Increasing liberalization of world trade is a key factor behind the dramatic increase in global prosperity since the 1950s. However, in recent years, free trade and globalization have come under assault from populist politicians. This demagogy has led to some costly realworld consequences. Free trade agreements (FTAs) with friendly nations negotiated years ago remain stalled by Congress. Some lawmakers decry China’s currency “manipulation” as an unfair subsidy and seek to impose retaliatory duties on Chinese imports, even though lower prices on Chinese goods benefit American consumers. And internationally, the World Trade Organization’s (WTO) Doha Round remains stalled due to rich countries’ reluctance to reduce their extensive agricultural support programs, which distort the world market and harm developing countries’ ability to compete.
The progress that more open trade can bring is increasingly threatened by efforts to insert environmental and labor standards into trade agreements, which function as a form of disguised protectionism. Imposing American- or European-level environmental and labor standards on developing countries would deprive poor people of jobs and harm the environment in those countries by undermining their economies’ varying competitive advantages. There is also a more recent push to introduce carbon border taxes to penalize countries that have not taken steps to enact Kyoto Protocol–like regimes. Yet increasing wealth—via liberalized trade—is a key to raising both labor standards and environmental protection in the developing world.