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

Economic openness is a key part of the liberal international order, which is based on a compromise between a free trade regime and regulated welfare economies. Open economies can bring economic growth but can also have negative effects on individual businesses or parts of the labour market. One aim of TradeCont is to examine the attitudes of European political parties to international trade policy. Protection against international trade has been an important part of high-profile election campaigns for several right-wing parties. In addition, the COVID-19 pandemic, Russia's full-scale invasion of Ukraine, along with geopolitical upheavals, have underscored the economic vulnerability that globalisation can entail. Findings from the project show that parties on the economic left are more likely to support the protection of domestic industry, as are parties that are culturally conservative. Larger parties, which are more likely to be in government, are more supportive of trade liberalisation than smaller parties, suggesting that it is so-called 'challenger parties' on the economic left and cultural conservative parties that attempt to politicise trade. At the same time, the economic ideology is particularly important for the parties' attitudes to trade. Many people who face increasing competition from abroad may risk lower wages or even losing their jobs. If certain regions are particularly hard-hit, people may also experience lower house prices or poorer public services. There are essentially two alternative ways in which public authorities can deal with such negative consequences of economic globalisation. One option is to compensate those who lose out from trade through various types of income protection or skills enhancement measures. The alternative strategy is to introduce forms of trade restrictions - not as a buffer against the consequences of increased trade after the fact - but simply to avoid them before they have the chance to unfold. Increasing tariffs or imposing quotas is often difficult due to international commitments, but other measures such as standard setting or subsidisation can protect domestic companies from being outcompeted. We know that groups that are more exposed to economic globalisation are more likely to view international trade as a risk and therefore seek a greater degree of protection. The literature expects attitudes to trade to be influenced by various forms of compensation. However, we do not know whether this is the preferred response of public authorities. Is protection really about protectionism, or does compensating the consequences of globalisation suffice? TradeCont’s ambition is to answer this very question: How do citizens respond to different policy measures, and why. The overall goal of TradeCont is to conduct a systematic analysis of the relationship between economic openness and the responses offered by public authorities. The ambition is that the findings from the project will contribute to the debate on the backlash of globalisation 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.