Here is what I do not understand. Why is it that anyone who says that the gains from the next trade agreement are not huge, that there are real social and distributional issues we need to confront before we strike the next trade deal, and that perhaps we need to rethink the basis of the multilateral trade regime in light of the severe legitimacy problems which it has run into--all true propositions--is immediately branded as a protectionist who wants to set the clock back?
That is the treatment that Hillary Clinton is presently getting, thanks to an interview she gave to the FT. Here is Peter Mandelson, the EU trade commissioner, as quoted in today's FT:
Politicians have a huge responsibility not to overstate the risks attached to open investment, because we have nothing to gain from a protectionist turn in global markets.
It seems likely that we are entering a period of relative vulnerability for the global economy and perversely, that is of course the moment when the logic of protectionism is most tempting.
That is why I would argue that Hillary Clinton’s doubts about the value of a Doha trade deal are misplaced.
In other words, you are a protectionist because you have doubts that the current setup for trade agreements is working. Further, you are being irresponsible because the fragile state of the world economy requires more trade agreements rather than a rethink.
What is outlandish about all of this is that no respectable economic model suggests the completion of Doha will add more than 1 percent to world GDP some ten years out--and this under the most favorable circumstances. The mental model that people like Mandelson seem to have is that the moment you take a breather on trade agreements, the whole world trade regime will collapse. There is little to justify this "bicycle theory" at the present time.
Indeed the only serious risk from not completing Doha or additional regional trade agreements is that free traders would take their own rhetoric seriously and react in unproductive ways that prove self-fulfilling.