Making Trade Agreements Work in the Service of Society

The Research Project

International trade agreements typically benefit the national welfare of the nations that sign them. However, they also generate economic displacements as well as negative social and environmental spill-overs. The traditional approach to address these negative spill-overs has been to rely on domestic flanking policies, which are de-linked from the trade agreement itself.

This approach, however, has not always worked well. Too often trade has been liberalized internationally, but domestic lawmakers have failed to enact the needed measures to address economic disruptions and spill-over effects on the environment and society. This has sapped the support for trade. Popular resentment of ‘globalisation’ has driven anti-trade sentiments to heights not seen since the 1930s in key geographies. A trend that has been intensified further with the COVID-19 Pandemic. This is having serious consequences for the multilateral trading system.

Inspired by early examples of “package treaties”, we will explore if and how trade agreements could become politically realistic and socially effective vehicles to address these spill-overs more directly. This would be by including the necessary flanking policies that offset the negative effects either (i) in the trade agreement itself or (ii) anchored in the domestic legislation implementing the trade agreement. We call both options “package treaties”.

Finding politically realistic and socially effective strategies would enable the gains of trade to materialize with the appropriate re-distribution and corrective mechanisms in place. Detecting novel ways of how to maintain both trade liberalization and the necessary adjustments have the potential of reshaping the way future international trade agreements are developed.