Twelfth Global Studies Conference

Abstract

The Trump Administration’s recent moves in foreign trade–withdrawal from TPP, tariffs on China, threats to trade partners in Europe and North America–dramatize the populist backlash underpinning Donald Trump’s election. At the same time, the European Union has proceeded with major free trade agreements (notably Canada and Japan) that signal the EU’s continued commitment to trade liberalization amid the anti-globalization movement. These divergent trends reflect the differing approaches of the EU and US toward trade adjustment. Several EU countries have enacted robust labor market adjustment programs to support workers dislocated by trade competition (e.g., Denmark’s “Flexicurity” system). Supplementing national-level programs, the EU launched the European Globalization Adjustment Fund (EFG) to hasten the reintegration of displaced workers. By contrast, the US Trade Adjustment Assistance (TAA) program remains woefully underfunded and inadequate to the needs of American workers dislocated by globalization. Measured as a share of GDP, Germany spends eight times more on labor market adjustment than the United States. This paper delivers a comparative analysis of trade adjustment programs in the European Union and the United States. Drawing on statistical sources, published reports, and interviews of trade officials, the paper addresses design of adjustment programs funding mechanisms and outcomes for dislocated workers. The paper (1) augments the scholarly literature on the microeconomic effects of globalization, and (2) specifies ways European and American policymakers can strengthen trade adjustment programs and thereby mitigate the anti-globalization backlash that threatens the liberal international economic order.