The Future of Multilateralism in the Post‐pandemic World

Ligang Song and Vishesh Agarwal

China & World Economy, 2023, vol. 31, issue 1, 62-87

Abstract: This paper applies an endogenous institutionalist framework to understand the evolution of the rules‐based international trading system since the end of World War II. We argue that the initial success of the General Agreement on Trade and Tariffs and re‐enforcement that led to the formation of the WTO can be explained by three major factors: the hegemonic position of the US, the belief that international trade would foster prosperity and peace, and Cold War politics. However, declining US hegemony along with a shift in global comparative advantage in labor‐intensive manufacturing led to a shift from multilateral towards preferential trade agreements since the 1990s. Today, the WTO faces several new challenges, including increasing geo‐political competition between the US and China, increasing digitization of commerce, and disrupted supply chains following COVID‐19. A functioning WTO that facilitates global economic re‐integration remains crucial to ensure a strong recovery from the pandemic and continued long‐term prosperity and stability of the global economy.

Date: 2023
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