For those wondering, Bacchus is a Democrat.
So Now What?
Contrary to what you might hear on Twitter or the New York Times’ opinion page, the issues before us today—on China, Russia, climate change, and so on—are neither unique to our age nor unaddressed by global trade rules. As I taught college students years before Trump became president, nations and the WTO’s adjudicators have long grappled with how to balance open and non-discriminatory trade with national sovereignty and security, domestic regulation, cultural differences, foreign policy, and—yes—even domestic politics. The GATT and now WTO agreements deal with these very things in nuanced ways, and members occasionally renegotiate their terms or even refuse to comply with discrete rulings. Throughout it all, however, they’ve recognized the overall economic and geopolitical value of the system, publicly vowed to maintain it, and accepted the costs of their occasional disagreement (see, e.g., past U.S. noncompliance on cotton subsidies or internet gambling).
The United States no longer does.
To be clear, this does not mean I’m revising my optimistic conclusions about the overhyped “death of globalization”—there remain plenty of reasons to believe that world trade will continue apace (albeit differently). But I do increasingly worry that the future of globalization, for the next several years at least, could be lacking two of its longstanding pillars—the WTO and the United States. Indeed, it’s not as if the Biden administration’s disregard for trade rules is limited to steel tariffs. Just last week, for example, we learned that an independent panel composed under a different trade agreement (the NAFTA-replacing U.S.-Mexico-Canada Agreement) had ruled against the Biden administration’s protectionist interpretation of already-protectionist “rules of origin” governing North American automotive trade. And as I and many others have noted (and much to the chagrin of Europe, Japan, South Korea, and other U.S. allies), the Inflation Reduction Act contains all sorts of discriminatory industrial subsidies that clearly violate WTO rules. Biden’s U.S. trade representative lauds this as a feature, not an unwelcome-but-necessary side effect, of Biden economic policy (other Biden officials do too), and it’s something U.S. protectionists have cheered as a “knife” to the multilateral trading system. Last week, the administration twisted that knife.
Whether other countries follow the U.S. lead remains to be seen. But the odds are higher today than they were six months or even a week ago.
There’s also the risk that Biden’s isolationist approach will extend beyond discrete policies like steel tariffs or EV subsidies to bigger and more important international initiatives that the United States is trying to spearhead, including on China and Russia. As Tufts University’s Dan Drezner noted a couple days ago: