October 14, 2021

CRITIQUE Exchange The Impact of Trade Policy Decisions on Social Justice

In this Exchange, Dr Chad Damro (Senior Lecturer, University of Edinburgh) and Grace Garland (PhD Student, University of Edinburgh) respond to Dr Sarah Goff’s (Teaching Fellow, London School of Economics) recent publication, “The Impact of Trade Policy Decisions on Social Justice”, Res Publica, 27:59–76 (2021). This post comprises three sections: a summary of Dr Goff’s paper, an exchange between Dr Damro and Dr Goff, and a dialogue between Dr Goff and Ms Garland about her motivations and the background to the argument. This is in collaboration with the journal Res Publica, where Dr Goff’s paper is available on open access here.

Summary of the paper: Dr Sarah Goff (s.goff@lse.ac.uk)

Decision-making about trade often involves countries acting together, particularly in the World Trade Organization and through bilateral and regional trade agreements. But a country can act alone when it exits a trade agreement, decides to join a trade agreement, or unilaterally raises or lowers its barriers to trade. For instance, the United Kingdom left the European Union’s Single Market and Customs Union at the end of 2020. Critics argue that this decision sets back its national interest. My paper catalogues some of the main ways in which a society’s solitary decisions on trade can hinder and facilitate its pursuit of social justice.

When a society liberalizes trade, it forgoes the use of certain policy options. These policies can be tariffs, for instance, or changes in its regulations that are prohibited under the terms of a trade agreement. A society forgoes these policies on the basis of its assumptions about how market actors and other states will respond, namely, with actions that tend to increase trade flows. By forgoing the relevant policies, the society improves its own economic productivity through increased trade flows.

How does economic productivity matter for a society’s pursuit of distributive justice? Some societies are unable to provide all citizens with their non-comparative entitlements of justice. For a society with these limitations on its economic capacities, it is valuable to liberalize trade because improved productivity is likely to result in the greater fulfillment of distributive justice. But many societies are limited by their own disinclination to pursue distributive justice. When such a society liberalizes trade, it may fail to extend any of the benefits of its improved productivity to disadvantaged citizens. Then its citizens have grounds for more serious complaints about the discrepancy between what their society has the capacity to do and what it is inclined to do to realize distributive justice.

Many countries have marshalled their economic capacities during the COVID-19 pandemic, for the purposes of public health and providing financial assistance to vulnerable citizens. It is possible to make a retrospective judgment about these societies that they previously had been disinclined, rather than unable, to pursue distributive justice. As the pandemic reduces productivity, however, it may become more valuable for many countries to liberalize trade. Many disadvantaged citizens are suffering increased hardship, even in wealthy countries. Their non-comparative entitlements of justice are more likely to be satisfied if their society improves its economic capacities, given a fixed level of inclination to use its capacities to pursue distributive justice.

Apart from the impact of improved economic productivity on distributive justice, a society’s forgone policy options can have their own significance for social justice. Justice may require a society to adopt particular policies, such as policies for national security and public health. Trade liberalization has an impact on the society’s realization of social justice if such policies are forgone or selected as a result. I argue that the policy options involved in trade decisions have an impact on social justice through their significance for the social hierarchy and their meaning about who has status and moral worth.

There is some force to arguments in favor of trade restrictions, on the grounds that citizens have entitlements of justice to ‘good jobs.’ A good job does not merely provide an average or higher wage, but also a ‘normal’ social status. A society has reasons of justice to maintain regulations and other policies that tend to preserve the good jobs held by those in the middle of the social hierarchy, even at the expense of the total quantity of jobs and the society’s productivity. However, these policies can express the social valuation that certain groups—such as white male workers— should be protected from foreign competition, even at the expense of the economic interests of society as a whole. Trade liberalization can have a positive impact on social justice by requiring a society to forgo policy options that have these expressive meanings about the superior status of certain workers and the inferiority of other groups, such as immigrants and racial minorities.

