Is US public opinion turning against free trade?

It's no secret that the American public is now increasingly voicing their concerns about free trade and trade pacts such as NAFTA and the Trans-Pacific Partnership (TPP) agreement. Both Hillary Clinton and Donald Trump have declared their opposition to TPP and hardly a day goes by without top economists and policy makers who are ardent free-traders speaking out against TPP. Jeff Sachs of Columbia University and Nobel Prize winning economist Joe Stiglitz have recently written strongly on this topic. So, citizens of small countries such as Bangladesh which are economically dependent on export earnings are getting increasingly confused and feeling threatened. Will the coming years see trade barriers go up once again, and is Bangladesh going to face a tougher external trade regime, particularly in the US? The short answer to both questions is no, but to understand and navigate through the rough waters in future, our policy makers need to pay careful attention to swings in public opinions in the US and Britain.

First of all, let us ask, "Why have erstwhile advocates of free market now changed their tune?" To answer this question, one does not need to seek too far. Trade policies are not always win-win for all segments for a country's population. When classical economists like Paul Samuelson or Jagdish Bhagwati first expounded the Pure Theory of Trade, they assumed that eventually the benefits would trickle down to the workers who lose their jobs due to lower priced foreign goods. If textile factories in the US shut down due to competition from cheaper garments from China, theory tells us that the unemployed workers in the US will find jobs in sectors that begin to thrive due to greater exports, such as software development and technology. But, this scenario does not always pan out. Workers need training and relocation expenses to move from, for example, Massachusetts to Washington or California. And if that does not happen fast enough, unemployed workers eke out a living working in low-paying jobs or dropping out of the job market. And these issues have been raised time and again by the economists in the US and the politicians in Britain.

Now, turning to evidence, if we look at data from 1988 to 2008, trade only benefitted the top 1 percent of the world, and the middle class in the newly emerging economies. They were the big winners. The losers were those at the bottom and the middle and working classes in the advanced countries.

Stiglitz in The Daily Star wrote, "In my recent book Rewriting the Rules of the American Economy, the rules of the game need to be changed again – and this must include measures to tame globalisation. The two new large agreements that President Barack Obama has been pushing – the Trans-Pacific Partnership between the US and 11 Pacific Rim countries, and the Transatlantic Trade and Investment Partnership between the EU and the US – are moves in the wrong direction."

In an article titled, "The truth about trade", Jeffrey Sachs said, "I am a believer in expanded international trade, but I am an opponent of TPP and TTIP." In his view, TPP offers corporations more power. And since with any trade pacts, some sections of the economy lose jobs and are not compensated for their losses, Sachs suggests a moratorium until these distribution issues are addressed by Congress. In an article in The Daily Star (October 4, 2015) under the headline, "The Trans-Pacific Free-Trade Charade", Stiglitz and Hersch raise a few objections to the provisions of TPP which they feel "would advance an agenda that actually runs counter to free trade".  They identify, among other factors, investor-state dispute settlement (ISDS) systems incorporated in TPP as serving the interests of big pharmaceutical and cigarette companies.

Paul Krugman of Princeton University won the Nobel Prize on articles he wrote on the benefits and mechanism of free trade. But, even Krugman has recently turned his powerful and rhetorical column in the New York Times against free trade. He writes, "So the elite case for ever-freer trade is largely a scam, which voters probably sense even if they don't know exactly what form it's taking." And then he continues, "It is fair to say that the case for more trade agreements - including TPP, which hasn't happened yet - is very, very weak."

So, it appears that on both sides of the Atlantic, three groups have ganged up against free trade: politicians, the voting public, and the one-time free-market economists. However, that is only a superficial view. The public know that free market allows cheaper banana and coffee to be on their menu, and assures them of the availability

Very Strong Opposition of all the cheaper gadgets they love - iPhones and apparels - as well as the Kias and Hyundais that make it possible for them to travel on the fabulous highway system in the US.

And here if we turn to surveys the evidence is mixed. What do public opinions polls show? In a recent survey, voters were asked the following question, among others, "How do you feel about rolling back free trade agreements?" The results are as follows:

Does this data show that the US public opinion is opposed to trade pacts? The answer is no. We notice that if we add up the percentage of voters who are either indifferent or oppose rolling back free trade pacts, more than 63 percent are not against free trade. However, whichever party wins the election, it needs to pay attention to the issue of "gains from trade" within a country. Politicians can't just be chasing free trade agreements that only safeguard the interests of multinational corporations but in the coming decades enact tax policies, income redistribution mechanisms, and training programmes that bolster the population that are left behind. 

The writer is an economist who writes on public policy issues.