Free Trade For Liberals

How a U.S.-Europe economic alliance could protect democracy, fight inequality, and save the environment.

It is difficult to overstate the dangers facing Europe. A hopelessly divided Britain is on the verge of crashing out of the European Union with no deal, risking economic turmoil, medicine shortages, and conflict in Northern Ireland. Aspiring autocrats lead governments in Poland and Hungary—once models of democratization. An angry populist movement with incoherent demands is wreaking havoc in France. A predatory Russia feeds these trends using everything from Twitter bots to assassins. 

Seven decades of peace and prosperity have made it too easy to forget what happens when Europe divides. More than 100 million people, half a million of them Americans, were killed during World War I and World War II. Those two conflicts capped centuries of nearly nonstop war, conquest, and revolution. The continent’s recent stability is the exception, not the rule. 

The peace stems largely from American foreign policy. The United States was essential to defeating the continent’s fascist powers during World War II, helped revive its economy with the Marshall Plan, and now safeguards its security through the North Atlantic Treaty Organization. When the Balkans descended into war in the 1990s, it took American military action, through NATO, to end the bloodshed.

Donald Trump has ignored this history. He has abandoned pacts that the EU values, like the Paris Agreement on climate change and the Iran nuclear deal. He has lobbed insults at the bloc’s leaders, tweeting that French President Emmanuel Macron “suffers from a very low Approval Rating”  and that “the people of Germany are turning against” Chancellor Angela Merkel. He has even threatened to withdraw from NATO. 

The president’s actions have rocked Europe’s confidence in the U.S. Last year, Merkel remarked that “it’s no longer the case that the United States will simply just protect us.” Macron called for a European army to safeguard the continent from “China, Russia, and even the United States of America.” The president’s behavior has created openings for the Kremlin, which is forging political and financial alliances with increasingly powerful far-right parties across the continent. 

But the fracturing of Europe predates Trump, and it will likely outlast him. Extreme nationalist parties have made steady gains in EU parliamentary elections. Unchecked, they will win control of more European countries, and they will use their authority to persecute minorities, weaken civil society, and perhaps even rip the union apart. Given the continent’s history, that’s a scary prospect. The United States needs new ways to bind European states to each other, to America, and to liberal democratic values.

Here’s one: establish a large, powerful trade agreement with the European Union. Call it the Atlantic Alliance. If implemented, it would bring Europe and America closer together by making them part of the largest free trade zone in the world. 

Proposing a new free trade deal in 2019 might sound backward. Recent trade agreements have been archetypes of the runaway free market-ism that produced the very inequality fueling nationalist backlash on both sides of the Atlantic. There’s a reason that Trump ran—and won—on a stridently anti-trade platform. And indeed, the deal that policymakers have already proposed, called the Transatlantic Trade and Investment Partnership (TTIP), shows the flaws of the existing system. It’s designed to liberalize the flow of capital without serious respect for the consequences. Like trade agreements past, it would establish international tribunals that let corporations challenge and undermine the regulations of sovereign states.  

The fracturing of Europe predates Trump, and it will likely outlast him. Given the continent’s history, that’s a scary prospect. The United States needs new ways to bind European states to each other, to America, and to liberal democratic values.

But there’s no reason why a new deal with Europe has to follow this discredited template. Tariffs between the U.S. and Europe are already low. The Atlantic Alliance would lower them further not as an end in itself, but as a means of reinforcing strategic ties and strengthening liberal values.

For American liberals, a deal with Europe could advance domestic progressive policies. Unlike the Asian and Latin American partners in past trade agreements, European countries have labor and environmental standards that tend to be stronger than ours. A deal, if done right, would curb greenhouse gas emissions and raise salaries. It would create stronger antitrust rules to liberate entrepreneurs, and it would crack down on the use of tax havens by multinational corporations and the ultrarich on both sides of the Atlantic. Like any other trade deal, it would increase economic growth. But by making the U.S. and Europe more equitable and prosperous, it would protect both places from authoritarian countries and help defang the right-wing nationalism tearing the West apart. 

