Systemic changes in the politicization of the international trade relations and the decline of the multilateral trading system

This Article contributes to the discussion about the development of international trade regulation of state interventionism by situating the tensions that exist about the future design of subsidies and state enterprises treaty regulation in the broader context of current systemic challenges to the multilateral trading system that are more profound than at any time in its seven-decade history. While recent studies have explored the issues of subsidies and state-owned enterprises (SOEs) as one of the most pervasive in impact among the contemporary challenges to the WTO, there is certainly scope to discuss further such a problem from the systemic point of view of the crisis of the multilateral trading system, its systemic challenges and concomitant increasing politicization of international trade relations. To this end, this Article analyzes the interactions between the pervasive and lasting decline of the WTO, growing political interferences with international trade flows; and the prospect of reforming trade rules on state interventionism. The arguments proceed as follows. Part A introduces the decline of the WTO as an institutional form of multilateral cooperation driven by the “depoliticization” of trade relations, and based on non-discrimination, reduction of border and internal barriers (deregulation), and fair competition. Thereafter, it presents the directions the Article pursues. Part B argues that the current crisis of the multilateral trading system is influenced and aggravated by remarkable geopolitical shifts, including increasing political interference with trade flows that stems from the launching of industrial policy programs by several economies and the growing recourse to trade restrictive measures based on political decisions that disregard existing international commitments. Moreover, Part B further analyzes other systemic challenges to the multilateral trading system, including issues with WTO membership; the causes and implications of the WTO Dispute Settlement, and other substantive areas requiring reforms that remained unaddressed by the biennial Ministerial Meeting (MC12), held in Geneva in June 2022, including the formulation of new rules on state intervention in the economy. Part C concludes by exploring ways forward.