My paper identifies the impact of a society’s trade decisions on social justice, through the pathway of its economic productivity and the pathway of its policy options. I focus on distributive justice, the gradient of the social hierarchy, and expressive meanings of social status and moral worth. In a more comprehensive treatment of social justice, I would consider the requirement to pursue public health and the requirement to act from principle. Every society may be required to liberalize trade for the production and distribution of vaccines, essential medical supplies, and personal protective equipment. In addition, a society’s decisions about trade with strongly illiberal states may have expressive or revealed meaning. By trading or refusing to trade with illiberal states, a society may reveal to itself the principles of justice from which it acts more generally.

Exchange: Dr Chad Damro (Chad.Damro@ed.ac.uk)

Goff’s article helpfully points out important normative concerns related to individual trade decisions and their implications for social justice. The argument employs what she terms a ‘simple description’ of trade liberalization: ‘a society forgoes the use of certain policy options (such as tariffs), in order to pursue greater economic productivity through increased trade flows.’ She then identifies and posits different ways that a society’s trade policy decisions can have an impact on its pursuit of social justice. While this is a compelling piece of work with a solid argument, I found it encouraged me to think about the broader contours of trade policy and what other issues we might consider in addition to those captured by Goff’s description of trade liberalization. For example, a useful thought exercise follows from reading Goff’s article – which focuses on individual trade decisions, such as the US imposition of protectionist measures against China or the UK exit from the EU Customs Union and Single Market – in tandem with the EU’s new trade strategy outlined in the 2021 Trade Policy Review.

The EU’s trade strategy ‘talks the talk’, putting forward values and principles while also conceiving trade policy as a broad set of policy options. In this regard, the strategy might be seen as going beyond Goff’s more economistic description of trade liberalization and her focus on tariffs or other protective measures. Of course, I do not mean to suggest that EU trade policy is somehow free from economic motives or considerations. Indeed, the EU makes clear its attention to the economic benefits from trade. Other perspectives might also suggest that trade policy decisions and outcomes are conditioned by geopolitical and other structural factors as well as domestic institutions and interest group contestation. If such factors are generalizable across trade jurisdictions, they may have significant implications for any society’s pursuit of social justice.

Thinking about trade in the terms articulated by the EU also reflects the modern multilateral trade agenda that has expanded to include negotiations over non-tariff measures and what Young and Peterson would call ‘New Trade Issues’. These issues and technical barriers to trade can be seen as reflecting and protecting the EU’s domestically agreed objectives and regulatory standards. Including them in broader descriptions of trade liberalization may generate further compelling insights into the potential ways in which a society should utilize its trade policy to pursue social justice, both within and across its borders.

The EU’s 2021 Trade Policy Review is not the first time that the Union has included such broad and values-based objectives in its trade strategies – indeed such references have been a consistent feature of previous trade policy documents, including the prior 2015 Trade for All strategy. This begs the questions: to what extent 1) does the EU (or any other trade actor) actually ‘walk the walk’ and include such values and principles in bilateral, regional and multilateral trade agreements, and 2) do these values and principles inform individual trade decisions and their subsequent implementation in individual cases? Such questions require further consideration and empirical analysis. But they do seem important for expanding our understanding of trade policy and its potential impact on the vital matters of national and international social justice.

Response to Dr Damro from Dr Sarah Goff:

I thank Chad Damro for his thoughtful response to my article. I agree with him that trade policy involves many important issues and values, and my article provides only a partial accounting of these. Many people hold the view that a society should pursue social justice, even in contexts with other competing principles and values at stake. I hope that this brief discussion provides some elaboration on the differences between the pursuit of social justice and the pursuit of other values at stake in trade policy.

