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UTENRIKS-Internasjonale forhold - utenriks- og sikkerhetspolitikk og norske interesser

Darkness on the horizon? Exploring the response to contestation of trade policy in Europe

Alternative title: Det mørkner i horisonten: en analyse av handelspolitikk og konflikt i Europa

Awarded: NOK 4.9 mill.

TradeCont focuses on how to deal with the distributional consequences of economic globalisation. Although free trade leads to economic growth and prosperity in society as a whole, even the most ardent supporters will admit that globalisation creates both winners and losers. As a result, decision-makers are faced with a challenge: to make sure that they reap the benefits from free trade, while caring for those who have to bear the negative consequences of globalisation. In a World Trade Organization’s annual report from 2020, the Director-General stated: “Historically high levels of trade-restrictive measures are hurting growth, job creation and purchasing power around the world”. Even more recently, the leaders of several prominent radical right parties in Europe, such as Marine le Pen in France and Giorgia Meloni in Italy, have mobilised on protection of domestic producer groups, taking ownership of a form of economic nationalism. Thus, after decades of running trade in relative quiet, from the mid-2010s onwards, we have seen a sharp rise in contestation of economic globalisation In response to these developments, several have spoken out in favour of more inclusive growth. But what does that mean? A key aspect is various forms of compensation, such as different types of income security or skills development measures. We know that groups that are more exposed to economic globalization to a greater extent regard international trade as a risk and want a higher degree of protection. However, we do not know what type of protection people prefer more. Is protection about protectionism, or does compensation for the consequences of globalisation suffice? Furthermore, we do not know whether these groups will be more inclined to support free trade if they receive the protection they want. The first question we ask in TradeCont is therefore: What is the effect of compensatory measures? We conduct survey experiments in different EU countries to study attitudes to different measures within and between different groups. TradeCont also looks at whether politicians consider compensatory measures important for strengthening support for a liberal trade policy, or whether we instead see a shift towards greater protectionism. It is important to understand the positioning of political parties because the electoral successes of the radical right have contributed to an integration of their ideologies, with protectionism as a visible component in several high-profile election campaigns. Our preliminary results show that parties from the economic left and culturally conservative right support protectionism. Larger parties are mainly supporters of trade liberalisation, which suggests that it is the challenger parties from the right and left who are trying to politicise trade policy. The next step in the project is to study how the larger parties react to this mobilisation for more protectionism. The overarching goal of TradeCont is to provide a systematic account of the underlying mechanisms that link support for economic openness and compensatory politics, and how this might be affected by a move towards economic nationalism. Through its findings, TradeCont seeks to inform the debate about the globalisation backlash and the social sustainability of future trade policy.

Recent trade talks in the European Union have been met with unprecedented levels of contestation. The essence of the conflict is the distributional consequences resulting from economic globalization. Although free trade might lead to economic growth, it also privileges some groups over others, which potentially gives rise to increasing inequality. As a result, policy-makers face the challenge of both making sure that they capitalize on the benefits of trade, whilst also taking care of those who are vulnerable to exposure from globalization. A key argument in the literature is that open economies are better at compensating those who are at the losing end of globalization. The rationale behind compensatory policies is to reduce negative attitudes toward trade. But is this really so? The goal of TradeCont is to analyse the politics of compensation and explore the potential for adjustment policies to boost support for free trade. The project sets out to answer two questions: 1) What is the effect of compensatory politics on public opinion? TradeCont will run a public opinion survey with an embedded survey experiment in five EU countries to study how information about compensation initiatives can create greater support for free trade. A key aim of the project is also to investigate whether compensation policies might counteract other drivers of negative attitudes towards trade. 2) Do politicians think that compensatory measures are key to shoring up support for a liberal trade policy? This will be tackled through a study of party manifestos to see whether and how politicians suggest compensatory measures in response to the increasing contestation of trade. TradeCont will provide a systematic account of the underlying mechanisms that link support for economic openness and compensatory politics and its findings will inform the debate about the social sustainability of future trade policy.

Funding scheme:

UTENRIKS-Internasjonale forhold - utenriks- og sikkerhetspolitikk og norske interesser