The US Supreme court ruled that most of the global tariffs imposed by President Donald Trump last year were unlawful, given that the mandate for trade policy has always rested with Congress. However, in response, he has already said he will introduce new tariffs of 15 per cent. Thanks to President Trump’s volatile and unilateral use of tariffs to attempt to bully others into geopolitical submission, we are all upping our game on the basics of trade policy, including tariffs, quotas and long-running disputes over sectors such as steel. Combined with his ongoing attack on rules-based order, this is the time for progressives to come back to the table on trade policy – it is too important an area of global politics to leave just to trade economists and policy experts, diplomats – or even President Trump.
I say back to the table because the international policy world to which I came of age was all about trade policy – as an undergraduate I was reading the first anti-globalisation texts and taking note of anti-World Trade Organisation protests in Seattle.
In the 2000s, UK and international development charities were strongly pursuing trade justice and the UK government took the unique position of placing its trade policy unit under the ministerial lead of the development department (in 2008 I was part of the wider trade policy team as our agriculture, environment and food Ministry’s lead on agricultural trade and so saw this first hand). But trade negotiations in the Doha Development Agenda blew apart in 2008 and never recovered, along with any hope of rewriting the multilateral rules to redress the power imbalances that still to this day favour rich country subsidies over developing country interests.
The WTO remains conveniently crippled
At that point, there was a relatively high level of arcane trade policy knowledge in the wider development world, though possibly less knowledge amongst the general public than there is right now, where we are learning about the way in which trade policy can quickly be utilised as a weapon in the wrong hands, should international institutions not be able to preserve the peace.
In case you are wondering, much of what the US has pursued under the current Trump administration would be likely to be found counter to one or many WTO rules. The first Trump administration ushered in the stasis in the WTO by refusing to appoint a judge to its Appellate Body, the standing body which rules on trade disputes, a move which paralysed the WTO’s ability to enforce trade rules.
The Biden administration, however, did not choose to redress this and so the WTO remains conveniently crippled. Of course, it’s unlikely Trump would have stuck by any ruling, but Appellate Body rulings do at least provide clarity on permissible ‘remedies’ or retaliation, thus preserving at least one side of the rules.
Supporting the WTO as an institution is far from a cause célèbre amongst the left and so that shouldn’t be a surprise, though Biden did push for a reform path. And this lack of support amongst potential justice advocates is part of the problem: for too long many equipped with a cursory knowledge of the international trade system see, like me, the need to address trade injustices, but are quick to reach to clichéd depictions of the WTO as some kind of neoliberal bully-boy institution, without really taking the time to understand how it functions.
As we approach the next ministerial conference in March in Cameroon, important reforms of the WTO in terms of disputes and decision making are on the agenda, as well as ‘special and differential treatment’ of countries in the global South. But the WTO does not get the attention it once did, for good or for bad, and thus these discussions tend to happen outside of the public gaze.
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Challenges of one member, one vote
The majority of the rules that the WTO is required to uphold were agreed under the last multilateral agreement reached in 1994 that created the WTO. Unlike the UN as a whole, the WTO functions on the basis of unanimity of its 166 member states: one member, one vote. So rather than blame the WTO, which is basically a bunch of international bureaucrats headed by a political appointee, blame the countries that signed these agreements – our governments.
One member one vote makes agreements notoriously hard to reach. For example, India’s refusal to water down proposals to protect its farmers from surges of agricultural imports has been blamed for the collapse of the 2008 talks (though others have blamed US negotiators, backed by powerful agriculture lobbies, for being too rigid on this question). Power dynamics which ‘baked in’ the inequalities in 1994, an age when the ‘quad’ of the EU, US, Australia and Canada still dominated, have shifted, with coalitions of countries now wielding power and large economies such as India, China and Brazil acting very much in their own interest rather than for the global South (those with ‘Developing Country’ Status in WTO agreements and thus treated differently) as a whole.
The importance of regional groupings
Trade policy has shifted in the intervening years. The WTO trundles along and has reached agreements on policies such as fishery subsidies but is no longer the locus of trade agreements. We may never again reach a multilateral agreement as we did in 1994 (and that’s an issue as those inequalities remain baked in – plus a lack of interest in working multilaterally also undermines the whole system as well as that important Appellate Body).
Much trade policy has shifted to regional groupings, such as the EU and ASEAN. This is also where more attention is needed to ensure the right balance between national and international interests and human and environmental justice. The EU in particular is pushing boundaries on trade policy in areas such as carbon border tax adjustments and deforestation protection which sound good on paper but if poorly implemented can be a real barrier to trade for those countries the EU previously plundered for their natural resources. Many countries are right to raise red flags with aspects of these policies in this context of historic and potential future trade injustices.
All trade agreements contain provisions that require careful scrutiny from a justice perspective, whether the notorious investor dispute panels, which allow companies to take countries to court for legislation that hinders their investments, to the multilateral decisions of the WTO itself which have had a mixed effect on upholding or constraining national sovereignty in terms of important areas of social and justice.
In each of these areas there isn’t a simple answer: some rules to protect investors are necessary to ensure important flows of money and expertise into poorer countries; some pooling of sovereignty is always required to ensure supranational systems work well for all involved (with the EU the strongest example). But by ‘upping our game’ on trade policy I do not mean acceptance of the unbridled neoliberalism that some would see at heart of all trade. My point is that whether you like it or not, in a rules-based order, rules and institutions are necessary to at least try to constrain the geopolitical power imbalances that already exist. We need to move beyond the anti-globalisation texts of 1999 and forge a new progressive trade policy for the late 2020s.
