One of the greatest ironies is currently being played out in the international trade arena. The irony stems from the announcement by President Donald Trump that the US will increase the tariffs on its imports of steel and aluminum products.
During the last century and thus far in the twenty-first century the US has been the key player in the multinational effort to create and maintain a stable trade order. Realizing that most of the international conflicts of modern world history have to one extent or another been caused by trade differences, the US insisted, at the Bretton Woods conference on post-World War II international arrangements, that an institution to promote world trade stability be created alongside institutions to maintain international financial stability (the International Monetary Fund) and to provide assistance for economic and social development projects (the International Bank for Reconstruction and Development, or World Bank).
The creation of an international trade institution was to be accomplished through the signing of the conference participants – these included the Union of Soviet Socialist Republic (USSR) and China, then governed by the Nationalist administration of Chiang Kai-shek – of a General Agreement on Tariffs and Trade (GATT). The signing of GATT was meant to bring an International Trade Organization (ITO) into being. Unfortunately, while the major World War II Allies were willing to sign – and did sign – the GATT, a number of them were not prepared, for one reason or another, to agree to the creation of an ITO. For the moment, ITO was in limbo and would remain that way for decades.
In a display of utmost pragmatism, the pro-ITO conferees decided that GATT would function as an operational institution, undertaking the trade promotion and stabilization activities that ITO would have undertaken. GATT functioned as a quasi-ITO for many decades, establishing rules and regulations for the orderly conduct of world trade, holding international conferences – called Rounds – for trade negotiations among member countries and candidates for membership and monitoring trade-related international developments.
Toward the end of the 20th century, realizing that the world needed a regular international trade organization and recognizing the superb work that GATT had been doing, the US and the other major trading nations decided to bring the World Trade Organization (WTO) into being, in the process putting an end to the long and creditable life of GATT. What had taken place was a mere change of name; WTO had simply taken over GATT’s marching orders and operational infrastructure.
There surely can be no better recognition of the value of the contribution of GATT/WTO to the prosperity and peace of the world than the interest of non-member countries – until, not so long ago, China – in being admitted into WTO.
Through the years since 1944, when the nearly victorious World War II Allies met in the quiet New Hampshire town of Bretton Woods, the US Has been in the forefront of the enduring campaign for an international marketplace characterized by free or low-tariff movement of goods and services. Indeed, so involved in, and so committed to the work of GATT/WTO has the US been that some commentators have gone so far as to equate US trade policy with GATT/WTO operations.
At the start of this column I spoke of an irony. The irony is this. All the effort, commitment and resources that America has expended over the decades in its pursuit of world trade stability is being undermined by the current head of the US government.
The irony is truly supreme.