Good afternoon, good morning and welcome

Am CC, and this is the Competition Research Policy Network of CEPR – where we aim to connect academe and policymaking, AND connect areas of economics and policy which should not be siloed in the current political economy: antitrust policy, industrial policy, trade policy, digital policy, growth and innovation policies. 

It all links, and yet the experience of these areas of policy today in many places is they are separate and distinct – so much so that people have asked me “why are you talking about trade to a competition crowd?” 

There could not be anyone better than today’s speakers to explain why we should not see trade as an isolated pursuit only of interest to macroeconomists and trade specialists – but as essential to create economic opportunities, reduce inequality and ultimately protect democracy –  together with industrial policy, together with competition policy …

On this note, worth remembering that competition has not always been a distinct domain from trade.  22 July is the 80th anniversary of the end of the Bretton Wood Conference – which was of course many things, but ALSO affirmed a vision that trade rules should embody competition values as protection against the unsavoury relationship between oligarchs and authoritarian regimes in the 1930s, and ultimately protect democracy against both private and State power. Is there anything more salient today?

But this vision has been lost along the way, as the view prevailed that corporations, not governments, ultimately knew better about commerce; and they should not intervene as “free trade” automatically implies competition.  We thus defaulted to a version of “free trade” that liberalized capital flows, so countries would compete for investment and production would shift to the lowest-cost places. IF this was bad for workers, “trickle down” would take care of it.

It did not, of course. But the issue is not “globalization” or even “hyperglobalization” per se – rather, the rules that govern trade agreements have been divorced from competition and protection of workers, and allowed to be shaped in the interest of large corporations: finance, pharma, tech, essentially promoting the interest of US national champions.

Trade is now trying to figure out the next world order, a different version of globalization. We recognise that focusing on the aggregate picture and thinking that all we needed was cheap consumer goods ignored distribution effects; leading to disenfranchising and impoverishing workers at home as production was offshored where costs were lowest – not because of intense competition, but because of unfair state subsidies, labour suppression and environmental  free-for-all.  The loss of competition guardrails and workers’ rights in trade has allowed corporate elites maximum flexibility to set the rules as they saw fit, creating a race to the bottom, huge concentration in markets and brittle supply chains.  Inequality has increased, workers and the working classes at home have been undermined, while the Global South has been also badly served.

The antitrust community should take an interest because we don’t have a coherent theory of how to keep corporate power in check. We need to return pro-competition and pro-worker values into trade. It makes no sense to pursue antimonopoly/pro-competitive actions at home and yet enforce trade rules that are written by those same actors to pursue their own interests. 

We will discuss this with Katherine Tai, US Trade Representative who has been very clear on the need to reimagine trade for prosperity and to create greater equality, and for a fairer dealing with the Global South – and Simon Johnson MIT, co-author of the celebrated “Power and Progress”, which also highlights the post-WWII order as one where institutions were trying to support a shared prosperity, of the choices we have to make as a society about how progress is used, whether we let it run amok and increase the gap between elites and ordinary people, or we have ways to step in and make it work for all. 

Direction of questions

KT: How can we most effectively evolve the global trading regime from one that increasingly deferred to business, to one that explicitly allows for competition and workers’ rights, and redresses the balance which is so much in favour of elites in selected countries? Promote a race to the top instead of a race to the bottom?

Give some concrete examples

There’s much rhetoric about any form of government intervention ultimately having the negative connotation of protectionism and populism. How is this vision different.

For many years the norm has been “one size fits all” bilateral and regional trade agreements – but do they work for developing countries? Not really. What is required for a post-colonial approach that is also intended to benefit the Global South? We should not pit workers in one country against workers in another, shift rent to capital from labour. This is what the approach has done. Discuss what’s happening with Africa?

To KT: your views on digital trade have made waves – in particular highlighting the need to link digital trade rules to antimonopoly values at home – can you expand.

• Starting from the distinction between e-commerce and digital trade – e-commerce involves using the Internet to facilitate trade, while digital trade is all about trade in data (and more about restricting digital policy space)
• And then your view that trade agreements should not have a role in developing the global digital governance landscape = your line was that US trade policy must reflect and leave space for US digital governance policy. That is why USTR did not come in with a “new” US position on data. The position is that it is premature to do so, you called it policy malpractice, said Congress and US regulators need to figure out the policy, and then you can ensure trade policy reflects that..

(Tech described it as a “long established trade policy” but it is not true. Digital trade is relatively new, the US is experimenting with digital policy and, it is okay for trade policy to take a step back and check with domestic policy. Trade rules are not static; they should be dynamic. Tech & co. call any policy that they do not like a “trade barrier.”  That’s why they were furious about the NTE report this year.  There has been no rise in digital “trade barriers,” but governments are reasserting their role in market regulation.

SIMON: your book strongly makes the case (having looked at history from the Industrial Revolution to Automation) that technological progress is not a tide that lifts all boats equally, but outcomes need to be shaped by policy to avoid extremely unequal distribution – a point you have made on AI – can you connect to what Katherine says and talk a bit about your views there – you talked about the Job market polarizing further since the 1980s as the mantra has been to minimize labour costs -=> falling labour share of income over last 50 years in many developed nations (automation/deregulation have benefited capital) – GLOBAL INEQUALITY HAS INCREASED –

what will happen with AI? POTENTIAL for a THREAT TO EMERGENT MIDDLE CLASSES in China, India etc. a mismatch between workers’ skills and the skills needed to effectively use AI, income gap will widen, and global inequality will increase within and across countries, creating more global political instability. However, these negative results can be mitigated or even avoided if governments adopt pro-worker policies. SHARED PROSPERITY