R Street Policy Study 167: Crisis and Opportunity: The Multilateral Trading System at a Crossroads
In a new policy study, R Street Trade Policy Counsel Clark Packard discusses the history of the multilateral trading system, explains the challenges it currently faces, explores ideas to address those challenges and highlights the potentially disastrous consequences of a withdrawal from the WTO.
The report explores how, for more than 70 years, the rules-based trading system has prevented protectionist, beggar-thy-neighbor contagion from spreading the way it did in the early 1930s. Today, however, the multilateral trading system faces the most serious challenge in its seven-decade history. This challenge is driven by stalled multilateral trade negotiations, the rise of China’s unique brand of state capitalism and the Trump administration’s multifront assault on the WTO.
Packard emphasizes the benefits reaped by the United States as a direct result of its involvement in the WTO. For 70 years, the United States has led the global economic order. Far from a victim of this system, the United States has been a primary beneficiary of it. The United States has shaped the WTO according to its own interests, and the results have been overwhelmingly positive.
Speaking to the vital role the United States has to play in protecting the WTO, the author adds, “while the rules-based trading system faces enormous challenges, the WTO is an indispensable player in an increasingly globalized world. As an architect and defender of the WTO, the United States bears a special responsibility to protect its system.”