Some of these other values can be understood in terms of global justice. I take Damro’s example of the EU’s 2021 Trade Policy Review, in particular, the stated aims to strengthen multilateralism and improve the fairness of global trade rules. In my view, these aims are largely about principles of global justice, particularly what Europeans owe to non-Europeans and vice versa in the context of trade. As another example, I think there are principles of global justice at stake when there is differential treatment of a society’s trading partners. A society may offer developing countries better access to its domestic market or it may raise barriers to trade with countries that violate human rights and/or regulatory standards in production. This is not to say that there are no issues of social justice involved in a society’s differential treatment of its trading partners. Rather, I think the issues of social justice in this differential treatment are largely derivative of the society’s orientation towards trade liberalization in general. Trade with particular countries may have additional significance for the society’s pursuit of distributive justice, for instance, if this trade has especially high potential to increase the national income. But it must be asked first whether the society has good reasons to increase its income through trade at all, since this could exacerbate its failure to realize distributive justice.

Other issues may have indirect significance for social justice, insofar as they involve values and principles that have been collectively endorsed by the citizens of a democratic society. For instance, the EU’s pursuit of sustainability through its trade policy may be important for the satisfaction of social justice in the EU member states. If citizens collectively endorse the value of sustainability, it could be a requirement of social justice to pursue this value in virtue of their democratic endorsement. I am skeptical that this kind of collective endorsement will occur often, since it requires ordinary citizens to have well-defined views about trade policy and/or commitments to the relevant values. Damro asks the right questions about whether the EU’s statement of its value-based objectives is simply ‘talk,’ or if these values will be reflected in its decision-making process and actually guide its actions on trade. Still, it is worth noting this other route through which trade policy can have an impact on social justice, namely, through the policy’s pursuit of certain values and principles that have been democratically endorsed.

I appreciate that the example of the EU’s trade policy highlights a limitation of my argument, specifically a limitation in the simple description of trade liberalization. My simple description takes a static view of a society’s options, at a moment when it could unilaterally raise/lower its barriers to trade or could exit/join a trade agreement. A society has the option to pursue greater national income or it can adopt certain policies that it expects to reduce trade flows (which could be tariffs or any kind of non-tariff barrier to trade). However, the EU clearly takes a dynamic and long-term perspective in its trade policy decisions. When the EU encourages non-EU countries to adopt its regulatory standards, for instance, this may improve the options that the EU has for its future decision-making about trade with these countries. I think the dynamic perspective on trade negotiations adds empirical uncertainty and inter-temporal complexity to the question of how a society should pursue social justice through its trade policy. My argument merely adopts a dynamic perspective on a society’s changing internal conditions, namely, its economic capacities to realize distributive justice, its political inclinations to pursue justice, and its conventional expressions about which groups of citizens have status and moral worth.

Dialogue: Dr Sarah Goff and Grace Garland (G.J.Garland@ed.ac.uk)

GG: You note that “public debate over trade policy is largely restricted to concern over society’s interests and the claims of domestic groups”, which is primarily an intra-country concern, so to speak. At the same time, the philosophical literature is more concerned with “the global trading system and its governance” in bi- and multi-lateral trade decisions – inter-country concerns (p. 60). In focusing on the normative dimensions of the former, it seems that you are taking your cue from the public whose concern is justice for them as citizens of a country, and thereby contributing to an expansion of the literature beyond the ethics of multi-lateral trade. Could you elaborate further on the positioning of the paper? What motivated you to take up this inquiry?

SG: It is often presumed that a country can compensate the domestic losers from trade and adopt mitigatory social policies, particularly when the country is rich. Two political events, Brexit and former U.S. President Trump’s populist trade policies, prompted me to consider when a country cannot or will not make the necessary domestic adjustments. I thought these two political events exposed the limits of normative arguments that recommend better trade policies for global justice and better compensatory social policies for domestic justice. What if trade liberalization has not been accompanied by subsequent action to compensate domestically, maintain access to good jobs, and mitigate other social impacts? In this case, those who oppose trade liberalization may have claims of social justice on their side. I am very interested in the tension between global justice’s demand to liberalize trade and the mixed implications of trade liberalization for the pursuit of social justice in non-ideal conditions. Further, it seemed to me that social status is an important issue that had not been fully addressed by arguments in the global justice literature, in their recommendations for domestic compensation and mitigatory social policies. Populist rhetoric about trade politics, as we have seen in the U.K. and the U.S., highlighted to me that trade policies can provide status recognition and have expressive meanings about the groups with low status.

