Mr. President, Tear Down These Economic Distortions! – RealClearMarkets

Report on Anti-Competitive Market Distortions and Sustainable Development Goals

Executive Summary

An analysis of an open letter by over 150 economists reveals a strong call to action against international Anti-Competitive Market Distortions (ACMDs). The letter posits that these distortions, which extend beyond traditional tariffs, are a primary obstacle to global prosperity. This report reframes these economic arguments within the context of the United Nations Sustainable Development Goals (SDGs), demonstrating that the proposed trade policy reforms are critical for achieving targets related to economic growth, global partnerships, and reduced inequalities.

Understanding Anti-Competitive Market Distortions (ACMDs)

ACMDs represent a significant barrier to fair and open global trade. While tariffs are the most visible form of trade restriction, ACMDs constitute a more complex and damaging set of obstacles that operate behind national borders.

• Discriminatory Regulations: Rules designed to favor domestic industries over foreign competitors.
• State Subsidies: Government financial support that provides an unfair advantage to state-owned or favored domestic enterprises.
• Non-Tariff Barriers: Regulatory manipulation and other “protections” that crowd out foreign firms and undermine open competition.

Economists assess that the negative economic impact of these non-tariff distortions likely exceeds that of tariffs several times over, directly impeding productivity and wealth creation.

Alignment with Sustainable Development Goals (SDGs)

The dismantling of ACMDs is directly linked to the advancement of several key SDGs.

1. SDG 8: Decent Work and Economic Growth: The primary objective of reducing ACMDs is to foster sustained, inclusive, and sustainable economic growth. By removing distortions that sap productivity, nations can unlock significant economic potential. A study by the Competere Foundation estimates that dismantling such barriers could increase U.S. per capita GDP by 31 percent over ten years, illustrating the profound potential for global economic advancement.
2. SDG 17: Partnerships for the Goals: The call for a “global reset” on trade policy necessitates strengthening global partnerships. A U.S.-led initiative to create a new international consensus focused on fair competition would revitalize global trade cooperation. This framework encourages partner countries to reform their economic structures, fostering a more robust and equitable global trading system.
3. SDG 10: Reduced Inequalities: ACMDs often function as a form of protectionism that benefits entrenched domestic interests at the expense of global competition. Addressing these structural imbalances promotes a more level playing field, providing greater market access for all countries and helping to reduce inequality within and among nations.
4. SDG 16: Peace, Justice, and Strong Institutions: A trade policy centered on dismantling global market distortions inherently promotes the core principles of SDG 16, including the rule of law and transparency. Combating veiled subsidies and discriminatory regulations helps build more accountable and transparent institutions in global economic governance.

Recommendations for a New Trade Framework

The economists propose a clear framework for future trade policy, grounded in the principles of fair competition and aligned with sustainable development objectives.

• Trade agreements should be evaluated and negotiated based on their effectiveness in reducing all anti-competitive market distortions, not just tariff barriers.
• The United States is positioned to use its economic leverage to lead this global effort, encouraging trading partners to commit to dismantling their respective market distortions.
• The ultimate goal is to return trade policy to its first principles: fair competition, open markets, and the creation of wealth through voluntary exchange, which will provide opportunity and hope for billions globally.

Analysis of Sustainable Development Goals in the Article

1. Which SDGs are addressed or connected to the issues highlighted in the article?

• SDG 8: Decent Work and Economic Growth

  The article’s central theme is the promotion of economic growth by tackling anti-competitive market distortions (ACMDs). It explicitly states that a “systematic reduction of ACMDs across the board in all countries would be a significant boost to U.S. and global GDP per capita,” directly aligning with the goal of fostering sustained, inclusive, and sustainable economic growth.

• SDG 10: Reduced Inequalities

  By advocating for the removal of “protections that favor domestic champions over foreign competitors” and creating “fair competition,” the article addresses inequalities in the global trading system. Dismantling these distortions would create a more level playing field, potentially reducing economic disparities between countries and giving “opportunity and hope to billions.”

• SDG 17: Partnerships for the Goals

  The article is a call for international cooperation to reform the global trade system. It urges the U.S. to “lead a global reset” and use its leverage to encourage trading partners to dismantle market distortions. This focus on strengthening the international trading system and fostering global partnerships for sustainable development is the core of SDG 17.

2. What specific targets under those SDGs can be identified based on the article’s content?

• SDG 8: Decent Work and Economic Growth

  • Target 8.1: Sustain per capita economic growth in accordance with national circumstances. The article directly supports this target by arguing that reducing ACMDs “would lift U.S. and global per capita GDP.” It even cites a study estimating that U.S. per capita GDP could “jump by an extra 31 percent over ten years” if such distortions were dismantled.
  • Target 8.2: Achieve higher levels of economic productivity through diversification, technological upgrading and innovation. The article identifies ACMDs as a major impediment to productivity, stating they “invariably sap productivity, distort the economy, and destroy wealth.” Removing them would therefore contribute to achieving this target.

• SDG 17: Partnerships for the Goals

  • Target 17.10: Promote a universal, rules-based, open, non-discriminatory and equitable multilateral trading system under the World Trade Organization. The entire article is an appeal to reform the international trading system to address not just tariffs but all “deeper, structural distortions that prevent open and fair competition.” The call to tear down “international anti-competitive market distortions” is a direct appeal to create a more open and equitable system as envisioned by this target.
  • Target 17.11: Significantly increase the exports of developing countries. While not explicitly stated, removing distortions like “veiled subsidies” and regulations that “crowd out foreign firms” in developed economies would open markets and create fairer competition, thereby helping to increase the exports of all nations, including developing ones.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

• Indicators for SDG 8

  • Indicator 8.1.1 (Annual growth rate of real GDP per capita): This is the most direct indicator mentioned. The article repeatedly refers to “U.S. and global per capita GDP” as the key metric that would be boosted by the proposed trade policy changes. The specific projection of a “31 percent” increase in U.S. per capita GDP serves as a quantifiable measure of potential progress.
  • Productivity Levels: The article implies that productivity is a key indicator. It states that ACMDs “sap productivity,” suggesting that measuring changes in economic productivity would be a valid way to assess the impact of removing these distortions.

• Indicators for SDG 17

  • Indicator 17.10.1 (Worldwide weighted tariff-average): The article explicitly discusses tariffs as a known trade barrier, noting that the international system has “succeeded in reducing tariffs across the board.” Measuring tariffs is a clear indicator of trade openness.
  • Prevalence of Non-Tariff Barriers: The article’s main argument is that non-tariff barriers are more damaging than tariffs. It implies that progress must be measured by tracking and reducing these distortions. Specific examples that could be developed into indicators include the “number and scope of discriminatory regulations,” the “value of state subsidies to domestic enterprises,” and other “protections that favor domestic champions.” The reduction of these non-tariff ACMDs is presented as the primary indicator of a successful trade policy reset.

4. Table of SDGs, Targets, and Indicators

Source: realclearmarkets.com