It’s quite unusual for former U.S. trade negotiators and prominent figures in foreign policy to suggest abandoning the international trade system that has fostered significant peace and prosperity for the U.S. and the globe. Yet, here we are.
Michael Froman, who previously served as the U.S. trade representative and is now the chairman of the Council on Foreign Relations, has voiced his support for the U.S. to step away from the World Trade Organization (WTO). You have to wonder how Cordell Hull would react to this, considering he played an instrumental role in building these trade frameworks.
Froman claims that “the global trading system we know is dead… If any remnants of the old order exist, they won’t revitalize.” It’s a pretty stark assertion, and it brings up a lot of feelings about what we’ve built over decades.
But I’m left questioning, should we really abandon the WTO? After all, it represents a significant global public interest that dates back to the efforts of Secretary Hull and President Franklin Roosevelt, who worked to reduce tariffs back during the New Deal era.
And let’s not overlook the perspectives of the other 165 WTO member states that aim to uphold and strengthen this trade framework. The only notable outlier seems to be the U.S. under Trump, whose approach has often disregarded WTO commitments, thereby undermining its dispute resolution processes and eroding the rule of law in global trade.
Are these other countries misguided? It’s a bit cliché to assume that they might be. When discussing the future of global trade, one really can’t just overlook what a collective effort it’s been.
Froman has faced challenges with the WTO even prior to Trump’s administration. While he managed to navigate trade negotiations during Obama’s tenure, the Doha Development Round ultimately failed to further liberalize trade globally. It’s a tough job, especially in today’s climate fraught with economic uncertainties.
Yet, pursuing these trade discussions echoes sentiments from John F. Kennedy—reducing barriers to trade promises economic benefits globally. Sure, it’s a challenging sell politically. But the risks of moving away from cooperation, especially given today’s geopolitical tensions, are significant.
Consider Froman’s alternative to a multilateral trading system. It could lead to a landscape of “open replicating agreements” among various countries outside of the WTO framework. This shift moves us towards bilateral and regional economic arrangements—something that’s been on the rise as multilateral trade negotiations face increasing hurdles.
The risk of these agreements turning into protectionist trade blocs is quite real. While Froman envisions a more “open” approach, history shows that many regional agreements haven’t necessarily welcomed broader participation from other countries. And when conflicts arise, how are they resolved? Most systems lacking WTO’s mechanisms tend to fall short when it comes to enforcement.
Commercial conflicts can escalate quickly; they can even turn into military confrontations. This idea is what initially drove the creation of international agreements on tariffs and trade, leading to entities like the WTO. The Peterson Institute for International Economics even claims that U.S. GDP is $2.6 trillion higher due to increased trade since World War II, benefiting average households significantly.
Much of this success can be traced to the U.S. being a WTO member. Research from the Bertelsmann Institute highlights that membership in the WTO is a financial boon for all involved. Perhaps most importantly, the multilateral trading system has, until now, contributed to maintaining peace on a global scale.
Froman doesn’t seem to acknowledge that a viable solution would actually be to reform and strengthen existing frameworks rather than dismantle them. A plurilateral agreement among ambitious subsets of WTO members could potentially elevate standards across multiple nations. This is feasible under current WTO rules, allowing replicating agreements that are accessible to any member willing to engage in WTO dispute resolution processes.
By choosing to work within the WTO, we sidestep many of the geopolitical dilemmas tied to Froman’s proposals. Similar approaches have succeeded in fields like information technology and financial services, leading to the very establishment of the WTO in the first place. Transforming bilateral agreements into inclusive contracts strengthens the entire trading system.
Froman’s idea of stepping away from the WTO reflects a growing sense of pessimism. He likely does aim for the best outcome but may need to reevaluate his position.
