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US-China trade

An interview with Lori Wallach

Published 12 December 2023

Senior Research Fellow Keith Rockwell interviewed American trade policy activist Lori Wallach on the provenance and trajectory of Wallach’s enduring influence on US trade policy. The following is a transcript of their correspondence.

KEITH ROCKWELL: For many years you were viewed by the trade establishment as one who advocated policies that were seen, by those in power at least, as extreme. Today, your views – on trade agreements and more specifically on issues like medical patents, cross-border data flows and labor and environmental standards – are in lockstep with those of the Biden administration. What has changed? 

LORI WALLACH: Reality overcame the special interest sale pitch: The damaging outcomes of the old model of trade and investment agreements is why there is a shift in the United States and in other countries. Not only did the promises made by those pushing the old model of agreements and the neoliberal hyperglobalization they implemented not come to fruition, but in many instances the concerns expressed by critics proved to greatly underestimate the damage these policies actually caused to people and the planet. The outcomes of the WTO-NAFTA trade model changed the politics of the trade issue, so that trade began to count as an issue for voters personally and the price for continuing the old trade policies designed by and for narrow corporate interests rose considerably. 

As a result, support for different trade policies and prioritizing access to affordable medicines, ensuring trade deals don’t foreclose Big Tech regulation and other issues that have become entangled in trade agreements grew as policymakers who came to these issues anew arrive on the scene with a perspective informed by the lived reality of the old model’s damage. Meanwhile, U.S. policymakers from both parties who once supported the old model have had to reevaluate and some have shifted positions. This shift had happened for congressional Democrats some time ago. The 2016 election shifted presidential-level politics. This dynamic of today’s approach to trade reflecting more focus on what the public needs and wants versus the corporate-managed status quo is why longtime career staff working on trade at USTR, Commerce and other agencies can sometimes be out of step with where the political appointees at their agencies and in other parts of the administration, Congress and the public are on the issues. 

Defenders of the old model think that they somehow did not do a good enough job in educating voters but the reality is when enough people have been directly harmed by a policy, even the most wealthy special interests cannot advertise, Astro-turf and otherwise bamboozle people to believe a sales pitch versus what they have personally experienced. That is why Big Pharma, Big Tech and other commercial lobbies associated with real harms to many people can spend fortunes in advertising, funding front groups and more and still have a terrible reputation with the public. 

KR: Many Beltway pundits believe that you have played the most prominent role in shifting policy both in the Trump administration and especially now with the Biden administration. Do you agree?  

LW: The reason the policy has shifted is because the politics shifted and that happened because one of the few things that American agree on across party and geographic lines is that our trade agreements got rigged by special interests and caused a lot of damage to a lot of people and communities. The old ploy of promising the moon with every new trade agreement stopped working a long time ago as peoples’ lived experience of these deals punctured the sales pitch. That is why now Big Tech is having a hard time trying to take a page from the Big Pharma playbook and commandeer trade negotiations to internationally preempt the governments whose oversight and regulation they seek to derail. The public and policymakers alike are on to the trade-pacy-Trojan-horse ploy.  

I have had a role in helping to educate and inform the public and policymakers. My role over the past three decades has been to translate inaccessible trade-pact provisions into what they mean for your life or for a goal or policy that communities or activists or policymakers care about, to make sure that people who can make a difference have this information and then to track the outcomes of the agreements over time and make sure people who care know what happened. I also have the knowledge and technical legal skills to be able to help policymakers and advocates think about what different trade agreements and rules can achieve better outcomes for more people.  

KR: You have long advocated against the concentration of economic power in the hands of a few. But doesn’t trade lead to greater competition in the marketplace? Isn’t the threat of competition the reason so many companies resist opening markets? 

LW: That theory is unrelated to the actual terms of the past 35 years of trade agreements, which were rigged to include classic forms of protection for various commercial special interests. The heart of the problem is not trade per se, but the specific rules of the global economy established via the WTO, FTAs and EPAs.  I imagine David Ricardo and Adam Smith are rolling in their graves to see the WTO and Free Trade Agreements mandating that governments provide classic rent-seeking tools for specific interests, such as lengthy monopoly licenses in the form of various intellectual property protections required in TRIPS and FTA IP chapters. Or to see WTO agriculture rules that helped to consolidate and now still allow the export subsidies benefitting just four global grain-trading firms that control at least 70% of all global grain trade while most subsidies for small farmers like cash price supports and supply manage programs that can ensure fair farmgate prices or input subsidies or concessionary loans or deficiency payments are disciplined. Or to see the GATS “Market Access” rules that ban key forms of competition policy, including limits on the size of a service provider or how many services one firms can provide, even if those rules apply to domestic and foreign firms alike. Or to see FTAs subsidize investment and job offshoring by providing what in practice is government-funded risk insurance and requiring governments to provide foreign investors protections that extend beyond domestic property rights and agree to extra-judicial investor-state dispute settlement tribunals. 

KR: Is trade THE driver of economic inequality? Isn’t the gap between rich and poor driven more by other factors including tax regimes that benefit the rich, poor enforcement of anti-trust laws, systemic racism and a profound lack of quality housing, health and education for many Americans?

