From multilateralism to unilateralism: U.S. challenge to global trade

Editor's note: Lu Yue, a special commentator on current affairs for CGTN, is a professor at the Academy of China Open Economy Studies, University of International Business and Economics (UIBE), and executive director of the Academy of Global Innovation & Governance, UIBE. The article reflects the author's opinions and not necessarily the views of CGTN.

On September 12, China's Ministry of Commerce released the 2024 Report on WTO Compliance of the United States, detailing how the U.S. has performed in complying with its WTO obligations. The report reveals a series of actions violating the core principles of the multilateral trading system. It also raises concerns over the U.S. destroying the multilateral trading system, practicing unilateralism, bullying, showing double standard in industrial policies, and disrupting global industrial and supply chains.

The report says the U.S. should rectify its policies, fulfill its commitments, and adhere to international rules, joining the collective effort to uphold the multilateral trading system and advance WTO reforms.

The policies and measures taken by the U.S. since 2017 that undermine WTO rules and the principles of the multilateral trading system can be summarized into four key categories.

The U.S. hindered the normal functioning of the WTO to serve its own interests. It is using WTO-established trade remedy measures as tools to promote trade protectionism, employing anti-dumping and countervailing measures to protect its domestic industries. It is also impeding the appointment of new members to the WTO Appellate Body, paralyzing its operation.

Moreover, under the pretext of economic security, it is promoting "decoupling" and "disruption" strategies. The measures include "friend-shoring" and "near-shoring." In the name of technology security, the U.S. has built "small yards with high fences." It has invoked national security to expand export controls and intensify scrutiny of foreign investments. An example of this is the decision in May to revoke the licenses of U.S. chip manufacturers to sell semiconductors to Huawei. 

Besides, Washington has implemented discriminatory and protectionist domestic industrial policies. Laws such as the Inflation Reduction Act and the CHIPS and Science Act have resulted in substantial subsidies for domestic industries in sectors like electric vehicles, semiconductors and photovoltaics.

It is evident that the U.S. has continuously politicized and weaponized economic and trade issues through various methods, which have profound implications for the multilateral trading system and global economic activities. The obstruction of the WTO Appellate Body and the disregard for international trade rules have significantly undermined the authority of the multilateral trading system. This has impeded the resolution of trade disputes and intensified global trade friction and protectionism.

Additionally, under the pretext of "de-risking," the U.S. intervention in global industrial and supply chains has disrupted their market-oriented configuration. This has increased production and operational costs for businesses and undermined the efficiency of the international division of labor and cooperation. What's more, to pursue technological dominance, the U.S. has enacted technology restrictions and suppression measures in the high-tech sector. These actions have restricted global technological exchanges and collaborations, hindered progress in frontier technologies, and weakened the innovation drivers essential for sustainable global economic growth.

U.S. unilateralism and trade protectionism have exacerbated global economic fragmentation, contributing to increasing complexity and uncertainty in both international business and geopolitical landscapes. The International Monetary Fund has warned that if this fragmentation continues, it could result in a 7 percent loss in global GDP.

The policies implemented by the U.S. have not only violated the core values and fundamental principles of the WTO, but have also significantly hindered global economic recovery and development. To restore the normal functioning of international trade and promote sustainably stable global economic growth, nations should take proactive measures and realign global economic cooperation.

A reinforced commitment to multilateralism and a resolute opposition to unilateralism and trade protectionism is essential. Multilateralism is the foundation of international order, and its implementation will support the stability and advancement of the global economy.

Also, it is vital to maintain the authority and effectiveness of the multilateral trading system. This requires accelerating WTO reforms, particularly the restoration of dispute resolution mechanisms. Such reforms will mitigate trade frictions and economic uncertainty, thereby creating a favorable environment for establishing new trade rules.

Finally, it is crucial for nations and regions to keep communicating, enhance mutual trust and cooperation, and build consensus on global issues such as green development and technological innovation. These efforts will be pivotal in strengthening the resilience and sustainability of the global economy.

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