Is America Abandoning Multilateral Trade? Commitment to a New World Trade Order
Article Summary and Author Biography
Japan, Europe, and others worry that the United States is backing away from its historical commitment to international rules and reverting to arm-twisting and private deals on trade. So long as governments intervene unfairly, Washington cannot demobilize. But as the world's most open market and a burgeoning exporter, America has the most to gain from multilateral decisions to lower trade barriers and increase exchange. During the past half-century it has shown the way, and it will continue to lead in shaping a multilateralism for the millennium.
Jeffrey E. Garten served as U.S. Under Secretary of Commerce for International Trade until mid-October. In November he becomes Dean of Yale University's School of Management.
In two years of travel for the Clinton administration in Asia, Europe, and Latin America, I have found foreign leaders' most recurrent concern to be that America is moving away from its historically strong support for the multilateral trading system. Rather than embrace the new World Trade Organization (WTO) and bring all its trade disputes before that body, the United States, they charge, is trying to solve its problems through bilateral agreements at best or unilateral fiat at worst. This substitution of the law of the jungle for established international rules, the critics say, encourages unbridled mercantilism, protectionism, and heightened political tension between countries, weakening global trade.
Set aside for a moment the hypocrisy of Europeans who deal bilaterally all the time, and the behavior of Japan, which continues to practice highly managed trade that runs directly counter to the spirit of the WTO. The fact is that ministers from Canada, Brazil, Korea, India, and Singapore, European Union commissioners, and business leaders from Toronto to Hong Kong are saying that the United States is turning its back on the multilateral trading system. The accusation is particularly significant in light of the past half century of American support for the General Agreement on Tariffs and Trade (GATT), the predecessor of the WTO. During this time the United States led every major round of global liberalization, providing the ideas and political muscle to bring negotiations to a conclusion and, most important, keeping American markets open in good economic times and bad so other economies could stay afloat. No other country came close to exercising this role.
Serious as the indictment is, it is also wrong. The issue is not whether the Clinton administration fully supports multilateralism, because it certainly does. The more relevant question is, what kind of multilateralism?
NO LONGER A LUXURY GOOD
Many remember the days when America was so wealthy that it could subordinate economic and commercial policies to the goal of strengthening its political alliances. They recall that before the 1990s GATT negotiations were as much designed to keep the West united and prosperous in the face of the Soviet threat as to expand trade for its own sake. They yearn for an America that accorded the process of developing multilateral trade rules the same importance as the results those rules yielded. That era, however, is over.
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