Translator: Mirjana Čutura
Reviewer: Peter van de Ven Hello, everybody. I want you all to come away
from the next 10 minutes with a single counterintuitive idea, and that is that trade deals
aren't really about trade, not in any conventional sense of the word. They're not about tariffs,
they're not about quotas, they're not about GDP growth, they're not even really about jobs. That's how we tend to talk about it:
job loss and job gain, and that's what's in the news,
and that's what's at the DNC, but that's not what they're really about. Not really. And we'll get to that, but for now, I want to start
at the very beginning. The modern era of free trade,
as we think of it today, started in about 1944, when all the great lights
of liberal economics got together in a little place called
Bretton Woods, New Hampshire. And at the time, the world
was in a pretty dark place. You know, all the people there
remembered World War I, they lived through the Depression, World War II was still raging
across the Atlantic, and at the top of everyone's mind
at the time was world peace: how do we create an economy that fosters
and necessitates world peace? That was the entire idea. And they seized on this idea
of economic interdependence. The idea was that if nation states
were dependent on each other for their supply chains, then they couldn't go to war
with each other. If Germany needed France for its coal
and France needed Germany for its steel, then they couldn't go to war
with each other. So, that was the idea behind what became,
about four years later, the GATT, the General Agreement
on Tariffs and Trade. And this little document
created the world as we know it today. It created globalization,
it created outsourcing, it created multinational corporation
as we think of it. It's hard to imagine a world in which there weren't, you know,
McDonald'ses and global corporations and the sort of structure
that we have now. But the General Agreement
on Tariffs and Trade is what did it. We created this. And it brought on this period
of extraordinary disruption and convulsion and prosperity. From about 1948, when the GATT
was first signed, till late '70s, the global GDP grew by about seven percent
per year - just explosive growth. And for a while,
people thought that wouldn't end, that was just it -
we had cracked the code. But then it began to wane. And in the late '70s and early '80s, you had the great lights
of a new generation of liberal economics get together for a second time: a new Bretton Woods. Only this time, it was the Uruguay Round,
and it lasted for eight years. And the scenario there
was a little different. Instead of world peace
and economic interdependence, they were really motivated
by this idea of global efficiency: so basically, How do we continue
to boost the global economy as it has been boosted
over the last 30 years? What do we do? And the scenario was different. So, in the 1940s, there were just
really, really high tariffs and quotas and really protectionist policies
at all the borders. And so, lowering those
could have this profound influence, but by the '80s, a lot
of those quotas were pretty low, a lot of those tariffs
were already pretty low. So, they began to think outside the box, and they seized on this idea
of non-tariff barriers. And now, this leads into the modern era
of trade I'm talking about now. Now, non-tariff barriers are the idea that it doesn't really matter how low a tariff is
around a country's border if, once a product gets inside, it has
to compete at an uneven playing field. So, once you have, you know,
Jim Bean, for example, it doesn't matter if Japan
doesn't have a tariff on liquor if, once it's inside Japan, it has to compete on the same shelf
next to a Japanese liquor that's subsidized
by the Japanese government. So, the idea now was, you know,
we just strip away all that other stuff and make the world's economy
as efficient as possible. And that is the philosophy that governed
trade beginning in the 1990s. In 1995, we got rid of the GATT, and we replaced it with something
you've probably heard of: the World Trade Organization. And around that time, before and after, we had these extraordinarily,
enormously powerful trade agreements - the NAFTA, the CAFTA, and literally thousands
of bilateral investment treaties - all of which were governed
by the same philosophy: non-tarrif barriers. How do you get nation states
to sign on to this idea that their domestic industrial policies, their domestic laws,
their domestic regulations needed to align with this global
sense of efficiency? It's the whole idea. And just take a moment,
and appreciate that because it's totally different than anything that the granddaddies
of trade would have considered trade. In the late 19th century, you know, David Ricardo and Adam Smith and all these people
you learn about in textbooks, when they were talking about trade, they were not talking about someone's
domestic policy on environmental law. They were not talking about, you know, how long a pharmaceutical
company's data exclusivity should last. Should it last for 12 years
or 7 years or 5 years and under what circumstances? All of a sudden, that became
what we were talking about when we talked about trade. And that changed everything. So, to give you two examples, one of the biggest discussions about trade
that we've been having since the late '90s involves - or fights, really -
involves the Europeans and the Americans. And the Americans want to export
their genetically modified beef to Europe, and the Europeans, for a variety
of cultural and social mores, don't want that, don't want GMO beef. And so, you have this fight because the Europeans say
that they're allowed for local rule and national sovereignty and democratic nations reflecting
the preferences of their constituencies, they should be allowed
to have those rules. And the USA, that's backed
by the WTO, says, "No, your domestic policies are not aligning
with the sense of global efficiency." And that is actually a much
more interesting discussion to be having than, Is trade good or is trade bad? Suddenly, we're discussing
national sovereignty, we're discussing local rule, we're discussing, What do we mean
by environmental regulations, and are we okay with them being trumped? Under what circumstances? So, here's a second example,
and this happened this year in the US. In the US, it used to be or it is that if you wanted
to put your tuna on the shelf and say "dolphin-free tuna" on it, you had to use methods
that actually excluded dolphins. And the Mexican government
got wind of that and said, "You know, that's not fair. That discriminates
against Mexican fishermen" because Mexican fishermen fish
in waters that are dolphin heavy, and they use methods
that don't exclude dolphins. So, by having this law, we're actually
discriminating against Mexican fishermen. And the WTO agreed. So, we have, you know,
these efficiency problems. How do we think about global efficiency? How do we promote the free movement
of as much goods and as much services across as many borders as possible while at the same time
preserving the laws and regulations that prize things that aren't
about global efficiency, that are maybe about,
you know, racial equality or about protecting the environment or laws that prize public health issues, things like that? That gets us up to where we are today. You may have noticed that the conversation
that we're having about trade on the national stage right now is very confused. (Laughter) We've got both of our
presidential candidates, who appear to be in favor of free trade but are against
the Trans-Pacific Partnership, that's that massive trade deal that would connect the United States
and 11 other Pacific Rim countries. And then, you have other organization
like the AARP and the Sierra Club and Doctors Without Borders that are opposed to elements of it. And people are telling us,
"Oh, you're either for free trade, or you're against it, or you're for globalization,
or you're against it. What kind of the world
do you want to live in?" Well, we're not talking about trade. We're talking about rules. We're talking about global rules,
global standards, and what kind of world we want that to be. And as soon as you
sort of change your mind and you realize that
that's what we're talking about, it all starts to make a lot more sense. So, I want to leave
you guys with that idea. We created the world that we live in now. Our forefathers got together
at Bretton Woods, and they created this global
economy that we have now, and we remade it
in the late '80s and the '90s with the World Trade Organization. The rules that we pass and that we embrace
are the rules of the game that we live in. So, let's think about that,
let's think about trade in that context. Let's think about what rules
we want to embrace, what we want them to serve. You know, do we want global efficiency
to be the paradigm that we think of, or do we want it to be something else,
maybe like global prosperity? Global prosperity for normal people: for farmers and ranchers
and, you know, everyday Americans. It's because the rules that we pass
are the rules of the game, and when we talk about trade,
we're talking about rules. Thank you so much. (Applause)