LW: Since 1941 standard economic theory has held that trade liberalization is likely to contribute to greater income inequality in developed countries like the United States. See eg. Wolfgang F. Stolper and Paul A. Samuelson, “Protection and Real Wages” in The Review of Economic Studies from November 1941. But I am a lawyer, not an economist, so on the economics I defer to Stolper and Samuelson on the theory and Professor Stiglitz and other economists on how the actual outcomes have increased inequality. As a lawyer, I am focused on the actual rules and must repeat that the generic concept of “trade” is not operationalized but rather there are enforceable rules for global commerce in effect today via “trade” agreements that do have measurable outcomes. And as I noted above, many of these agreements were rigged by special interests to include terms that benefit them often to the detriment of most of us living with the results. The specific rules have increased inequality is very measurable ways. When the WTO required the United States to extend its patent term from 17 years to 20 years, which meant higher prices for medicines for all Americans and for government-funded programs like Medicare and Medicaid, after decades of consumer activism stopping that change, that is just one of many examples of specific trade-agreement terms shifting wealth aware from consumers and to special interests.

KR: Do you worry that as multilateralism crumbles, it will be replaced by a “might makes right dynamic” in which small and poor countries are left without a voice? 

LW: I do not see crumbling support for multilateralism as a driving force but rather the current regime of corporate-rigged trade and investment rules have fallen into disrepute based on their damaging outcomes and thus could take down the institutions carrying them absent significant changes to the rules so they benefit more people. The stubborn adherence of what I sometimes call “Trade Team Status Quo” to a model that has failed and is tarnishing the very concept of trade is what does enormous damage to institutions like the WTO.  

Unfortunately, a might-makes-right dynamic was on full display yet again at the WTO when almost all WTO members supported a temporary waiver of WTO patent monopolies to facilitate global access to affordable COVID vaccines and the European Union, UK and Switzerland blocked it. As well, many developing country WTO members see the very existence of the “Joint Statement Initiative” negotiations on E-Commerce, Investment Facilitation, and Services Domestic Regulation as full-scale might-makes-right dynamic at the WTO given those rump negotiations were each launched by a few powerful WTO members after they repeatedly failed to obtain consensus to launch talks on these topics in compliance with WTO rules. 

KR: How would you reform the WTO? 

LW: The answer to that would require more words than your article can bear or my schedule allows but the second edition of my book “Whose Trade Organization” lays out my thinking on that question some years ago, and my views have not changed in direction but have been enhanced by more years of seeing how the outcomes of the current rules and function of the current organization. 

KR: After the 2000 election when your then boss Ralph Nadar ran for president, he collected more than 97,000 votes in Florida, a state that George W. Bush won by 537 votes. This win in Florida gave the presidency to Bush and led to fierce backlash by many Democrats and labor leaders against Nadar and Public Citizen. How did you weather than storm and regain a prominent position in shaping trade policy? 

LW: Come on Keith, this is silly. Do you believe this or did someone put you up to this? I did not face a storm so did not have to do any regaining… 

To start with, Ralph Nader was not my boss although he certainly was a major mentor. He founded Public Citizen, but his formal role there either as staff (which ended earlier) or being on the board ended in 1980, as in a decade before I arrived. And twenty years before the 2000 election. After being introduced to him by Public Citizen’s president, Joan Claybrook, I did have the benefit of working with Ralph a lot and learning enormously from him during the NAFTA and WTO debates. But as you might recall, when Ralph ran for president Public Citizen had to stop even listing him on our website and stationary as our founder given Public Citizen’s strict adherence to campaign finance law and non-profit tax status. Democrats and labor and people inside the beltway knew that Public Citizen was an altogether different entity than Ralph Nader and also knew that neither Public Citizen nor its leaders could “control” Ralph. Public Citizen did not suffer backlash from Democrats or labor after the election although everyone at PC and elsewhere who knew Ralph certainly did face endless appeals from colleagues and friends to “convince” Ralph to do X, Y or Z during his 2020 run.

And while I certainly am aware of the backlash Ralph received after the 2000 election, blaming him and the Florida outcome for Gore’s loss may be convenient but the reality is that Gore managed to lose many states he should not have that ALSO could have made the difference. When does a presidential candidate lose his own state? Even Mondale won Minnesota… When does a presidential candidate leash and lock an incredibly popular president, Clinton, instead of having him on the trial to pick up many other states like Ohio, Missouri, etc Clinton won both times but Gore lost. 

KR: What led you to leave Public Citizen in 2021 and launch the Rethink Trade program at the American Liberties Project? Are the two organizations affiliated? 

LW: The two organizations are not affiliated.  

I made the shift because after 26 years of directing Global Trade Watch, I wanted to spend more time doing the analysis and writing and advocacy that also is probably my best value-added and wanted to benefit from working with other lawyers and experienced policy wonks versus having to focus a large portion of my time on training and supervising a big staff, managing advocacy campaigns and raising money. FWIW, I had a plan launched in spring 2019 for leaving at the end of 2020, which would have been 25 years after founding Global Trade Watch which happened after leading the Public Citizen trade program from 1991-1995 as part of the Congress Watch division. But, COVID foiled the fall 2020 GTW 25th anniversary pass-the-torch event and also made recruiting a new director extremely difficult, thus the one-year delay. 

© The Hinrich Foundation. See our website Terms and conditions for our copyright and reprint policy. All statements of fact and the views, conclusions and recommendations expressed in this publication are the sole responsibility of the author(s).

Keith M. Rockwell is a Senior Research Fellow at the Hinrich Foundation. Prior to his retirement in June 2022, Keith served as a Director at the World Trade Organization (WTO) and spokesperson for the organization for more than 25 years. He also is Global Fellow at the Wilson Center.

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