A More Inclusive Trade Agenda Must Include Gender
Yesterday, European Trade Commissioner Cecilia Malmström accepted the Association of Women in International Trade’s prestigious woman of the year award in Washington, D.C. In her acceptance speech, “Building bridges, smashing glass ceilings”, Commissioner Malmström emphasized that trade liberalization and gender equality are mutually supportive, noting that the two most trade-enabling countries in the world —The Netherlands and Singapore— are also “highly gender equal” when it comes to wages. This point is an important one to emphasize within the current debate on the costs and benefits of trade agreements to which the United States is a party, and is supported by research.
According to late University of Chicago Economist Gary Becker’s classic model of discrimination, costly discrimination cannot persist with increased market competition. Because trade promotes international competition, it may also reduce firms’ ability to discriminate against women.
In fact, studies in the U.S. have found that the residual gender wage gap narrowed more quickly in trade-affected manufacturing industries that experienced larger increases in competition with trade reform. The Council of Economic Advisers’ 2015 Economic Report of the President similarly demonstrated that U.S. industries with larger decreases in tariffs experienced larger relative income gains for female employees between 1989 and 2009. These findings are important to remember, particularly in light of the fact that at current rates, the gender wage gap in the United States is not projected to close until 2059.
Not only may trade contribute to greater gender equity, studies have also found that advancing women’s equality could add 12 to 28 trillion dollars to global GDP by 2025.
Although many recognize that gender equality and economic growth are mutually supportive, this relationship is seldom studied and as Commissioner Malmström notes, there is “too little data on how trade can impact on women’s opportunities.” Indeed, a joint report released in early April by the World Trade Organization, the International Monetary Fund, and the World Bank, entitled “Making Trade an Engine of Growth for All”, contains a mere paragraph on gender.
This World Bank Report argues that we must respond to the increasing calls for inward-looking economic policies by the current U.S. administration and other countries around the world with a more “inclusive” trade agenda.
If inclusion is truly the goal, then this response must entail more than a passing reference to gender equity.
In Commissioner Malmström’s own words: “In an age when there is increasing – and justified – attention on those who seem ‘left behind’ by globalisation…we shouldn’t forget those who have been – or continue to be – left behind in other ways.”
— Photo of Cecilia Malmström by Johannes Jansson