Reforming US Trade Policy for Shared Prosperity and the Planet

Trade has not always been such a controversial topic, and it worked well for the US and many other countries for most of the post-war era. However, in the last few decades, trade has become a key pivot point in politics and elections in the US. This is partly because of the transformation of the US trade model in the 1980s in which trade became a determinant of winners and losers, prioritizing investors and firms over workers.

A working paper by Kevin P. Gallagher and Sandra Polaski sets out an analysis of what went wrong in multilateral and bilateral trade policies and offers a concrete list of steps to move forward. The authors argue for a profound reorientation of US trade policy that pushes back against the imbalance of the global economy.

The authors recommend that the US reforms its trade policy template to protect and guarantee ample policy space for national-level initiatives, encourage upward harmonization of labor and environmental standards, re-balance trade and investment governance and make a serious commitment to adjustment assistance both domestically and internationally. These steps are necessary for two key purposes: establishing rules that push wages and working conditions upward globally as well as calibrating the world economy toward low-carbon economies to combat climate change.