“It makes imminent, strategic sense for the U.S. to want this,” said Wesley Clark, NATO’s former supreme allied commander. “Everything we can do to pull the United States and Europe closer together is essential. The United States cannot deal effectively with China without the strong, complete support of its European allies. And right now, the U.S. does not have that support.”

But this is more than just a way to benefit Western democracies. The United States and the European Union make up 45 percent of global GDP. Outside nations will have to raise their production standards for any goods they want traded as part of the agreement. If they want to eventually join the deal, they’ll have to adopt these terms wholesale. That could mean improved labor conditions for billions of workers and a united front on climate change. 

In other words, if done right, this deal could save the world.

In the 1930s, the international system exploded. Japan invaded China. Italy seized control of Ethiopia and Albania. Germany annexed Czechoslovakia and occupied Poland. Britain and France declared war on Germany. The deadliest conflict in human history had begun.

Initially, Americans were reluctant to send troops to Europe or the Pacific. So the United States responded using trade policy instead. In a 1940 speech, Franklin Delano Roosevelt told Americans that, to save its allies, the U.S. needed to become “the great arsenal of democracy.” Roosevelt then provided friendly powers with vital military and agricultural supplies at virtually no cost. Many allied leaders later credited these sales with saving their countries. After Roosevelt’s death, Winston Churchill referred to the president’s decision as “the most unselfish and unsordid financial act of any country in all history.”

Postwar liberals shared Roosevelt’s appreciation for the power of trade to promote democracy. In 1947, New Deal–style policymakers established the Havana Charter, a multilateral trade agreement that would have strengthened international labor rights and limited the power of major corporations and financiers. But business interests opposed the deal, and Congress never ratified it. 

“The United States cannot deal effectively with China without the strong, complete support of its European allies,” said Wesley Clark, NATO’s former supreme allied commander. “And right now, the U.S. does not have that support.”

Still, over the next several decades, the U.S. used trade to help rebuild the economies devastated by the war in a way that would prevent future conflict. Free trade helped Japan grow rapidly and bound its economic fortunes closely to America’s. In Europe, the Marshall Plan made billions of dollars in aid contingent on greater economic cooperation. And in 1949, Congress declared that “the policy of the people of the United States [is] to encourage the unification of Europe.”

European governments grudgingly went along. In 1950, French Foreign Minister Robert Schuman proposed that European nations pool coal and steel production so that war between France and Germany would be “not merely unthinkable, but materially impossible.” 

Four other European countries ended up joining the new European Coal and Steel Community, which allowed coal and steel (and eventually other goods) to travel freely across borders. Over the course of the next several decades, more countries joined, leading to the formation of what was eventually named the European
Union. 

The Marshall Plan and the EU are perhaps the best examples of how economic policies and trade deals can advance growth, security, and democracy. The Marshall Plan kickstarted the integration of Europe while tying the bloc to the United States in an alliance against the Soviet Union. The EU used economic ties and development spending to turn a continent riven by violent divisions into one of the most peaceful and prosperous places on earth. It is an imperfect institution, pushing business-friendly policies at the expense of unions, for example. But scholars have found the incentive of EU membership turned many once communist countries into democracies. It is proof that globalization can be a means to liberal democratic ends.

That, of course, is not the dominant narrative today. “We’re in a retrenchment mode,” said Edward Alden, a senior fellow at the Council on Foreign Relations and a trade expert. “I think the issue now is not, ‘How do trade agreements, how does trade liberalization, move forward?’ I think the question is, ‘How far does it recede?’ ”

There are many things that motivated British and American voters to opt for Brexit and Trump. Racism and opposition to immigration were key, as they have been in right-wing victories throughout the world. But economic skepticism of globalization—shared by many on the left—also played a role. This is, at least in part, a reaction to post–Cold War trade agreements. Instead of treating increased interdependence as a means of advancing democracy and liberalism, as the European Coal and Steel Community once did, these deals tend to serve the interests of multinational corporations. 

Consider the World Trade Organization. Arguably the most important international institution established since the Cold War, it has no labor or environmental requirements. Instead, it was designed to liberalize capital flows as much as possible with little regard for avoiding harmful side effects. 

