Nobel Laureate Paul Samuelson was once asked to name an aspect of economics that was both true and non-trivial. Samuelson came back with the concept of “comparative advantage” — the fact that countries do better overall if they specialise in what they do best — which is a cornerstone of trade theory. That statement demonstrates the paradox trade has laboured under for centuries: its benefits rest on a seemingly simple premise wrapped in a complicated reality.
Former Australian trade negotiator Dmitry Grozoubinski’s new book, Why Politicians Lie About Trade… and What You Need to Know About It, attempts not so much to reconcile this contradiction as to convince readers why they should care about it in the first place. And to a very large extent he succeeds.
My own job often reminds me how hard it is to write engagingly about trade and to get readers — even those who should care — to pay attention at all. Grozoubinski’s worry is that if people don’t engage, they won’t be equipped to perceive how, contrary to many a politician’s claim, most trade policy decisions have both winners and losers, but not necessarily the ones you might expect. He brings this point home again and again in an engaging and nuanced manner, demonstrating how trade’s effects play out in various circumstances.
Probably more than many other citizens, Australians have an appreciation for the role trade plays in their lives. Once, while out buying a plant for a friend’s new place, I remarked at the high prices. The salesperson began to give me a lecture about import costs and how Australia’s distance from source countries raises costs considerably. I wanted to point out that the native plants I was considering were not imported, but stopped myself because the salesperson wasn’t entirely wrong. True to Grozoubinski’s thesis, the answer is more complicated, but not in the way the salesperson necessarily understood.
From the outset, Grozoubinski clarifies that this is not a book for trade policy wonks. And indeed, as I read it, I found myself saying, “Yes, but…” more than a few times. While trade insiders might be frustrated by its occasional oversimplification, the book is a well-crafted guide aimed at those who want to understand how trade works without getting lost in the jargon.
As a former trade negotiator, Grozoubinski’s insider perspective also offers unique insights, particularly in chapters on trade negotiations, the often-underappreciated issues of equivalency and mutual recognition, investor state dispute settlement, or ISDS, as well as the relationship between trade and development.
The book’s first half, which deals with the treatment of trade’s core tenets, is the stronger part. Grozoubinski doesn’t just emphasise the dollar value of trade, he also highlights broader advantages like increased product variety and consumer satisfaction, which are often overlooked in traditional economic discussions. He manages to do this through a clear-eyed account of what, exactly, is involved in getting goods from point A to point B. He demystifies these processes, arguing that while they may seem arcane, there are reasons, mostly reasonable, for their existence.
At times, though, Grozoubinski’s self-deprecating style pulls trade policy down with him. While he critiques the lack of trust in politicians, he doesn’t always show convincingly when and why the public actually should trust them. An example here is in his discussion of trade-negotiation secrecy. There are good reasons for keeping talks private that have nothing to do with people being “dim” — quite the contrary. To discuss issues in public during a negotiation process risks generating debates about positions that might well change as the talks progress.
Grozoubinski cites the negotiations between Britain and the European Union over the post-Brexit Trade Continuity Agreement as a successful use of transparency. But that was hardly a conventional trade deal, and he leaves unsubstantiated how such an approach actually improves outcomes.
While Grozoubinski does a good job of simplifying complex ideas, some readers may find themselves frustrated by what they might perceive as oversimplifications. His discussion of the “math” behind free trade agreements, for example, glosses over significant changes in how these agreements are negotiated and modelled. Having worked on this end of things, I know how much effort goes in to getting informed numbers to negotiators. While the core theories may not have shifted since Ricardo, modern trade agreements have become vastly more complex, incorporating issues like digital trade, intellectual property and environmental protections. The analysis behind their implementation has advanced as well.
When it comes to the treatment of the often-overlooked everyday business of trade, Grozoubinski gives the reader an appreciation for the sheer amount of paperwork and administrative hurdles businesses face in navigating global trade. He correctly points to the evidence that an alarmingly high number of companies don’t actually avail themselves of the benefits of trade agreements but misses an opportunity to explore how some firms use the complexity of the rules to stifle competition and protect their market positions.
