Trump & Trade: The Crisis in the Multilateral Trading System
The multilateral trading system was already in crisis prior to Donald Trump’s tenure as
U.S president. Americans have turned a blind eye to the truth of the past and now believe
Trump is the catalyst that pushed America away from global trade. In reality, the U.S had
already taken steps in that direction before him such as retreating from multilateralism and the
rules based trading system, abandoning multilateral trade negotiations at the WTO and
undermining its dispute settlement mechanism by blocking appointments to the Appellate Body.
Trump’s polarizing presence turned him into the fall guy and netted him most of the blame
because he has acted differently to any other previous president. This does not change the fact
that behind the scenes America was trending in a direction that was anti global trade prior to
Trump.
Americans abandoned the multilateral trade system due to their declining power over the
core institution and rules governing the trade which has been severely weakened by other
countries' increase in power. With the rise of China and other global powers alike, the US’s
ability to dominate global trade governance and write the rules of the trading system has sharply
diminished, leading to an erosion of American support for the multilateral trading system it once
led.
A large number of people believe Trump ruined multilateralism in global trade. The
author explains why this is not the case due to the U.S abandoning the WTO. The downfall of
the U.S and multilateralism began in 2001 under the Bush administration with the WTO’s DOHA
agreement. A significant power shift was to occur due to the rise of China, India, and Brazil.
These countries created large groups of developing countries to challenge the traditional
dominance of the U.S. In turn, substantial and differential treatment (SDT) provisions for
developing countries were proposed including reduced liberalization commitments, greater
flexibilities and exemptions, and longer implementation periods. In 2008, when the DOHA
agreement was to be implemented, the U.S rejected it and it because they were no longer able
to strong arm the opposition to meet their demands. Other nations disagreed and would not
conform to the U.S’s alternative, its “competitive liberalization” strategy that would reward
cooperative countries with trade agreements and punish uncooperative ones. Furthermore,
China, a direct economic rival to the U.S, would be entitled to the substantial SDT that
developing countries had been able to secure in previous negotiations. Neither side would give,
and ultimately the deal completely fell apart and has since been labeled dead. In response and
frustrated from the lack of success with the WTO negotiations, the U.S, led by the Obama
administration negotiated new bilateral and regional free trade agreements (FTAs) with a focus
on mega-regional trade agreements, such as the TPP and TTIP, as an alternative to the
multilateralism of the WTO and as part of a geopolitical strategy for responding to China’s rise.
This situation is similar to Karl Marx’s theory about the fall of capitalism and proves him
right. The only difference being instead of high vs low class inside of a region it is a countries of
differing statuses butting heads. Similar to the proletariat, developing countries grew tired of
being taken advantage of and being overly reliant on the U.S (bourgeois) and banded together
to overthrow their rule. In this instance they disrupted their dominance over the global trade
market and it worked.