The More Things Change, the More They Stay the Same?

This column marks a milestone of limited significance—it is probably my 300th column. I lost count a few years ago and can’t be sure, but if it’s not number 300, it’s close to it. You will have to judge whether they have made any difference. I can only say they have been fun to write, and I’m looking forward to the next 300, although that might be a bit optimistic.

Since this is an anniversary of sorts, marking not only the 300th column but five years since I retired from the National Foreign Trade Council, I thought I would spend some time reflecting on how things have changed in trade over the time I have been in the business. The short answer is that a lot has changed, but not everything. One rule is that in trade, no problems are ever solved; they just keep coming back one way or another. In 2016, after I had moved to Kelley, Drye, & Warren, I ran into someone who had spent years working on behalf of the steel industry, and I mentioned I was looking forward to returning to trade issues, having been away from them since I left Capitol Hill in 1993. His response was that nothing had changed—the issues were exactly the same as when I left. And he was right.

However, some changes have occurred—some recent and some over decades.

The most recent has been the role of trade in public debate. Scott Miller, the other Trade Guy on our podcast, and I have often said we owe former president Trump a great debt. His obsession with trade took it out of the business section and onto the front page, and it has stayed there ever since. To be fair, it has not been all Trump’s doing. As the United States has become increasingly integrated into the global economy—a multi-decade process—trade has become a bigger political issue as exports have become a more important part of our growth, competition from imports has affected more people, and international rules have begun to chafe.

Thanks to the pandemic, the debate about trade has taken a turn. Instead of the old argument about whether globalization was good or bad, we have come to recognize both its inevitability and its sometimes unpleasant consequences. The new buzzwords are “supply chain resiliency,” a shift driven by shortages and foreign dependencies that became clear over the past year. For many, including the Biden administration, resiliency is code for reshoring—making as much as possible here in the United States and encouraging companies who have gone overseas to return. “Buy America,” for years a footnote in the trade debate, is now a fundamental principle.

My prediction is that it won’t last too long outside of some specific industries like steel. People are already recognizing that you don’t achieve resiliency simply by reshoring; you achieve it by diversifying your sources of supply. The old cliché, “don’t put all your eggs in one basket,” is taking on new life.

A more gradual change that has now come to a head has been the growing importance of alternative economic systems where government plays a much greater role by allocating capital, distorting markets, and insulating its institutions from the consequences of its own mistakes. China is the prime example of this, and it is busy selling its system to other authoritarian regimes and challenging the fundamental principles of both democracy and capitalism.

This is not exactly new—we lived with the Soviet Union for 70 years—but China’s scale, success, and determination to engage the world make it a much bigger issue than it used to be, and Western involvement in and dependence on the Chinese market have made it difficult for governments to develop a coherent response.

Related to the rise of alternative economic systems has been the decline of multilateralism. With tariffs now relatively low, much of the low-hanging fruit of trade negotiations has been picked. New talks focus on rules and standards, areas that intrude directly into how governments organize their economies and how their citizens live their lives, making agreement much more difficult. The World Trade Organization has produced only one multilateral agreement since it began 25 years ago. The pending fisheries negotiations are testing whether the system has run out of gas or whether it is still possible to reach broad-based agreements.

Competing economic systems and skepticism about multilateral agreements have added momentum to plurilateralism—coalitions of the willing that agree among themselves on more ambitious rules, usually in closed systems that restrict the benefits to those who sign on. Thirty years ago, few people knew what “plurilateral” meant, and the spell-check on my computer still doesn’t recognize it as a real word. But it may be the best, if not the only, way to defend against the spread of authoritarian nonmarket economies. It is a difficult path, as it could mean the end of the most-favored nation principle that has been the foundation of the trading system for more than 70 years. That would lead to further fragmentation of a system that is already under stress. If nothing else, however, it will provide many topics for my next 300 columns.

William Reinsch holds the Scholl Chair in International Business at the Center for Strategic and International Studies in Washington, D.C. 

Commentary is produced by the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s). 

© 2021 by the Center for Strategic and International Studies. All rights reserved.