A Glance through the Global Trade Window: Like the View?

CETA Specifics and Precedents:

• The Canada-EU Comprehensive Economic and Trade Agreement (CETA) eliminated 98% of tariffs on goods, with the remaining 1% (mostly agricultural) scheduled for full duty-free status in seven years.
• The agreement took 10 years to negotiate, a timeline Eilish Campbell notes established a "template" for future trade deals, though she jokingly withheld details on a potential licensing fee for copying the text.
• CETA covers non-tariff barriers including services, e-commerce, competition, labor standards, environmental protection, and sustainable development.
• The agreement facilitates mutual recognition of professional certifications and aims to increase labor mobility for skilled workers.
• Canada's unique ratification process involved sub-federal provinces, particularly regarding procurement, setting a precedent for integrating regional jurisdictions in trade talks.
• Campbell highlighted that the UK currently enjoys free trade with Canada under the CETA framework until the UK diverges from the EU, serving as a potential model for post-Brexit arrangements.
• Campbell emphasized the need for the UK to rebuild its independent trade negotiation capacity, noting that such expertise had migrated to Brussels during EU membership.

Globalization Trends and Economic Phases:

• Bill Lee and Rhonda Smichline challenged the premise of "free trade," arguing that global trade has historically been "distorted" by agreements that maximize benefits for insiders at the expense of outsiders.
• Smichline noted that the International Trade Commission (ITC) does not set trade policy but analyzes economic impacts, citing a 2016 report that found trade agreements produced net GDP growth but exacerbated the gap between skilled and unskilled workers.
• Ian Goldin rejected the idea that globalization is ending, arguing that the world is in a new phase where trade growth (exceeding GDP growth) is driven by the integration of China, India, and other developing economies.
• Goldin identified 3D printing and robotics as future challenges to trade flows, predicting that production location will shift based on the cost of capital rather than labor, leading to "reshoring" without a corresponding return of jobs.
• Rhonda Smichline argued that the "golden age" of globalization has been beneficial for the global economy, citing rising life expectancy, poverty reduction, and increased choice, while acknowledging that the U.S. and U.K. have suffered from stagnant wages.
• Rhonda Smichline pointed out that while the U.S. saw its trade share of GDP double from 15% to 30%, Canada (a smaller, more open economy) gains relatively more from trade than larger economies.

Political Backlash and Inequality:

• Panelists agreed that the rise of populism (Brexit, Trump) stems from the failure to adequately compensate "losers" of globalization within domestic economies, a failure of redistribution rather than trade itself.
• Bill Lee argued that the new wave of globalization must address domestic redistribution, as the "second best" world requires bilateral deals that account for specific industry losses.
• Ian Goldin warned that protectionist moves like Brexit and Trump's policies will worsen the "race to the bottom" on taxation, as global firms and the wealthy increasingly avoid fiscal capture.
• Ailish Campbell noted that Canada's support for open markets is linked to its immigrant history and strong public institutions, including free, high-quality education, which helps mitigate vulnerability to anti-immigrant sentiment.
• Ian Goldin challenged the "golden age" narrative by noting stagnant productivity growth in the West during this period compared to the 1960s-70s, attributing this to social institutional decay rather than trade.
• Bill Lee countered that productivity stagnation in the U.S. is due to a lack of "multi-factor productivity" (mixing talent, capital, and technology) caused by a declining school system and poor social institutions.

Financial Stability and Risk Management:

• The panel debated the 2008 Global Financial Crisis, with Rhonda Smichline and Ian Goldin arguing the crisis resulted from regulatory failure, narrow mandates, and a lack of imagination rather than globalization itself.
• Goldin noted that Canada, Singapore, and South Africa avoided the crisis through prudent management, whereas the U.S. suffered due to excessive risk-taking in derivatives and subprime mortgages.
• Ailish Campbell argued that globalization spreads risk effectively when managed, making diversified global banking systems more resilient to localized shocks (e.g., pandemics, hurricanes) than fragmented local banks.
• Rhonda Smichline criticized the reliance on "objective indicators" in modern finance, arguing that local knowledge and relationship-based lending previously offered better risk assessment than algorithmic models.
• Bill Lee suggested that derivatives should be used as early warning systems for risk, but only if traded and marked to market to ensure transparency and accurate pricing.
• A Citi representative (David Walker) noted that while market volatility (VIX) is low, "fat tail" risks remain hidden, and structured products could help finance infrastructure if properly regulated to reflect true risk.

Data Flows and Regulatory Approaches:

• Eilish Campbell described Canada's position on data as a hybrid model between the EU's strict localization and the U.S.'s free flow stance, though she noted challenges arise with Asian countries imposing stiffer rules.
• Rhonda Smichline confirmed the U.S. maintains an open approach to data flows and opposes localization requirements, noting that the TPP included a prohibition on such restrictions.
• Smichline highlighted that the U.S. lacks a general federal privacy law, relying instead on a piecemeal approach, whereas the EU and U.K. have strong privacy regulations.
• Campbell suggested that data regulation may eventually follow a trajectory similar to historical export restraints, requiring a tipping point from protectionism to openness.

Policy Responses to Displaced Workers:

• The panel rejected Universal Basic Income (UBI) as a solution, with Goldin arguing it increases inequality, fails to provide the "meaning" and "status" derived from work, and is arithmetically unsustainable.
• Ian Goldin identified "mobility" as the critical missing policy, citing housing costs and transport congestion that prevent workers from moving to dynamic cities where jobs exist.
• Bill Lee emphasized that education policies must focus on adaptability and lifelong learning rather than specific job training, as the nature of future employment is unpredictable.
• Eilish Campbell advocated for "co-creation" with citizens and youth to understand local needs, noting that public institutions must actively listen to diverse populations rather than assuming aggregate solutions work.
• Rhonda Smichline argued that training is viable if supported, citing that displaced workers often travel long distances for employment, disproving the notion that they cannot relocate or adapt.