Professor Daniel C. K. Chow of the Ohio State University lays out in detail America’s beefs with China that’ve led to its crippling the work of the WTO.
The process was initiated by the Obama administration in 2016 and completed in 2019 under the Trump regime by America refusing to appoint representatives to the Appellate Body and thereby reducing its numbers below the number necessary to form a quorum.
This works well for America in the short term as its now free to a) pursue whatever trade remedies with China it believes are unilaterally appropriate, and b) allows it to enact domestic policies that may have been hitherto been challenged by other nations via the WTO with the very recent example being the Chips and Science Act which provides U$50bn of direct government subsidies for a designated industry.
In summary the paper describes this shift as follows; “The United States is [Now] free to pursue a power-based approach to international trade in place of the rules-based approach of the WTO.”
Professor Chow doesn’t say as much but it’s clear that the WTO is now de facto dead. This is somewhat ironic as it was America in 1995 who was the principle architect of its construction and, moreover was the prime mover in pulling China into it in 2001.
He concludes; “While the United States has new options available in the short term, the long-term externalities to the global economic system may be very serious… The world may be witnessing a retrenchment of globalization and a return to the nationalism, protectionism, and power-based approaches of the pre-war era… Even more ominous, the lesson of history is that trade wars lead to military wars. The United States may have traded… an uncertain and dangerous future in exchange for the opportunity to slow China’s rise.”
The work is more monograph than ‘paper’ and despite its delving into the minutia of international trade law very readable. If you have more than a passing interest I’d encourage a full read here How the Rise of China Led to the Wreck of the World Trade Organization.
Happy Sunday? 🙁