World trade — what everyone needs to know

The dangers of U.S.-China trade tensions command the world’s attention, and European allies bristle about tariffs as President Trump heads for a meeting of the NATO alliance. For insights into the role of global trade, and the consequences of trade disruptions, the Orlando Sentinel Editorial Board sought out Alan Wm. Wolff, the deputy director general of the World Trade Organization.

The World Trade Organization was established to regulate international trade. What are the most significant accomplishments of the WTO? In the last 23 years since the WTO was founded, world trade has more than quadrupled. Without the open markets that the WTO rules provide, this could not have occurred. The WTO has provided certainty for business to expand. It has assured that transmissions across the internet remains tax-free, that product standards not be a hidden means of protection, that export subsidies would be banned. In short, it provides the rules of the road for expanding world trade, providing better jobs and more consumer choice.

Should Americans who are unhappy about trade blame the WTO? The WTO provides the rules under which trade takes place. It seeks to open markets and more level playing fields. Florida accounts for substantial exports, $55 billion in 2017. While I would have expected most of that to consist of citrus products and tomatoes, actually the top of the list is dominated by complex electronics and machinery. That markets are open to these exports is largely due to negotiations in the WTO. In services as well, as Orlando knows well, Florida has benefited tremendously from global rules on trade in services. In sectors like tourism, transportation and education Florida has expanded its market of customers far beyond the borders of the United States. This is also a time of rapid technological change and that has a major effect on the kinds of jobs that are in demand. Advances in technology, such as robots and smart phones, are not going to get blamed for replacing more traditional jobs. The answers for adjustment to new circumstances are to be found in job training, investment incentives and other domestic policies.

What could the WTO be doing to settle the trade imbalances President Trump has cited in imposing tariffs on U.S. trading partners? The WTO is a place to settle disputes. The U.S. has filed a number of cases where it has said there are problems, such as the protection of intellectual property in China and on China's agriculture policies. The United States has brought 125 cases against other WTO members, and is one of the most active in using dispute settlement. The United States and a number of WTO members have called for reforms of the WTO rules to broaden their coverage. The idea behind the WTO is to make trade not only freer but fairer.

What would you tell Americans who question the benefits of international trade for the U.S. economy and for their own well-being? The world has experimented with putting into place trade restrictions. It did this in the early 1930s which deepened and lengthened the Great Depression. There was massive unemployment at the time as world demand collapsed. It has been calculated that 2.4 million jobs in Florida alone are supported by exports. The country and the state would be a lot poorer were it not for international trade.

Are there changes that countries should consider to strengthen the role and authority of the WTO? There is always room for improvement in the world trading system's rules. WTO members are actively considering changes. Just in the last few years, most countries agreed to eliminate agricultural export subsidies; they agreed to make borders more free of needless red tape, and to make the newest information technology goods duty-free. These are just some examples. There are constant improvements being considered both in the regular work of the WTO as well as being discussed in groups of countries that agreed in December of last year to explore what sort of rules would facilitate e-commerce, investment, and would reduce the trade restrictive effects of regulations on services. There is also strong interest in how small and medium enterprises can gain more from trade.

Political observers who are alarmed by President Trump’s tariffs have invoked the Smoot Hawley tariffs that were blamed for deepening the Great Depression in the 1930s. How does the state of world trade today compare with trade during the Depression? There are a number of countries that are putting additional restrictions including tariffs on trade. This series of actions and reactions will have a negative effect on economic growth, reduce employment, as well as increase prices to consumers and reduce consumer choice. This is not what caused the Depression. That was a collapse in global demand, but trade restrictions made the Depression much worse. The conditions today differ a lot from 1929, but massive trade restrictions should definitely be avoided. When put in place they can cause largescale changes for workers and households, as workers who produce products that cost more as a result of the restrictions see job opportunities dry up and consumers pay higher prices and have less choice in the goods they buy. Some industries may expand, but usually by a smaller amount than those that contract.