Blog post

Inclusive Trade Policy: an etiquette guide for good governance

By L. Alan Winters CB. Published 17 May 2022

For me, ‘inclusive trade policy’ has two elements; inclusive trade policymaking and inclusive outcomes of trade policies, however, they are made. In both dimensions it defies precise and literal definition: complete universalism is not practicable even if one restricted attention to just the 67 million current UK residents, so one needs to define boundaries and/or relative weights. Yet, as soon as one does that, there is always someone on the outside or undervalued – that is, excluded. But despite this, ‘inclusive trade policy’ is still a useful and operational concept. How come?

First, consider policymaking. Trade policy should emerge from a process that commands widespread acceptance in which different viewpoints are heard and considered, and which are based on complete information offered with sufficient time to permit reasonable analysis. To be effective, this process has to end with national political structures, but it should take seriously the roles and rights of the devolved administrations and be supplemented by inputs from beyond the political parties and the usual set of stakeholders.

The ‘beyond’ bit is important. It includes specialist advice (researchers/experts - but you would expect to find that in a blog from a research centre) and broad interests beyond the narrow trade domain such as environmental groups, public health constituencies and consumer groups. And it should recognise that, whereas firms will have direct pecuniary interests in trade policy, and hence the incentives and means to enter the debate, that is less true for labour interests and much less true for other groups. Just as courts function in part because defendants can be helped to make their cases and Parliament explicitly supports an opposition, so inclusive trade policy should devote resources to supporting groups to test and challenge government views.

Turning to outcomes, while the evidence is overwhelming that international trade almost always boosts a country’s income in aggregate, it also unavoidably has distributional consequences – some people gain (e.g. if export markets for their output open up) and some lose (e.g. those who cannot withstand import competition). It is not realistic to think of any single item of public policy, let alone single trade policies, having no losers. But one might expect trade policy as a whole to be reasonably even-handed and even demand that economic policy overall be so. Thus, in outcome terms, inclusive trade policy would seek to ensure a reasonable degree of equity in outcomes, be aware of when and where there were (or were likely to be) failures in this goal and be prepared to act to mitigate or offset them. What might this involve?

  • A national conversation about the objectives of trade policy and strong Parliamentary scrutiny as policy is formulated;
  • A good understanding of the probable consequences of trade policy and designing policy to avoid egregious harms; this is part of what inclusive policymaking is meant to deliver;
  • Monitoring and analysing the actual outcomes of pieces of policy;
  • Avoiding circumstances where one interest group comes to dominate policymaking – e.g. tech firms in designing digital trade policies, powerful trade unions protecting one specific set of jobs, producers using standards to block competition regardless of the costs to others;
  • Being willing to support individuals who have fallen on hard times; and
  • Serious consideration of complementary policies that help to spread the benefits of trade and might help to support ailing communities. My own belief is that the former includes facilitating internal migration so that people can more easily move from places of stress to places of opportunity, and that the latter requires a greater degree of local control and accountability than the UK currently has.

All of these things will be easier if trade policy is based on an agreed (or at least accepted) framework of objectives and principles and if it recognised that trade policy is but one of the instruments with which governments should seek to make the lives of their citizens (and perhaps those beyond) better.

So, to summarise, inclusive trade policy is less a recipe than an etiquette guide for good governance.

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L. Alan Winters CB

Centre Director

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