Freer trade still delivers – if we share the gains wisely

AROUND the world, people are waking up to the benefits of freer trade. After years of free trade fatigue and growing protectionism, a majority of Americans now say the United States should pursue global free trade, while the European Union is striking free trade deals as fast as it can. Even regional geopolitical rivals China, South Korea and Japan have agreed to greater cooperation.

The threat of a global tariff war has driven many to the conclusion that everyone is better off when countries specialise in what they’re best at. This rosy view is a stark contrast to the vision of trade as a zero-sum game that other countries have won. And yet, the downsides of free trade are real: Images of the “Rust Belt” of America have come to stand for the negative impacts of free trade not only with US voters but also globally. Miles of once-mighty factories were silenced and once-proud communities devastated when corporations shifted their manufacturing offshore.

Both things can be true. The benefits and costs of free trade policies don’t fall equally. Wealthy countries benefit relatively less from freer trade, and parts of their workforce carry a disproportionate burden. But despite this, peer-reviewed research by Copenhagen Consensus economists shows that freer trade is still overwhelmingly good even for rich countries.