The framework of rules for global trade has withstood some fearsome ructions over the past few years. The rise of China, which aroused resentment about job losses across the world; the global financial crisis and the threat of renewed global protectionism; mounting inequality within some rich countries frequently blamed on trade: all have strained the World Trade Organisation’s ability to keep the peace.
Happily, even though the WTO’s rulemaking function has more or less ground to a halt, the laws set down in previous agreements have largely restrained destructive protectionist impulses. All that, however, could end with the US administration of Donald Trump, who regards trade deficits as prima facie evidence of rule-breaking by the counterpart country and holds institutions like the WTO in contempt.
The revelation that administration officials have asked the Office of the US Trade Representative to draft a list of unilateral measures to go after countries such as China is disturbing if not surprising. The US already has some of the world’s more far-reaching forms of “trade defence” — antidumping and antisubsidy duties — in its arsenal. To go further towards unilateralism, rather than bringing cases to the WTO, threatens to irreparably harm the multilateral trading system as it currently exists.