GG: You argue that the standard benefits argued for by defenders of trade liberalisation need to be understood in the light of an important distinction: whether the lack of distributive justice prior to liberalisation was due to a lack of capability, or lack of will. If it was merely lack of will, the increase in economic output will exacerbate existing inequality, and thus cannot be understood as a benefit to the society as a whole. ‘Growth for whom?’ seems to be the question you want to add to the standard benefits argument, allowing for scenarios in which increased value in economic terms generates increased disvalue in social justice terms. In these scenarios, the worst-off have “more serious grounds for complaint” (p.67). Is the ‘lack of will’ explainable within a purely distributive justice paradigm? Relatedly, is the normative force of the ‘complaint’ a primarily distributive issue? What do you think of an interpretation that sees these failures as failures of justice as recognition, as well?

SG: I make a distinction between a society’s capacities for distributive justice and its inclination to pursue distributive justice. This distinction can and should be extended to a society’s capacities to make the social hierarchy just and its inclination to do so. I agree that claims of distributive justice and claims for status recognition are highly inter-related in the context of trade. For instance, I propose that a ‘good job’ includes a wage/income that is sufficient for the occupant to enjoy a ‘normal’ social status in society. A person who is unemployed, or who has a bad job, suffers from the lack of social status to which she is entitled and all the resource shortfalls that result from the attempt to live a life of normal social status on an insufficient wage/income. From the perspective of distributive justice, addressing this may require a society to adopt a trade policy that will tend to maintain access to jobs paying an average-level wage, even if this comes at the expense of the national income. Alternatively, the society could try to reform the social meanings that presently attach to average-waged jobs, so that people can enjoy a normal social status even when they earn much less. I think there may be additional capacity to reform these social meanings around work in the present crisis, because the turmoil has challenged existing ideas about the role of work in our lives and the groups/activities that provide the most value to society. But there is a question about whether there is the ‘will’ or inclination to replace these ideas with new forms of social status and expressions about people’s value.

GG: Something that becomes noticeable over the course of the paper is the frequent use of the word “society”, where it would seem that “country” or “state” would have conveyed the same meaning. For novices in this literature like me, could you elaborate on the reasons for this framing decision? How do you understand “society”?

SG: The paper’s argument is framed around the idea of a society that pursues social justice. By referring to a ‘society’ rather than a state or a country, I describe a political community that has a domestic economy and a shared set of social meanings. Claims for distributive justice, including with respect to ‘good jobs,’ can be directed to the political community’s management of its economy. Claims for justice about the social hierarchy can be directed to the political community’s conventional social meanings and expressions. I hesitate about this definition of society because it seems to presuppose more internal unity than currently exists. With respect to the economy, it seems that one of the main problems of trade is that it can have such a differential impact on regions, industries, and groups of workers. Further, there are often multiple systems of social hierarchies within the same political community, such that the status of having a ‘good job’ can have very different meanings. But I think greater unity is part of what a society is seeking when it pursues social justice, so that a higher national income will tend to benefit all participants in the economy and so that a person with normal social status can enjoy good relationships with different groups.

GG: The paper is framed as an inquiry under ‘non-ideal conditions’, and posits that it may be desirable in such conditions for a society to limit its own policy horizons and thereby prevent itself from enacting unjust trade agreements. Could you explain what you mean by ‘non-ideal conditions’? Do you share the Rawlsian commitment to the conceptual priority of ideal justice principles over applications thereof in non-ideal conditions? What are the challenges to a society proactively self-sanctioning in this way, given non-ideal conditions?

