It’s the End of Globalization As We Know It (And That’s Probably Fine), Part 2
Let’s talk about trade rules.
This week we’ll jump right into Part 2 of my musings on the big “deglobalization” narrative that’s sweeping the (ahem) planet. You can read Part 1 here, to which I’ll just add these useful notes and chart from a fellow skeptic, Schwab’s Jeffrey Kleintop:
Now on to Part 2…
Then There Are the Trade Rules
The second big misunderstanding regarding all of this deglobalization talk relates to the rules governing global trade, particularly at the World Trade Organization. Yes, the WTO agreements do generally prohibit a member country from discriminating among other members (the “most favored nation” principle) or in favor of their own entities (“national treatment”), and they generally encourage members to “channel” trade restrictions into tariffs and “bind” these tariffs at relatively low levels. However, these rules also contain myriad exceptions from both nondiscrimination and trade liberalization principles—for things like subsidies, trade remedies (anti-dumping, etc.), procurement restrictions, quotas, environmental or health regulation, and even high tariffs on “politically sensitive” items. Most of these measures are subject to certain conditions (which sovereign nations, including the United States, can and do sometimes ignore), but the rules generally do permit WTO members to deviate from pro-trade principles and reflect, as my former Cato colleague Simon Lester just explained, the political balance between free trade and protectionism that has undergirded the multilateral trading system since its inception in the 1940s. This has never been “unfettered free trade” and probably never will be.