Individual trade agreements negotiated by the U.S. are hardly better. Many of these deals include “investor-state dispute settlement provisions”—the statutes that let companies undercut the regulations of sovereign countries. Rather than pushing for better labor rights or environmental standards, the U.S. spends its negotiating capital on obtaining strong patent and copyright protections for U.S. pharmaceutical companies and media conglomerates like Disney. 

That’s because multinational corporations are interested in shareholder returns, not democracy and equality. They want patent protections, not pollution control. They want to be able to source as much as possible from China and other low-wage countries with lax environmental and labor standards. And they have disproportionate power to push for these preferences. Through “industry trade advisory committees,” corporations get to see classified negotiating texts and provide drafting suggestions. 

“Current agreements set a ceiling: a country cannot have stronger health, financial stability, environmental, or other policy standards,” said Lori Wallach, the director of Public Citizen’s Global Trade Watch. “But there is no floor. So there’s no rule that says, if your food safety is truly miserable, or if you have child labor, or slave labor, or no minimum wage, it’s kept out of global trade.”

While far-right parties did well in Europe’s 2019 parliamentary elections, a variety of pro-Europe parties on the left made serious gains. If a Democrat wins the presidency, there’s reason to think she can work with the EU’s combined majority of centrists and leftists.

That doesn’t mean these deals don’t have upsides. Military experts say that agreements like NAFTA and the never-implemented Trans-Pacific Partnership increased (or would have) America’s national security by drawing allies closer to the U.S. and away from hostile powers. And there is evidence that post–Cold War trade deals have helped lift hundreds of millions of people in developing nations out of extreme poverty.

But research shows that trade deals have also had unsavory consequences. A 2015 study by three prominent economists found that between 1999 and 2011, Chinese imports alone cost the U.S. roughly one million manufacturing jobs. NAFTA’s impact on the U.S. economy is exceptionally complex, but there is evidence that it has put downward pressure on the wages of non-college-educated workers. This year, several political scientists at the University of Pittsburgh found that regions in Europe that are highly exposed to trade are more likely to support right-wing populists.

Unfortunately, the growing power of these populists makes cutting any kind of trade deal difficult. “The nation-state is coming back to life,” said Charles Kupchan, a professor of international affairs at Georgetown University and the former senior director for European affairs on the Obama administration’s National Security Council. “This is not a moment when free trade is going to find a lot of adherents.”

For European leaders, crafting a deal with the U.S. is especially difficult because it entails negotiating with a country with weaker labor and environmental laws. Even French President Macron, Europe’s consummate centrist, has expressed hesitation. “No European standard should be suppressed or lowered in the areas of environment, health, or food,” he said last fall.

But that doesn’t mean the Atlantic Alliance would be impossible to pull off. While far-right parties did well in Europe’s 2019 parliamentary elections, they didn’t pick up as many seats as expected. More importantly, a variety of smaller, pro-Europe parties on the left—like the Greens—made serious gains. Meanwhile, in the U.S., a 2018 Pew survey found that 67 percent of Democrats have positive views of free trade, up from 53 percent in 2009—likely in reaction to Trump’s hostility to it. If a Democrat wins the presidency, there’s reason to think she can work with the EU’s combined majority of centrists and leftists.

There are plenty of areas where liberal Americans and Europeans could establish a united front. Perhaps the most prominent is climate change. Macron’s government has demanded that any nation signing a trade deal with the EU must also sign the Paris Agreement. The next American administration should go even further and put the Paris Agreement in the new trade deal’s text, making lower tariffs conditional on saving the planet.

“If you put things in that Europeans care a lot about and like, such as the Paris climate agreement, that would be a big deal,” said Kupchan. “That would win back a lot of confidence in American leadership.”

There’s more that Europeans and liberal Americans could accomplish with the promise of lower tariffs. Their trade deal, for example, should require participating countries to set minimum labor standards and pay their citizens a livable minimum wage, which would make the U.S. lift its own pay base. The deal should also include strong antitrust provisions that would make the U.S. address its high levels of corporate concentration. In both of these areas, European law is more stringent than America’s.

