Trading

We should welcome trade with the US – but not a trade deal – LabourList



I am not going to repeat the well-known case against a trade deal with the US. The risks to public health, animal welfare, the NHS and public services are familiar to most LabourList readers. But there are other reasons for which Labour should oppose the deal.

A trade deal offers no tangible benefits – no jobs, no great boost to economic growth or productivity. Political discourse on trade assumes the opposite: that more trade makes everyone better off. This idea is based on a series of myths, and now is a teachable moment when Labour can set out the truths about the economic impact of trade.


Myth: trade creates jobs

If a company sells more, it can employ more workers. If a country sells more, there will be more export jobs but not more employment overall. Some sectors will recruit staff as they expand to supply exports. Other sectors will contract as their production is supplanted by imports.

Trade will change the patterns of employment – geographically, by sector and by skills. A sharp change in trading conditions, which could follow a trade deal, will disrupt existing patterns of employment, causing a short-term rise in unemployment. But in the long run the level of employment depends on other factors, not trade.

As Nobel Prize-winning economist Paul Krugman put it: “When the US Secretary of Commerce returns from a trip abroad with billions of dollars in new orders for
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