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Between A Rock and a Hard Place: The WTO in a Competitive Age

Nicholas Contas Monaco

The international order that emerged after the Cold War rested upon two complementary pillars: relative harmony among the great powers and economic globalisation. In the long shadow of American hegemony, trade barriers fell, technological progress accelerated and diffused, national economies converged, and multilateral organisations arose to manage the widening and deepening of global integration. For possibly the first time, the stewards of world order saw their era’s defining threats—terrorism, disease, transnational crime—as largely the consequences of “failed” states rather than strong ones. In this new paradigm, openness to globalisation was accepted as an unalloyed advantage, and with economic and security issues ostensibly separable, growth was king. The question of the distribution of growth’s benefits between or within states was largely dismissed as irrelevant or inevitable, the product of market forces beyond the reach of popular politics and outside the realm of national security.

The re-emergence of explicit interstate strategic competition has placed the dubious assumptions undergirding that order under great and growing stress. Both in their means and ends, the security and economic policies of the great powers are increasingly indistinguishable. Russia has adroitly leveraged its dominant share of Europe’s energy supply to forestall sharper reactions to its seizure of Crimea and sponsorship of Ukrainian separatists. China has steadily aggrandised its direct control of one of the main maritime arteries of global trade, while it attempts to break into—and then dominate—the international technological market among accusations of military-industrial cyber-espionage. Looking outward, China’s Belt and Road Initiative has invested in the infrastructure of developing economies, which the Trump administration has criticized as a form of “debt-trap diplomacy.” Meanwhile, the United States and Western Europe, whose capabilities to deal with peers or near-peers have atrophied after two decades of counterterrorism and counterinsurgency, resort to limited formal economic sanctions as their first, and often seemingly only, response to malfeasance by state competitors.

Unveiling the Pentagon’s 2017 National Defense Strategy, then-Secretary of Defense James Mattis proclaimed that “great power competition, not terrorism, is now the primary focus of US national security.” With the great powers explicitly inaugurating a new period of hard-nosed competition, the question arises: can cooperation in the international economic order survive the re-emergence of outright rivalry between its largest constituent parts?

Caught in this growing divide is the World Trade Organization (WTO). Created in 1995 to move global trade from the province of competitive power politics to that of cooperative international law, the WTO epitomises the post-Cold War impulse to segregate economics and security. On a purely functional level, it has become increasingly anachronistic, while its decisions command less and less credibility. In a recent article published in the Harvard International Law Journal, Professor Mark Wu argues convincingly that the WTO is, at present, structurally incapable of addressing the ambiguities and nuances of the Chinese economic model—the highest priority geoeconomic challenge for the United States and no small concern for Europe. Concerns about the self-aggrandisement of the WTO’s appellate body, too, have grown for years. Reforming the organisation to better address contemporary economic realities, however, would require the sort of broad-based political cooperation that made the WTO possible in the first place and is now sorely lacking. In an attempt to kick-start reform through brute force, the US has systematically crippled the WTO’s dispute settlement body, vetoing the appointments of new appellate trade judges to endanger the organisation’s highest court’s ability to reach a quorum to conduct business. By justifying its new steel and aluminium tariffs, ordinarily illegal under WTO rules, through an exclusion for “national security,” the Trump administration has essentially dared the WTO to either proclaim itself the arbiter of its members’ security concerns or limply accede to trade barriers imposed on the flimsiest of pretexts. Caught between its own maladies and the conflicting interests of its newly-assertive members, the WTO is truly between a rock and a hard place.

Caught between its own maladies and the conflicting interests of its newly-assertive members, the WTO is truly between a rock and a hard place.

Can one imagine a more treacherous position for an organisation meant to oversee the ostensibly apolitical process of global economic integration, and to maintain a bright line between geopolitics and globalisation? Even if technical fixes to the institutional weaknesses and anachronisms of the WTO were somehow found and agreed upon, it remains highly uncertain that the vision of international economic order—all-encompassing, rules-based, and unsullied by security concerns—that the WTO stands for could endure in the coming decades. After all, official US doctrine now proclaims its support for China’s 2001 WTO accession a mistake of historic proportions; the world’s two most powerful nations, the “Chimerica” that has carried the post-Cold War global economy on its conjoined shoulders, cannot agree that they both belong in the same purportedly universalist trading system.

With promoting overall global growth forced into the backseat by questions of the relative distribution of economic power, the stage is set for a fundamental reconsideration of the institutions and norms governing global trade. Robert Lighthizer, the US Trade Representative, says his country “is not talking about a level playing-field…what we are saying to [potential trade partners] is ‘We’ll give you better access than the rest of the world, and you give us approximately an equal amount of better access’”– a stark, eminently political rebuke of the WTO’s pursuit of a truly global economy, in which nations cannot bend market forces towards preferred partners. Under such a transactional, case-by-case, and bloc-oriented approach, trade can become more a means of consummating alignments and pooling strength than sewing the entire world together in a moderating interdependence.

The multipolar tug-of-war over the soul of the WTO speaks to a broader effort to reimpose national interests and prerogatives upon the ebbs and flows of the global economy. The WTO came of age in an era, one must remember, in which former US Federal Reserve Chairman Alan Greenspan could claim in 2007 “…that, thanks to globalisation, policy decisions in the US have largely been replaced by market forces. National security aside, it hardly makes any difference who will be the next president.” It is a testament to just how much has changed in the interim that this statement has aged so poorly. Not only were those “market forces” within a year of painfully demonstrating their fallibility in the worst financial crisis since the Great Depression, but the underlying assumption—“National security aside”—has since proven to be at best misplaced idealism, at worst dangerous self-deception. In the mid-2000s, when the animating concerns of “national security” centered on disparate non-state actors, it could be charitably judged the former. Now that the very interstate competitive impulses that the WTO and its ilk attempted to subdue have returned to the surface, however, it is decidedly the latter.

The multipolar tug-of-war over the soul of the WTO speaks to a broader effort to reimpose national interests and prerogatives upon the ebbs and flows of the global economy.

What, then, are the prospects for economic cooperation in this new world? In many ways, they are rather disquieting. While the Trump administration’s “trade wars” have provoked jitters in the markets, it seems unlikely that those markets have fully comprehended the true challenges posed by the slowing, stalling, or even partial rolling-back of thirty years of global economic openness. Most policymakers, corporate leaders, and citizens worldwide seem to have internalised the claimed values and facial rhythms of a unipolar, integrationist, and optimistic period that has, with the passage of time, increasingly proven itself a transient anomaly. The vestigial institutions and norms of those thirty years now face an agonising trial, with the looming risk of WTO obsolescence standing as a challenge and a warning.

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