Ann Linde is Minister for Foreign Affairs from September 10, 2019

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Opinion piece from Ministry for Foreign Affairs

Free trade does not widen the gaps

Published

Opinion piece in Dagens industri, 22 August 2016

More and more criticism of globalisation and free trade is being voiced around the world. The solution is to be part of development and to offer a strong safety net and an active labour market policy, writes Minister for EU Affairs and Trade Ann Linde.

Things are going well for Sweden and this is no coincidence. Unemployment is falling and growth is high. The number of people in employment has risen by 120 000 since 2014. We have the lowest level of youth unemployment for 13 years. This is very positive. But we must not rest on our laurels. Even more people need a job to go to.

More trade is necessary if we are to continue creating new jobs in Sweden. This is why the Swedish Government is pushing for a greater number of progressive free trade agreements. To be successful in this, it is necessary for people to understand the political conditions.

Widening gaps and a lack of security have created a sense of frustration that is targeted towards openness and trade in many countries. More people have to realise that development and security must go hand in hand.

Today we see a trend in which more people are demanding that the doors we have fought for centuries to open now be closed to both people and trade with the rest of the world.

Many people feel that change does not mean improvement. On the contrary, many people feel that change makes things worse. People feel that their jobs are being destroyed by global competition and technological developments – and therefore that their life situations are under threat.

We must understand that this frustration exists. That it is strong. And that it is, unfortunately, well-founded in many places. In both the EU and the United States, there has been a trend towards widening gaps, with wage earners – and in particular those in less qualified professions – receiving an ever smaller piece of a growing pie.

This frustration is expressed in various ways. People cannot vote on globalisation and technological developments, but they can vote against the EU, migration and trade policy. In the United Kingdom this resulted in Brexit. The people of the Netherlands voted against the trade agreement between the EU and Ukraine. In the United States, it is migration and trade policy that are the focus.

But the solution is not to close the door on the rest of the world and stop developing. The solution is to be part of development and to offer a strong safety net and an active labour market policy. The Swedish Government knows this. And we are good at it.

During the shipyard, textile and steel crises of the 1970s, hundreds of thousands of jobs disappeared. Many people lost their jobs during the crisis of the 1990s. During the latest financial crisis, a large number of people were also let go when the order books were not as full as they had been.

This structural transformation has resulted in Sweden becoming one of the world's leading innovation and industrial nations. Old jobs have disappeared and new ones have emerged. What was outdated and inefficient has been replaced by modern and efficient. Many people have had the opportunity to enter further education or training and have benefited a great deal from this development.

The Swedish Government knows that development and security go hand in hand. New jobs emerge through free and open trade. An active labour market policy with collective agreements and social insurance schemes can build bridges between old and new.

It is people that should be protected, not inefficient businesses. Our Swedish model creates secure people. And secure people believe in development.

Because what would Swedish society have looked like if we had retained outdated shipyards at Lindholmen in Gothenburg, instead of building a large campus and a science park?

We must push for more open and free trade. But for the Government it is a given that in trade policy we must stand up for workers' rights, our environment, people's health and our democratic space. We must therefore ensure that our trade agreements protect our own scope for decision-making, and our opportunities to tighten environmental requirements and also to continue protecting people's and animals' health.

I am pleased that negotiations over CETA, the trade agreement between the EU and Canada, have been completed. For this is a broad and deep trade agreement that is based on modern trade patterns. Approximately 99 per cent of the tariffs between the EU and Canada will be removed, opening the way for trade and more jobs.

The Government previously gave the National Board of Trade the task of conducting an impact assessment of CETA. This has now been completed and the Board's overwhelming assessment is that CETA protects the parties' future scope for regulation.

I am now looking forward to CETA beginning to apply, and to more people realising that the Swedish model of development and security is the way forward.