The more trade barriers fall around the world, the more some workers will face anxiety over losing a job or being forced to accept lesser-pay work. That fear helped collapse world-trade talks last week. Or rather, not addressing those fears led to failure.
Most of the 149 nations at the so-called Doha Round of negotiations did not have new (or better) plans to help workers and farmers adjust to the expected increase in competition if there were to be another global deal that further opens markets and reduces subsidies.
Instead, they either simply defended their own trade barriers or argued for lowering the barriers of other nations, while also noting that, yes, freer trade has brought well-proven benefits in higher productivity, lower prices, and more goods and services. The World Bank chimed in with a study that claimed that an end to tariffs, subsidies, and domestic support programs would add $300 billion a year to the global economy by 2015 – not bad if you know how to win a piece of that new wealth.
As welcome as those benefits might be, they are generally not persuasive enough for average workers who might feel stressed at seeing how free trade has dislocated entire industries and other chunks of national economies that were proven to be uncompetitive – and thinks they might be next. Workers would be more supportive of further globalization if they weren't left to adjust to such trade-induced changes by themselves. The risks would seem bearable if shared by government.
The lost political momentum toward more open trade can be reversed if each government comes up with ways to help workers and farmers make the necessary transition to either enter a new profession or to become more competitive.
Most workers now do so on their own, but some, especially older and less-educated ones, have difficulty in learning new skills or making ends meet while they learn new skills.
A few European nations have had some success in offering wage insurance to workers displaced by new global competition. Such programs go beyond the normal unemployment insurance. In some cases, laid-off workers might receive up to two years of pay and incentives for retraining. Or, if they found new jobs that pay less, they would receive some compensation for short periods.
The US has a small program, known as "trade adjustment assistance," for factory workers over age 50 who are in vulnerable industries and lack skills that can be easily transferred. Congress needs to rethink the program before it runs out next year. Some experts believe that a private wage-insurance program, with some government incentives might be better than a straight government program.
Global competition is now a fact of life whether or not the Doha talks are revived and an agreement is reached. Nations can't afford to put up more protectionist walls. The better way to compete with offshoring and outsourcing is to invest in workers, helping them through a layoff and retooling them for emerging jobs.
To reduce worker unease over the volatility of globalization is a necessary part of globalization. Doha should restart on that basis.