View original document

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

Economic SYNOPSES
short essays and reports on the economic issues of the day
2007 ■ Number 11

Where You Live Affects What You Think About Trade
Cletus C. Coughlin

T

he issue of job security inevitably arises in any discussion about reducing international trade barriers. In
2006 the Chicago Council on Global Affairs and a
number of partners surveyed public perceptions in the United
States, China, India, and South Korea on a wide range of foreign
policy issues.1 Overall, the opinions expressed reveal similarities concerning the importance of protecting jobs as well as
differences concerning the connection between international
trade and job security. Specifically, responses from the U.S.
survey help explain why international trade legislation in the
United States is so controversial.
According to the 2006 survey, the American public feels
that protecting the jobs of American workers should be the top
U.S. foreign policy goal. The next three goals are preventing
the spread of nuclear weapons, combating international terrorism, and securing adequate supplies of energy. In fact, the
goal of protecting American jobs has been at or near the top
of this survey’s responses for more than twenty years.
The U.S. respondents see international trade as threatening
American jobs. Although the majority of those surveyed think
that international trade improves their standard of living, 67
percent of those surveyed also think that international trade
adversely affects job security for American workers. Only 30
percent think international trade enhances job security.
Much job insecurity in the United States can be traced to
the near doubling of the global pool of labor stemming from
the integration of China and India into the world economy.
China has become a major player in the export of manufactured
goods, while India has become a major force in services. Perhaps surprisingly, this concern about job security does not
translate into a desire for higher trade barriers. Although 36
percent do favor protectionism, 43 percent favor agreements
that lower trade barriers so long as governmental assistance is
provided to those who lose their jobs. An additional 15 percent
would lower trade barriers without governmental assistance.
Like U.S. respondents, respondents in the Asian countries
believe that protecting jobs in their countries should be a high
priority for foreign policy. In China, protecting jobs was the
highest-ranked foreign-policy priority; in South Korea, it was
second behind promoting economic growth; and in India it

was in a three-way tie with promoting economic growth and
combating world hunger. A key contrast between these three
Asian countries and the United States involves their perception
of the connection between international trade and job security.
Recall that less than one-third of the American public believe
that international trade contributes to job security. Meanwhile,
the comparable percentages in India (49 percent) and South
Korea (51 percent) are roughly one-half and the percentage
in China (65 percent) is nearly two-thirds. Thus, Asians are
much more inclined to believe that trade contributes to job
security than job insecurity.
Although job security is not the only consideration that
influences the public’s position on trade liberalization, it certainly plays an important role. A comparison of American
views with Chinese views on the desirability of free trade
agreements provides some suggestive evidence on this claim.
For example, the percentage of Americans who believe their
country should have a free trade agreement with China, India,
and South Korea was 34 percent, 36 percent, and 39 percent,
respectively. Such a reluctance to support free trade agreements
likely reflects concerns that freer trade will increase job insecurity. Meanwhile, the percentage of Chinese who think their
country should have a free trade agreement with the United
States, India, and South Korea was 66 percent, 59 percent,
and 66 percent, respectively.
The survey results point to the following conclusion:
Because jobs are very important, political support for trade
liberalization will increase if the costs borne by those who are
adversely affected are mitigated. The majority (62 percent) of
respondents to a September 2006 survey by the German
Marshall Fund of the United States, however, believe that the
U.S. government does a poor job in helping workers adjust to
new competition.2 In today’s political reality in the United
States, without effective mitigation, the potential gains from
trade liberalization are quite likely to remain unrealized. ■
1

Australia and Japan also participated. See www.thechicagocouncil.org/
dynamic_page.php?id=56.

2

See www.gmfus.org/doc/GMF_TradeSurvey%202006.pdf.

Views expressed do not necessarily reflect official positions of the Federal Reserve System.

research.stlouisfed.org