Dear Capitolisters,

Early in 2022, I wrote how President Biden’s first year guiding U.S. trade policy was a mostly expected mix of good (better than Trump), bad (Trump 2.0), and ugly (actually worse). Recent events require me to update to those conclusions, and—spoiler alert—things have deteriorated significantly. In fact, it’s not hyperbole to say that Biden’s latest trade moves might pull the plug on the multilateral trading system as we know it.

(Insert ominous music here.)

A Brief History of the WTO

Before we get to that, some quick background. In response to multiple world wars caused in part by trade frictions, officials from several governments, led by the United States, created the General Agreement on Tariffs and Trade (GATT) in 1947. That agreement did two main things: 1) created a baseline set of multilateral (global) rules for member countries to voluntarily follow; and 2) established an impartial process for resolving government-to-government disputes related to those rules. In some ways, the GATT was pretty successful: Participating governments agreed to channel most trade restrictions into tariffs (the most transparent/predictable, and thus least distortive, barrier), to cap those tariffs at certain levels (incrementally lowered via subsequent negotiating rounds), and to not discriminate in favor of certain other members (aka “most-favored nation” treatment or “MFN”) or their domestic industries (aka “national treatment” or “NT”). Over time, the combination of declining tariff levels, transparency/predictability, and non-discrimination—along with non-trade things like containerized shipping and information technology—caused world trade to increase significantly. Cross-border armed conflict also declined, which many experts attribute (at least in part) to trade integration. And, seeing these benefits, many non-member nations sought to join the party.