Recent waves of protectionist policies and sentiment across the world can be countered by increasing transparency about free trade agreements (FTAs) and improving education to ensure people’s adaptability to a changing trade world.
These were the ideas exchanged at the Organisation for Economic Co-operation and Development (OECD) Week in Paris last week. Speakers recognised that as FTAs move from being purely tariff removals to more comprehensive deals encompassing intellectual property and sustainability clauses, among others, transparency needs to be increased.
Lilianne Ploumen, minister for foreign trade and development co-operation in the Netherlands, said: “The benefits of tariffs and quotas are something that is easily supported by people. Today, FTAs include more than the removal of tariff barriers, and rightly so, but it is complicated for people who do not do every day business to follow and understand that.”
Some countries have been better than others at communicating their trade negotiations. Lenita Toivakka, minister for foreign trade and development in Finland, explained that in her country, there are public hearings after every round of trade negotiations. “The key word is transparency. The EU has been quite good on this, but all countries have a responsibility in this as well. We are not talking enough about benefits and about what protectionism means,” she added.
Costa Rica’s trade minister, Alexander Mora, recalled the referendum held in 2007 to decide whether the country should adopt the Dominican Republic-Central America Free Trade Agreement (CAFTA), removing trade barriers between Central American countries and the US. The “yes” vote won, but very tightly, which in his opinion proves that anti free trade sentiment is not a new thing.
“The national reaction of the population is to protect. This new trade approach with new disciplines included in FTAs and investment agreements have created a perfect storm. We need a clearer message to help the population make an informed decision,” Mora said.
Education for adaptability
On top of improving communication about the benefits of free trade, speakers pointed out that it was governments’ responsibility to counter the negative effects of such agreements on their population. Particularly in terms of the job losses incurred through globalisation, they agreed that more should be done to give people the skills they need to adapt to a changing world.
Ploumen explained: “There is a responsibility for governments to monitor very closely the impact of trade agreements. A large part of Dutch society and workers have benefited from free trade, but that’s also because people have been able and willing to continue to invest in their own skillsets. Businesses that employ people need to take on that responsibility for lifelong learning and to make sure people can renew their skillsets. We now know that some sectors don’t benefit from free trade, so governments need to work with those sectors to mitigate the impact. It needs constant monitoring and vigilance.”
Skills adaptability was a recurring theme throughout the week, and was mentioned in various contexts. For example, a fintech sessions tackled the issue of banking job losses as a result of automation and disintermediation, and asked whether there would be enough “new” jobs to absorb those losses.
At the Latin America and Caribbean Forum that closed the week, Mexico’s economy secretary Ildefonso Guajardo Villarreal said that job losses in manufacturing were also “a reality” as a result of technological advances, and that governments needed to ensure education programmes at all levels were adjusted to reflect that trend.