Trump Says the WTO is a Disaster

14 Pages Posted: 12 Feb 2018 Last revised: 17 Aug 2018

See all articles by Peter Marcel Debaere

Peter Marcel Debaere

University of Virginia - Darden School of Business; Centre for Economic Policy Research (CEPR)

Abstract

In 2017, it was a challenge to assess the future of global trade. It was an open question whether the US financial crisis and the recession that it triggered would mark a turning point for the liberal post–World War II world order. If one looked toward Europe, China, Latin America, and Japan, there was a flurry of activity. New trade agreements were being completed and pursued. In Washington, DC, on the other hand, President Donald Trump seemed set on ripping apart and/or renegotiating any trade deal the United States was ever part of.This case explores Trump's opinions and emerging policy stance on trade, bilateralism, and the global economy, among others. It also gives an overview of the World Trade Organization (WTO) and the General Agreement on Tariffs and Trade (GATT) and asks whether the Trump presidency would constitute a major challenge to the WTO and what it stood for in 2017.

Excerpt

UVA-GEM-0152

Rev. Jul. 31, 2018

Trump Says the WTO Is a Disaster

The three-quarters of a century since World War II had experienced relatively smooth economic expansion, interrupted by a few recessions and the Great Recession, but no major depression. Economic growth tended to support liberalizing international trade. It muted demands for protectionism, created opportunities, and attenuated structural adjustment pains associated with freeing up trade. Overall, since 1945, world trade had grown faster than world output (see Exhibit1). After the stalling trade negotiations of the early 1980s and the “new” protectionism after the second oil crisis, the 1990s stood out as years of accelerated trade growth with accelerated integration of emerging economies into the world economy. In spite of strong growth and low unemployment, however, the 1990s experienced significant pushback on trade. The decade started with lively discussion about potential job losses due to the North American Free Trade Agreement (NAFTA), or, in the words of US presidential candidate Ross Perot, its “giant sucking sound.” The 1990s ended with violent protests by opponents of the World Trade Organization (WTO) in Seattle, Washington, and a call to safeguard labor and environmental standards, especially in deals with emerging countries. It is worth noting that those protests happened before China entered the WTO, and before the financial crisis hit the world economy in 2007, which at least temporarily reversed the expansion of global trade.

In 2017, it was a challenge to assess the future of global trade. It was an open question whether the financial crisis and the recession that it triggered would mark a turning point for the liberal post–World War II world order. If one looked toward Europe, China, Latin America, and Japan, there was a flurry of activity. New trade agreements were being completed and pursued. In Washington, DC, on the other hand, Donald Trump seemed set on ripping apart and/or renegotiating any trade deal the United States was ever part of. A veteran trade negotiator attending the festivities for the 70th anniversary of the General Agreement on Tariffs and Trade (GATT) on October 30, 2017, summed up the confusion best: “This feels more like a wake than a birthday party.”

Contradictory Signals

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Keywords: World Trade Organization, WTO, General Agreement on Tariffs and Trade, GATT, Donald Trump, global economics, trade, international trade

Suggested Citation

Debaere, Peter Marcel, Trump Says the WTO is a Disaster. Darden Case No. UVA-GEM-0152, Available at SSRN: https://ssrn.com/abstract=3121347

Peter Marcel Debaere (Contact Author)

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

HOME PAGE: http://www.darden.virginia.edu/html/direc_detail.aspx?styleid=2&id=5794

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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