International trade relations are in a state of tension that has not been seen since the Second World War and that is characterized by major increases in unilateral sanctions, reprisals, and threats, against a backdrop of profound and paralyzing challenges to the World Trade Organization (WTO).

The ostensible cause is the Trump administration’s trade policy. Quite apart from the sums involved, the destabilizing nature of this policy is related to the nature of the instruments used and the rhetoric accompanying them. The policy represents a major break from the norms upon which the multilateral trading system is based, and of which the United States has historically been both architect and leader. Protectionist measures, obviously motivated by economic concerns, have been justified by the argument of national security, which places them de facto outside the remit of the multilateral trading system. Donald Trump repeatedly blames all imaginable ills on the WTO, an organization that is directed by its members and that cannot function unless they respect its legitimacy.

While it is necessary to study the Trump administration’s policy in order to understand the current state of international trade relations and their possible future development, this is only a starting point. The causes of the tensions observed go beyond the whims of an unpredictable pre­sident; international trade has changed profoundly over the last twenty-five years, and this has presented its institutional foundation with three structural problems: the reversal of comparative advantages in a context in which trade agreements cover goods much more effectively than services or investment; the major emerging economies’ status as latecomers to the trading system, which creates an asymmetry of commitment compared to countries that have long been full members; and multipolarity, which leaves the system without a dominant power able to play the role of constructive leader.

These problems present challenges to the stability and relevance of the multilateral trading system, which is why the political dimension is currently coming to the fore in structuring exchanges. This perspective suggests that the shift in the way the US treats these issues is likely to continue and presents challenges of both a political and economic nature. Nevertheless, the constraints of the globalized economy are strong and place clear limits on what is likely to develop in the future. […]

OUTLINE

• What is Trump’s protectionism saying “no” to?
• International trade: what has changed
• The three phenomena destabilizing the multilateral trading system
  - The reversal of comparative advantages
  - The problem of the “latecomers” at the negotiating table
  - Multipolarity
• The burden of legacy
• The future of world trade

Sébastien Jean is Professor of Economics, Jean-Baptiste Say Chair, Conservatoire national des arts et métiers (CNAM, France).