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Global Trade Policies Are Under Pressure

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EDITOR NOTE: The article below, written by a US think tank whose purpose is to advocate American leadership in the global economic and trade front, reads like an awkward cross between propaganda and a really bad sales brochure. They’re right in pointing out that China is a threat to the “Western-led” rules of trade, simply because those rules were largely created by the US, and based on market-driven principles. China’s is based on a more authoritarian state model. So, the authors are suggesting that the World Trade Organization should play “referee” between China and the West so that everyone can, once again, play fair, under a “Western” model. Good luck with that! In a free market, the rules of trade are determined by the parties involved. Intervention between the buyer and seller should be kept to a minimum. And that last thing you want to do is introduce yet another level of bureaucracy into the mix. Traders and merchants make the market; not think tanks. And perhaps no institution whose individuals haven’t been voted in by its constituencies should be allowed to rule over businesses involved in foreign trade. It’s another example of global trade policies elitism; not unlike the IMF or WEF.

The global rules-based trading system is in crisis. Without bold leadership from the United States, the system risks deteriorating, slowing global growth and upending a system that has raised living standards for billions. The United States played a crucial role in creating the current global rules-based trading system and has the most to lose.

The System Under Pressure

Trade Policies

The linchpin of the system is the World Trade Organization, but its three pillars – negotiation, dispute settlement and transparency – are fraying. In response, countries have turned to regional trade agreements to advance their interests, leading to overlap trade regimes and trade diversion that the United States can do little to shape.

The China Challenge

Trade Policies

Two conflicting economic approaches are putting additional pressure on the system: a Western-led, rules of law-based market-driven model and an authoritarian state-driven model championed by China. The World Trade Organization was not designed to meet the full range of challenges posed by China’s model.

Its rulebook remains out of date and its value as a forum for settling disputes before they escalate is fading. At risk is the global rules-based trading system.


The Commission recommends three sets of actions to revitalize the global rules-based trading system and advance U.S. interests.

  1. Create a new trade compact parallel to the WTO to ensure that trade rules keep pace with changes in the global economy and are able to counter unfair non-market practices.
  2. Revitalize the WTO through targeted efforts aimed at achieving realistic reform objectives.
  3. Update the U.S. domestic trade policy toolbox so it is better equipped to deal with unfair trade practices not adequately addressed by WTO rules.

These recommendations should be combined with a proactive trade policy that pursues strategic trade agreements that advance U.S. interests.

Originally posted on CSIS Trade Commission

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