The Beginning of World Trade Disorganization? | The Diplomat - 0 views
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Last summer, the World Trade Organization (WTO) entered a phase of paralysis as India unilaterally shifted its stance and vetoed the Trade Facilitation Agreement, a modest attempt to remove red tape at borders. The WTO, as its director-general Roberto Azevêdo lamented, has plunged into the “most serious crisis” ever since its formation in 1995. India eventually agreed to back down under American persuasion. Meanwhile, in an effort to update the WTO’s Information Technology Agreement of 1996, China presented a long list of IT products that it requests be excluded from the new agreement and prompted a deadlock, only later to make concessions as U.S. threw its weight behind the 18-month negotiations. Uniting the two incidents is the emerging sense of frustration with the WTO platform and, consequently, the growing need for direct U.S. intervention in safeguarding agreements. The WTO has entered a new phase of existential crisis, being multilateral in appearance, but bilateral in essence. This is in revealing contrast with the past, when the U.S. could only be the spoiler, not defender, of the multilateral trade regime it established. Why is this happening to the WTO? There is a simple yet powerful explanation: The entire system of the WTO is underpinned by the American hegemon supplying political and economic capital. If the U.S. is in relative decline, the trade system will naturally fragment. This theory is known as the hegemonic stability theory.