Experts I spoke with also pointed to international tax evasion as an area ripe for U.S.-EU collaboration. “It’s become almost impossible to tax corporations because they are so mobile,” said Alden, of the Council on Foreign Relations. Europe’s efforts to deal with the problem have been frustrated by some of its own members. While Germany and France want to fight evasion, tax haven states like Ireland and Luxembourg do not.

Evasion, then, is an area where the United States could actually help Europe. “If the United States were on board for a cooperative approach that could be put into a chapter of the trade agreement, that might alter the internal politics in Europe,” said Robert Howse, a trade expert and international law professor at New York University. This, in turn, would give major European powers an incentive to craft an agreement with the U.S.

Then there are reasons to cooperate on trade that are only indirectly related to American domestic politics. The U.S., for example, could make it easier for Europe to access natural gas, reducing its dependence on Russia. More importantly, a trade deal with strict rules of origin would help the U.S. and Europe establish a united front against China’s mercantilist, environmentally degrading, and labor-exploiting industrial practices. 

Together, this would make the Atlantic Alliance far more popular than the corporate-driven trade deals of the past. There is, after all, something quite populist about a deal that binds countries to chasing down corporations that avoid taxes, and then making them pay their fair share.

Decades of interdependence helped bring unprecedented stability to the West. The last twenty-five years of globalization have eroded that promise and helped turn millions of people against it.

For the deal to accomplish these goals, the Atlantic Alliance would need to be rigorously enforced and hard to reverse. The most effective way to do that may be to put the rules into the implementing legislation—codifying the deal’s terms in European and American law. In the case of the United States, that means the implementing bill needs to make it through Congress. 

This may seem daunting. But trade deals have a good legislative track record, in part because they are often voted on under “fast track” authority. When subject to fast track, trade deals can’t be filibustered, and Congress can’t litigate their components. All they can do is vote up or down. If Congress wants the economic growth that comes with trade deals, and if business communities want freer access to European markets, they will have to support whatever agreement the president produces.

Tucking progressive causes into a trade deal is a double-edged sword—much like abolishing the filibuster. Conservatives could then use the same process to advance their own agenda. But they already do. To ratify the World Trade Organization, for example, the United States loosened its meat and poultry inspection standards and gave pharmaceutical companies three extra years of patent exclusivity on their medicines. Liberals shouldn’t be afraid of also using this tool, particularly for causes that require international solutions. There’s no way to fight climate change without commitments from the United States. And it will be much harder for Republicans to renege on those commitments if they’re enshrined in a U.S. law that’s essential to American economic growth.

Even under the most favorable political circumstances, the United States and Europe will face obstacles in negotiating a deal. Agriculture is a major minefield. The U.S. has long been frustrated by European labeling requirements. Meanwhile, the U.S. historically hasn’t entered into trade agreements that don’t help its politically powerful agricultural industry. But if American and European leaders are serious about saving international liberalism, they’ll have to make some tricky compromises. Decades of interdependence helped bring unprecedented stability to the West. The last twenty-five years of globalization have eroded that promise and helped turn millions of people against it.

“Trade and commercial policies that don’t take into consideration any sort of impact on working people leads people to really distrust the system,” Global Trade Watch’s Lori Wallach said. “It’s how we got Trump. It’s an important part of how a bunch of these right-wing movements are rising in Europe.” 

What we need is the opposite: a deal that fights income inequality, environmental degradation, and corporate concentration. This would show middle-class Americans and Europeans the upsides of interdependence and reduce the appeal of right-wing populism.

If we have learned anything from the last few years, it’s that the forces behind this kind of populism are global in nature, able to thrive in a wide variety of national soils. The solution must therefore be global, too. Illiberalism is simply too big and powerful to be stopped by any one state, or even one region. Working with Europe—a continent full of democracies, many our partners since the end of World War II—is the best place to start.

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Daniel Block

Daniel Block is an editor at the Washington Monthly.