Wednesday, August 26, 2020
Professor Kevin Fandl, the President of the ALSB International Section, has posted a really timely article to SSRN: Trump, Xi and the Threat to the World Trade Organization (here). I’m looking forward to giving it a thorough review just as soon as the new semester settles in! Here’s the abstract:
Is the WTO big enough for two economic superpowers? China’s explosion onto the world economic stage has allowed new and unexpected challenges to emerge, most significantly, which path globalization should be guided down. For 70 years, the western world has approached globalization from a liberalist perspective, seeing it as a corollary to democracy and rules-based economic growth. Yet China, which benefited enormously from globalization, has exceled in the absence of democracy, challenging the idea that the liberal world order is necessary or even desirable.
With the WTO teetering on irrelevance, this is a moment to lift the hood and examine the engine of economic growth we have relied upon for decades. Though both China and the United States have the economic power to unilaterally pursue trade advantages (think NAFTA or the Belt and Road Initiative), it is not in the interest of either party to abandon the constraints imposed by the rules-based WTO system. The WTO provides an avenue to resolve disputes peacefully without the need for unilateral actions, which tend to escalate rather than resolve trade disputes. The WTO also enshrines the ideals of liberal trade by denouncing trade barriers of all kinds and pursuing open exchange. And the WTO establishes, by consensus, the rules of the road that allow countries large and small to compete in a mostly fair and equitable environment. These are public international rules that neither China nor the United States could establish and enforce on their own.