The time has come to embrace a different logic, that of “exchange of policy space.” Poor and rich countries alike need to carve out greater space for pursuing their respective objectives. The former need to restructure their economies and promote new industries, and the latter must address domestic concerns over inequality and distributive justice. This requires placing some sand in the wheels of globalization.
The best way to bring about such institutional re-engineering would be to rewrite multilateral rules. For example, the “safeguards” clause of the WTO could be broadened to allow the imposition of trade restrictions (subject to procedural disciplines) in instances where imports demonstrably conflict with domestic social norms. (I discuss the specifics in my book The Globalization Paradox.) Similarly, trade agreements could incorporate a “development box” to provide poor countries with the autonomy they need to pursue economic diversification.
Progressives should not buy into a false and counter-productive narrative that sets the interests of the global poor against the interests of rich countries’ lower and middle classes. With sufficient institutional imagination, the global trade regime can be reformed to the benefit of both.
A Progressive Logic of Trade