Trump & Trade: The Crisis in the Multilateral Trading System

Abstract

President Trump is widely seen as reversing 70 years of US trade policy and abdicating the American hegemon's traditional leadership role in the multilateral trading system. Trump has threatened to withdraw the US from the WTO, abandoned trade multilateralism for aggressive unilateralism, and jeopardised the WTO's dispute settlement mechanism by blocking appointments to its Appellate Body. As this article shows, however, both the crisis in the multilateral trading system and the American hegemon's turn away from the WTOincluding abandoning multilateral trade negotiations and blocking Appellate Body appointmentsoriginated prior to Trump. This shift in the US orientation towards the multilateral trading system cannot, therefore, solely be attributed to the rise of populism under Trump. It is also a reaction to the decline of the US's institutional powerits power over the core institution and rules governing trade. Amid the rise of China and other emerging powers, the US's ability to dominate global trade governance and write the rules of global trade sharply diminished, leading to an erosion of American support for the multilateral trading system it once led. While realism has fallen out of favour in IPE, understanding recent dynamics in the trading system requires revisiting its core insights.

You’re Fired! International Courts, Re‐contracting, and the WTO Appellate Body during the Trump Presidency

“…This has been a consistent approach by the US throughout the two decades since the Appellate Body began functioning, relying on rhetorical attacks against the legitimacy of the judges’ rulings when these were not in its favor (Alter, 2008). The US consistently employed ex ante mechanisms, as evidenced by its efforts to influence the Appellate Body proceedings through the (re)appointment of individual judges (Hopewell, 2021). Nevertheless, and despite the rulings regarding the US meat and steel‐related trading practices and vocal criticisms by the USTR, the US continued to comply with the decisions (Bown & Keynes, 2020; Jung & Kang, 2004).…”

“…In fact, while the Trump administration praised the Body when it produced rulings that were favorable to the interests of the US, the opposite occured when the rulings went against its interests (Bown & Keynes, 2020; Josephs, 2019; Swanson, 2019). The Trump administration instead relied on unilateralism and bilateralism to protect its interests, criticizing the Body and questioning its credibility and impartiality (Hopewell, 2021; Josephs, 2019; Swanson, 2019).…”

“…The United States (US) has been at the center of the crisis, having consistently blocked the appointment of judges to the WTO’s Appellate Body, effectively making one of the most valuable components of the organization inoperable. To add salt to the wound, the Trump administration called the organization ‘broken’ and refrained from endorsing the nomination of Ngozi Okonio‐Iweala as the new WTO Director General, and expressed its consideration for leaving the WTO (Amaro, 2020; Hopewell, 2021). In short, the Trump administration accused the Appellate Body judges of engaging in unsolicited judicial overreach, making the case that this represents a deviation from the agreements to which member states had signed up to at the inception of the organization (USTR, 2018, 2020).…”

The Geneva Effect: Where Officials Sit Influences Where They Stand on WTO Priorities

“…Until recently, the main blemish on WTO performance was the limited success in negotiating additional market access liberalization and updating WTO rules in the Doha Round of multilateral trade negotiations. The reasons for the failure of the Doha Round are complex but include insistence by high-income countries on greater reciprocity from emerging economies and more broadly, eroding domestic political support for the WTO in high-income countries, most notably in the US, perhaps due to that country's declining ability to dominate trade governance (Hopewell, 2021). The WTO impasse became a crisis when the US blocked consensus, repeatedly, on the appointment of new adjudicators to its Appellate Body because of dissatisfaction with its operation, causing the appeals mechanism to cease functioning at the end of 2019.…”

The Reclamation of Dispute Settlement Mechanism in WTO for Sustainability of International Trade (Trade Law vs. Security Law)

“…Multilateralism, an axiomatic approach towards the accomplishment of free global trade, ensuring equal economic benefits to all, the establishment of the economic rule of law rather than the law itself perceived as governing principles of the system. The idea of multilateralism has given birth to two trade governing and dispute settlement institutions, i.e., GATT and WTO, in order to foster economic growth by generating acceptable trade conditions for competitive corporate markets (Hopewell, 2021). Much focus was given at the time of coding liberal trade rules rather than on its enforcement and compliance as enforcement was not the concern while drafting the GATT, but the emphasis was laid down on the procedure only under Article xxii and xxiii, and no channelized institution was referred for the redressal of trade disputes (Chatagnier and Lim, 2021).…”