The Free Trade Debate: A Left Keynesian Gaze

This chapter used the North American Free Trade Agreement (NAFTA) to articulate a Left Keynesian critique of mainstream trade theory and propose an alternative theoretical framework. It argued trade openness in the current era has promoted cost arbitrage, whereby corporations seek to drive down and equalize costs. That becomes a serious economic and societal problem when trade joins large economies with very different wage levels and different levels of development. In that context, there is likely to be levelling down of wages and socio-economic regulations. That argues for promoting "free" trade between countries with similar socio-economic regulatory structures and wage levels and being more careful about countries with which differences are large. Trade with the latter may require corrective "social" tariffs to address differences in labor standards, environmental standards, and regulatory standards.