The following is an excerpt…
Conclusion
“There is no denying that a US departure from the WTO would be a nasty shock to the organization. But leaving the WTO would also create immense problems for the United States. The chaos and uncertainty unleashed by President Trump’s erratic trade policies would be compounded by severing the ties that enable US companies to participate in overseas markets with predictability and certainty. US services companies, and innovators would lose the protection afforded to them under WTO rules.
This would be ironic given that American entrepreneurs benefit more from this protection than those from any other country. Just ask the Silicon Valley tech companies who have traditionally been among the WTO and multilateral trading system’s most steadfast advocates.
This realization seems to have dawned on Washington, which could explain its decision to pay its WTO dues, to send a qualified trade expert to Geneva as ambassador, and to participate in those areas of WTO activity it believes suit it best.
But the status quo is not really an option either. Spinning its wheels as it has for so long has undermined confidence in the WTO not only in the United States, but across the globe. Reforming the organization is unquestionably the best way forward.
But for this to occur there will need to be leadership. But from whom?
China? The world’s second largest economy clearly has the clout to push for its objectives, but few WTO members see the Chinese model as one they wish to replicate. Moreover, most members are wary of Beijing’s zero-sum approach to trade.
The European Union? The EU brings noteworthy bona fides to the party. No other member has been as consistently supportive of the multilateral trading system. Its immense size and broad array of interests mean Brussels has a stake in the WTO across the board. But the EU is an unwieldy beast beset with complex internal challenges and burdened by its own cumbersome decision-making process.
The Director-General is, by tradition and necessity, a neutral arbiter who can suggest and guide. But when it comes to matters of vast political consequence, the DG is constrained in what actions it can take, particularly if there are stark differences among the members. The fact that the current DG, Ngozi Okonjo Iweala, does not have Washington’s confidence, further complicates matters.
Which leaves the United States. At present, expecting bold action from a government led by a transactional president who cares little for the nitty-gritty of trade policy and who harbors deep suspicions about multilateralism would be a poor bet.
Predicting US trade policy in the coming years is a risky proposition.
But what of US policy post-Trump? The president’s chaotic, antagonistic and arbitrary trade policies are increasingly unpopular. Many voters blame the tariffs for higher food and energy prices and there is unease about how they have alienated traditional US allies. A recent Pew poll showed that 61 percent of voters disapprove, while a poll from Yale University indicated that 71 percent of chief executives believe the tariffs have compromised their businesses.25
The Democrats have shown little affection for trade or the WTO. But change could be afoot. In three separate votes in the Senate this autumn, a majority of senators voted to strike down tariffs against Brazil, Mexico and Canada and against the tariffs unveiled on “Liberation Day.” Given that the House of Representatives had previously cast a blanket vote prohibiting anti-tariff legislation from coming to the floor, these Senate votes went nowhere. But they did send a signal. It is instructive to see so many prominent Democrats speaking so critically about the application of tariffs. Would this trend hold if Democrats take the White House and the Congress in the coming years?
Predicting how US trade policy will evolve in the coming years is a risky proposition. Lurching into unilateralism is nothing new for the United States and is it unclear whether this most recent Trump-inspired bout is an aberration or the start of a long-term trend.
Confronted with what real protectionism looks like, might the people of the United States come to appreciate the rewards that trade, and trade rules, deliver for the country? It is too early to say. But today’s US trade policy is driven almost exclusively by one man. After he has gone, things will no doubt be different. US trade relations with allies and perhaps the WTO are likely to improve – could they get much worse? But no one should expect a return to the heyday of multilateralism.”
To read the full report as it was originally published by the Konrad Adenauer Foundation, click here.