The case for a multilateral trade organisation without America

SINCE January, the world has watched in shock as US President Donald Trump’s administration has undermined every pillar of the economic order that the US helped build and proudly championed for much of the past century.

The principles of the post-war international economic order – non-discrimination among trading partners, fair treatment of foreign businesses in domestic courts, and adherence to the rule of law as enshrined in the World Trade Organization’s (WTO) Articles of Agreement – laid the groundwork for eight decades of unprecedented prosperity and poverty reduction. While economists still debate whether trade was the primary engine of global growth or merely a key facilitator, few would dispute that the liberalisation of trade played a central role.

Given this history, it is hardly surprising that the Trump administration’s sweeping, country-specific tariff hikes, which violate the tariff ceilings negotiated under the WTO, have shocked America’s allies. Trump’s invitation to individual countries to “negotiate” tariff reductions represents yet another breach of the multilateral rules-based system, given that these negotiations have been strictly bilateral.