The International Governance Crisis and Post-WTO Order: A China-US G2 FTA as a Solution?
21 Pages Posted: 11 Oct 2019 Last revised: 2 Jan 2020
Date Written: October 9, 2019
The World Trade Organization deadlock, US-China trade war, and the Belt and Road Initiative are having a profound effect on global economic governance. This paper examines several questions: what are the systematic conflicts that have triggered this crisis of WTO deadlock and trade war? What might be the structure of the new order which is emerging? How should norms and institutions be designed to best address the crisis in the long-term, to produce desirable global and extra-regional governance outcomes? The paper argues that the US-China consensus gap is at the heart of the crisis. The potential multilateralism disintegration will likely lead to an increasingly important role for regionalism, while regionalism will likely further marginalise the WTO. An open G2 (US-China) Free Trade Agreement that promotes international rule of law, termed “treaty stability” here, could be a possible solution to this crisis. However, the considerable uncertainty around such a G2 trade pact indicates the difficulties in developing a rule-based system.
Keywords: trade war, WTO, crisis, the Belt and Road Initiative, US-China FTA
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