Washington Monthly: Open Markets Fellow Beth Baltzan Urges Liberals to Fulfill New Deal Legacy on Trade

Washington, D.C.— As controversy builds this week over President Trump’s proposed U.S.-Mexico-Canada trade deal, Open Markets fellow Beth Baltzan joins the debate with a groundbreaking essay in the Washington Monthly calling for a bold rethink of America’s trade policies to curb corporate power and protect workers and the environment.

Formerly a Democratic counsel to the House Ways and Means Subcommittee and an associate general counsel with the Office of the U.S Trade Representative, Baltzan criticizes the enormous amount of power our existing trade regime has ceded to large multinational corporations. This has led, she shows, to major abuses, including corporate exploitation of workers, both here and abroad, and to weakening global environmental standards.

As a model for reform, Baltzan offers a historic global trade agreement negotiated under the Truman administration in the late 1940s but never ratified by the Senate. The Havana Charter not only set fair labor standards but also had many anti-monopoly provisions. Baltzan argues it provides a framework for addressing modern problems, including increasing corporate concentration and the environmental concerns reflected in the “Green New Deal.”

The article is excerpted below and can be read in full here.

...All trade depends on rules, and unless markets operate under the right ones, they will tend toward capitalistic excess, including dangerous degrees of industry concentration and the exploitation of workers and the environment. Which is why the architects of the postwar system got fifty-three nations to sign off on a treaty known as the Havana Charter, which included rules that guaranteed workers’ rights, provided protections against destructive foreign investor behavior, and required trading nations to abide by anti-monopoly rules.

[...]As giant corporations have gained economic power they have also gained political power, which has been used to undermine health, labor, environmental, and other regulation. Blowing up the outsize influence of corporations, including the power of nominally American corporations that take advantage of lax Chinese health, labor, and environmental standards through offshoring, is a precondition for doing anything serious about inequality or climate change.

We also cannot continue to justify our trade policies on the basis of consumerism. Not only are benefits to consumers assumed, rather than proven, we also must consider the rights of working-class Americans to a fair shot at the American Dream, and on the ability of small and midsize American firms to stay in business without needing to bust unions, cut benefits, or offshore their operations. In some instances, achieving these goals will require the U.S. to cut trade with certain nations, or at least retain the ability to credibly threaten to do so.

That means we will need to be ambitious in reconceiving the way the international trading system works. It needs to have strong labor and environmental standards. It needs to prevent bureaucrats in Geneva from making up rules. And it needs to address the fact that Chinese state capitalism, which is monopolistic in nature, is fundamentally incompatible with the free enterprise system the original architects created. The concentration of vital industrial capacities in a few nations— or only one—is dangerous for the global system.

Trump’s abrasive attack on the WTO has shaken things up. Therein lies the opportunity. Liberals care about systemic problems like income inequality and the destruction of the environment. As we look ahead to 2020 and contemplate bold policy ideas like the Green New Deal, it should be natural for us to expect the global trading system to be part of the solution, not part of the problem.