Trade Negotiations Under Fire: Social Identity and the Rising Opposition to Free Trade

Susanne Keller and Sebastian Krautheim

No 12337, CESifo Working Paper Series from CESifo

Abstract: Massive protests against - and spectacular failures of - international trade negotiations are an important element of the globalization backlash developed economies have experienced over the last two decades. We analyze a model of endogenous social identity where the government chooses between accepting or rejecting a trade agreement involving the recognition of a lower precautionary standard. We show that protests by an NGO against the trade agreement can alter the social identity equilibrium, feeding back into the political process and possibly resulting in a polarization of society. We focus on two possible outcomes: the trade agreement may either be maintained, but at lower welfare gains than initially expected (the "CETA-case"), or it may be abolished altogether (the "TTIP-case).

Keywords: trade negotiations; standards; social identity; NGOs; globalization backlash; TTIP; CETA (search for similar items in EconPapers)
JEL-codes: F13 F68 L31 (search for similar items in EconPapers)
Date: 2025
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