CAFTA,

and literally thousands of bilateral investment treaties -

all of which were governed by the same philosophy:

non-tarrif barriers.

How do you get nation states to sign on to this idea

that their domestic industrial policies,

their domestic laws, their domestic regulations

needed to align with this global sense of efficiency?

It's the whole idea.

And just take a moment, and appreciate that

because it's totally different

than anything that the granddaddies of trade would have considered trade.

In the late 19th century, you know,

David Ricardo and Adam Smith

and all these people you learn about in textbooks,

when they were talking about trade,

they were not talking about someone's domestic policy on environmental law.

They were not talking about, you know,

how long a pharmaceutical company's data exclusivity should last.

Should it last for 12 years or 7 years or 5 years

and under what circumstances?

All of a sudden, that became what we were talking about

when we talked about trade.

And that changed everything.

So, to give you two examples,

one of the biggest discussions about trade that we've been having since the late '90s

involves - or fights, really - involves the Europeans and the Americans.

And the Americans want to export their genetically modified beef to Europe,

and the Europeans, for a variety of cultural and social mores,

don't want that, don't want GMO beef.

And so, you have this fight

because the Europeans say that they're allowed for local rule

and national sovereignty

and democratic nations reflecting the preferences of their constituencies,

they should be allowed to have those rules.

And the USA, that's backed by the WTO, says, "No,

your domestic policies are not aligning with the sense of global efficiency."

And that is actually a much more interesting discussion to be having

than, Is trade good or is trade bad?

Suddenly, we're discussing national sovereignty,

we're discussing local rule,

we're discussing, What do we mean by environmental regulations,

and are we okay with them being trumped?

Under what circumstances?

So, here's a second example, and this happened this year in the US.

In the US, it used to be or it is

that if you wanted to put your tuna on the shelf

and say "dolphin-free tuna" on it,

you had to use methods that actually excluded dolphins.

And the Mexican government got wind of that and said,

"You know, that's not fair.

That discriminates against Mexican fishermen"

because Mexican fishermen fish in waters that are dolphin heavy,

and they use methods that don't exclude dolphins.

So, by having this law, we're actually discriminating against Mexican fishermen.

And the WTO agreed.

So, we have, you know, these efficiency problems.

How do we think about global efficiency?

How do we promote the free movement of as much goods and as much services

across as many borders as possible

while at the same time preserving the laws and regulations

that prize things that aren't about global efficiency,

that are maybe about, you know, racial equality

or about protecting the environment

or laws that prize public health issues,

things like that?

That gets us up to where we are today.

You may have noticed that the conversation that we're having about trade

on the national stage right now

is very confused.

(Laughter)

We've got both of our presidential candidates,

who appear to be in favor of free trade

but are against the Trans-Pacific Partnership,

that's that massive trade deal

that would connect the United States and 11 other Pacific Rim countries.

And then, you have other organization like the AARP and the Sierra Club

and Doctors Without Borders

that are opposed to elements of it.

And people are telling us, "Oh, you're either for free trade,

or you're against it,

or you're for globalization, or you're against it.

What kind of the world do you want to live in?"

Well, we're not talking about trade.

We're talking about rules.

We're talking about global rules, global standards,

and what kind of world we want that to be.

And as soon as you sort of change your mind

and you realize that that's what we're talking about,

it all starts to make a lot more sense.

So, I want to leave you guys with that idea.

We created the world that we live in now.

Our forefathers got together at Bretton Woods,

and they created this global economy that we have now,

and we remade it in the late '80s and the '90s

with the World Trade Organization.

The rules that we pass and that we embrace are the rules of the game that we live in.

So, let's think about that, let's think about trade in that context.

Let's think about what rules we want to embrace,

what we want them to serve.

You know, do we want global efficiency to be the paradigm that we think of,

or do we want it to be something else, maybe like global prosperity?

Global prosperity for normal people:

for farmers and ranchers and, you know, everyday Americans.

It's because the rules that we pass are the rules of the game,

and when we talk about trade, we're talking about rules.

Thank you so much.

(Applause)