Hyper-globalization is dead, killed by the rise of China, the supply chain catastrophe, the COVID pandemic, Russia’s invasion of Ukraine, and the belated recognition that ultra-free trade was mainly designed to serve financial elites. The Biden administration is pursuing a course correction and looking inward for economic security. Many other nations are taking this approach. Even some businesses recognize that the risk of disruption brought about by extreme globalization doesn’t justify the allure of weak regulation and low labor costs.

Despite this shift, a great deal of global trade will continue, under different rules. The task of the next decade is to figure out what those rules will look like. Is there a path back to a trading system that allows nation-states more room to govern capitalism, as in the Bretton Woods era? Can the successor system offer a better deal to developing countries of the Global South? Might a new trade regime give more weight to climate goals, labor rights, public health, or public provision of goods? And where does China fit in?

The next trade regime will not be a single universal set of rules, as the WTO’s sponsors imagined. It will be a hybrid that could provide more space to pursue progressive economic and social policies, nationally and globally, if we don’t succumb to the lingering influence of trade traditionalists in government and their allies on Wall Street.

…

One key area where even modest WTO reform has been blocked by industry power is the idea of waiving WTO rules on intellectual property, known by the acronym TRIPS, to expedite distribution of COVID vaccines. Biden proposed a TRIPS waiver early in his administration. The most recent TRIPS proposal by WTO director-general Ngozi Okonjo-Iweala falls far short of what’s needed to treat vaccines as social goods. “If you can’t get a temporary, emergency TRIPS waiver in a global pandemic when millions of people have died and more will without access to effective vaccines and treatments, when are you going to get it?” says Lori Wallach, a prominent critic of the WTO trade regime.

Lighthizer’s other breakthrough, which also violated WTO rules, was to act unilaterally to defend U.S. economic interests. The process for proving that China illicitly subsidized its industries, one case at a time, was impossibly cumbersome. So Lighthizer decided to levy a general tariff against China’s mercantilist system as a whole, averaging 25 percent. This was imprecise, but ballpark accurate. With WTO dispute settlement out of business, there was little China could do other than retaliate, leading Lighthizer to further increase tariffs on some sectors.

There was shock and dismay among free-traders. But “the Earth did not tilt off its axis, as confidently predicted,” as Wallach likes to say. Mostly, trade went on, just as it did in earlier eras when tariffs were the norm. Indeed, China’s trade surplus with the U.S. has grown, though the tariffs did create some shelter for the U.S. to build key industries.

…

The old trade regime may be dead, but traditionalists keep trying to resuscitate it. Not only is there continuing pressure to cut or repeal the China tariffs and to freely let in components needed as part of the domestic supply chain. Free-trade careerists and corporate lobbyists also keep pushing for the U.S. to do more trade deals. “Big Tech is trying to hijack the trade agenda to undermine President Biden and Congress’s plans to combat Big Tech abuses and break their monopoly powers while simultaneously rolling back the best gig worker, privacy, and competition policies in other countries,” says Lori Wallach. “To try to evade detection, they are selling this whole operation as a new ‘digital trade’ initiative.”

…