Like sport, trade works best when there is a referee. But on December 11th the WTO will lose its adjudicating body. Expect a rise in foul play
Before 1995 the system was less stable and less fair. The General Agreement on Tariffs and Trade, the’s predecessor, had rules but no judges to enforce them. Big countries had bullying rights.
Most likely, the appellate body will die, or remain dormant for years. If so, expect a deterioration in conduct—Japan and South Korea are already in an ugly spat. Some Americans believe that their country’s size gives them the raw clout to impose rules on others, but it has yet to wrest any big concessions from China.
Indeed, as the legal framework for trade decays, even America will be vulnerable to escalating tensions. So far, trade frictions have not caused a global recession. But trade has stopped growing and long-term investment by multinational firms dropped by 20% in the first half of this year. If there is a recession, the temptation of tit-for-tat tariffs will rise across the world. When the referee leaves the field, anything goes.
France Dernières Nouvelles, France Actualités
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