GG: In both pathways you describe, you build towards the same clear conclusion: ‘it depends!’ Whether it is trade liberalisation or increased restrictions, it depends on something else – the political will to address distributive injustice with increased funds, and the expressed meanings of policies that discriminate on demographic grounds – whether the society can be said to be benefitting or not. This brings helpful clarity to the kneejerk interpretations of these decisions. I’d like to invite you to identify countries where these dynamics have gone the right ‘way’, viz. where increased productivity from liberalisation has been channelled into achieving greater social justice, where protective measures have not sought to bolster already privileged groups? Is there a characteristic they share, in some sense? Which ‘way’ are these dynamics playing out now that the UK has exited the European Union and some of the immediate effects are more apparent than at the time you wrote the paper?

SG: It is an excellent question when it has been the case that trade liberalization has been channeled into greater attainment of social justice. I wish I had a better answer. It is difficult to make a causal attribution in any particular case to trade liberalization rather than other factors, so I tend to rely on general patterns of correlation. Consider a society with three changes in its conditions: it has liberalized trade, it has an increase in its national income, and it has a decline in its level of absolute poverty. Did its national income rise due to increased trade, or another factor? Did absolute poverty decline due to the increase in national income? China is a country that has liberalized trade, has been growing economically, and has diminished its levels of absolute poverty. If you believe, as most do, that China’s trade liberalization has increased its national income and thereby reduced its levels of absolute poverty, then its trade liberalization has had a positive impact on this particular element of social justice. Limited economic capacity was a highly significant non-ideal condition in this case. Generally I think that limited economic capacity is an important characteristic for the dynamics of trade liberalization to go the ‘right way’ with respect to a positive impact on social justice. In the case of the U.K. and Brexit, the economic effects are starting to emerge, although the pandemic adds complications to the analysis. There is clearly more uncertainty and paperwork for small businesses in the U.K., as a result of the new restrictions with the E.U.. Since small businesses are often thought to offer ‘good jobs,’ I think this will be a loss from the standpoint of distributive justice and preserving positions in the middle of the status hierarchy. There were effects on social justice in the U.K. immediately after the referendum, due to rising cases of violence and contemptuous expressions against immigrants and ethnic minorities.

GG: You mention in your blogpost summary that in “a more comprehensive treatment of social justice” you would like to further explore “the requirement to pursue public health” as well as the “requirement to act from principle”. My understanding is that you wrote this paper prior to the covid-19 pandemic, and our interaction for the purposes of this blogpost is taking place in the midst of it. Given this, I’d like to invite you to share more about your current thinking. Generally speaking, has the experience of the past year focused your attention on matters of public health justice? Is the ‘requirement’ you’re thinking about primarily an intra- or inter-country requirement? Have you found yourself reconsidering, or seeing in a different light, any of the arguments made in your paper?

SG: The pandemic has highlighted the importance of international trade in goods, including essential medical supplies, parts and equipment for the production of vaccines, and consumption goods that help keep people safely at home. I think there are additional reasons for a society to liberalize trade with respect to these goods during the pandemic, beyond its reasons to pursue distributive justice. So I would put more emphasis on public health as a separate reason in the paper, although I think the pandemic also has highlighted the closeness of the relationship between distributive justice and public health. Those who suffer most from failures of distributive justice also suffer most from the failures of the pandemic response. On the question about whether requirements of justice in public health are intra-country or inter-country, I am troubled by the potential for the two to conflict. It is a common refrain that ‘no one is safe until we are all safe,’ as a way to recommend that rich countries donate excess vaccine supplies, agree to waive intellectual property rights, and encourage pharmaceutical companies to help set up vaccine production lines in low and middle income countries. I support all those recommendations. But I think rich countries at partial levels of vaccination in their population also have duties of global justice to open up more slowly and cautiously with mitigation, so they do not risk inflicting new variants upon the world (i.e. the ‘alpha’ variant originally detected in Kent) and do not increase the need in their own populations for booster vaccinations. A slower, more cautious re-opening would have implications for justice within these societies in the short term, because they will have to endure the economic costs and social exclusions of the restrictions a bit longer. I tend to think a cautious approach will be better for these societies in the long term, for their public health and social justice more generally, so this limits the conflict between the demands of global justice and requirements of social justice.