The size and intricacy of today’s trade regimes has raised concerns among many governments about a lack of control over global commerce. This is especially true when some tech giants and multinationals have revenues larger than many countries’ GDP. While Grozoubinski provides the reader with a roadmap to the growing use of trade as a political weapon, he doesn’t always make the connection directly. This is important given the growing spread of industrial policy policies — America’s Inflation Reduction Act and Australia’s Future Made in Australia Act, for example — which directly challenge the open markets philosophy.
When it comes to providing the reader with a straightforward explanation of the complex regulatory and domestic policy issues, such as the challenge of harmonising regulations across borders, Grozoubinski hits the mark. He highlights how domestic ministries and agencies often clash as trade policy encroaches on areas traditionally governed by national laws. His insights into how regulatory reforms are influenced by trade policy, and vice versa, underscore the broader point that trade is not just an economic issue but one that affects nearly every aspect of governance. Trade agreements are also well worth the effort: a significant amount of evidence shows that FTAs enhance trade, in some instances doubling flows, and raise incomes.
Indeed, I think more could have been made of the case for how such agreements can serve as tools for domestic reform in countries where political challenges might otherwise make change difficult. By forcing countries to adopt high-quality labour or environmental standards, free-trade agreements offer an indirect pathway to improvement.
So it is good to see that the most important institutional structure for achieving the aims of trade compliance, the World Trade Organization, discussed at length. As Grozoubinski points out, there are few international settings where countries have agreed to give over part of their sovereignty to an international organisation — and then, through successive negotiation rounds, to yield more, not less, to the organisation. That the Doha Round stumbled and ultimately failed should not diminish the WTO’s success, nor its various plurilateral efforts. In this sense, it is no surprise then that every other multilateral push (labour, environment, human rights) wants to ride off that success by being placed with the confines of a trade agreement.
Grozoubinski’s handling of broader societal issues, such as labour, Indigenous rights, and climate change, while the most thought-provoking parts of the book, are also its Achilles heel. He stops short of critiquing the tendency to overburden trade policy with the responsibility of addressing these issues, which are often more appropriately handled through domestic policy. These issues are at the forefront of trade policy, and more space should have been devoted to them.
In his discussion of environmental policy, for example, Grozoubinski focuses heavily on climate change, especially EU’s Carbon Border Adjustment Mechanism and its associated challenges. But he misses an opportunity to explore other relevant environmental trade concerns — the WTO’s negotiations on environmental goods and services, for example, or its efforts in controlling plastics pollution — which are increasingly important in global trade discussions.
One of the more surprising but welcome inclusions is a discussion on ISDS and dispute settlement. Grozoubinski provides a balanced and accessible explanation of this often-overlooked aspect of trade agreements. As the enforcer of international trade rules, the current crisis of the dispute settlement mechanism in the WTO may seem like an issue only trade “wonks” would be interested in, but in reality it has the potential to affect everyday trade in important goods such as semiconductors, food and pharmaceuticals.
Overall, Grozoubinski’s book is an engaging and informative exploration of trade policy, balancing technical detail with accessibility. But if his goal was to provide an average reader with an ability to ask the right questions by providing understandable explanations and background, then more time should have been spent on newer trade issues, because this is where things are currently happening.
The so-called “next generation” trade issues — which, let’s face it, are more than twenty years old now — are what drives trade policy today. And they are also the most contentious and intertwined in domestic policy. As it deals increasingly with much thornier issues — labour, migration, climate change, technology, human rights and — trade policy has become increasingly complicated, far-reaching and controversial. This invariably leads to slower progress and more compromises.
Indeed, much of the public’s frustration with trade is that while almost everyone can agree that lower tariffs are a good thing, not everyone agrees that imposing environmental standards is necessarily fair or human rights standards culturally appropriate. That’s a point Grozoubinski certainly makes, but without the depth provided in the first part of the book.
True, addressing those issues would fill another book. And Grozoubinski makes it clear that his goal is to give the reader the tools needed to understand that these issues have many layers. For anyone looking to understand the basics of how trade operates in the modern political landscape, this book is a solid and enjoyable guide. •
Why Politicians Lie about Trade… and What You Need to Know About It
By Dmitry Grozoubinski | Canbury Press | $52.99 | 288 pages
