(Project of the Kajima Institute of International Peace)

The Present and Future of the International Trade Order

Akihiko Tamura
Professor, National Graduate Institute for Policy Studies

A future perspective of the international trade order should inevitably be based on current and future state assessments of the global political environment surrounding the international trade order. This paper begins with a discussion of the concept of "the collapse of an empire" featured in the May 2016 issue of the ASTEION magazine.

The year 2016 marked the hundredth anniversary of the conclusion of the Sykes-Picot Agreement by which the European powers decided the partition of the Ottoman Empire. This fact inspired the magazine to make a feature on the topic. The Sykes-Picot Agreement enabled the UK and France to divide part of the Middle East that corresponds to present Syria and Iraq into several zones under their direct control or influence. The borderline between British and French spheres of influence roughly coincides with the present national border between Iraq and Syria. The agreement basically defined the current national borders in the region. After the collapse of the Ottoman Empire, Turkey achieved its independence as a republic in 1923 in the wake of a war of independence. Meanwhile, in other areas of the Middle East including Iraq and Syria, secularist nationalist regimes established sovereign states for a while. Yet, with the withdrawal of the United States from the region there evolved a development described by Akifumi Ikeda as "the loosened unity of sovereign state and the foregrounding of identity politics" --- a development which is still in progress. Dictatorial powers dominating sovereign states that were established based "not on the creation of citizens but on the keeping from cleavages" (Akifumi Ikeda) lost their governing, when the United States withdrew from the region. Today, a variety of intermediary bodies, religious and tribal, are a sharply confronting one another in fierce contests.

Next let us cast a look at China. Takashi Okamoto in the same issue of the ASTEION magazine attempts to understand the current situation in China in the context of "the collapse of an empire." "The collapse of an empire" in the Chinese context was the downfall of the Qing Empire which Okamoto designates as "a multi-layered amalgamation of universalities." The Twenty-One Demands made by Japan were to China as the Sykes-Picot Agreement was to the Middle East, in the sense that the demands contributed to the "partition (guāfēn)" of the Chinese territories by the imperialist powers. Unlike the Ottoman Empire that failed to found a nation-state, China's nation-state building process is still underway based on a certain "Han Chinese nationalism." The Qing Empire realized a multi-layered amalgamation of the Han race universality, the Tibetan Buddhist society and the Mongolian universality through the intermediary of the ruling Manchurians. In and after the 18th century, the Han Chinese engaged in trade and prominently expanded their social influence, thereby upsetting the balance among those different universalities. The Han race universality, according to Okamoto, served as a driving force to initiate the process of construction of a unified, homogeneous national sovereign state. In the process, the Han Chinese were instrumental in importing innumerable Western concepts from Japan --- where the people had studied the concepts from original sources in the late Qing era --- through an expedient method of translating Japanese into Chinese.

The concept of "the collapse of an empire" may be effective in conducting a historical analysis of the current affairs of the United States under the Trump administration, which pursues a new foreign policy under the flag of "America first-ism." "America first-ism" signifies that the United States will "forsake its status as an empire." Emmanuel Todd defines that an "empire" is a political organization that can pursue universalism, or an entity in the international politics that homogeneously understands the interests of itself and others. If so, "America first-ism" may be construed as a declaration of farewell to such a homogeneous understanding of US citizens and other peoples. Todd argues that traditional US ideologies used to make it possible to understand homogeneously the human race and nations. Their "universalistic" character defined the peculiarity of the United States as an empire. Since, however, US ideologies are nowadays losing their universalistic character, the United States, therefore, is losing its status as an empire.

Among the "America first-isms" policies in many fields, a representative example realizing something beyond mere rhetoric is US trade policies. In the first place, trade policies are fitting to be cited as a typical example of public goods provided by an "empire." Countries that held hegemony since the dawn of modern times --- the Netherlands, the United Kingdom, and the United States --- repeated state interventions in trade and showed a strong inclination to mercantilism until they finally achieved hegemony. As soon as, however, they came to understand that the open free trade order constructed mainly with their allies would constitute the source of their own power, along with military power, they began making efforts to maintain and strengthen the trade order. After completion of the Second World War, the United States established free trade regimes with GATT as an axis, and advanced mutual economic development by conducting free trade with its allies, abiding by rules. The United States promoted free trade to win the Cold War and to secure its supremacy.

Consequently, if we evaluate the recent US trade policies under the Trump administration in light of the above historical analyses, the United States seems to have already "abandoned the status as an empire or supremacy." The Trump administration's trade policies are drawing media attention, such as the US withdrawal from the TPP established under US initiative; the imposition of high tariffs on steel and aluminum imports for national security reasons (Section 232 of the Trade Expansion Act), and retaliatory measures against the alleged China's infringement of US intellectual property rights (Section 301 of the Trade Act). The present author's chief concern from a systemic point of view is that the United States is now blocking the selection of members for the WTO Appellate Body. Vacancies that have occurred in the body due to the stagnant selection process have thrown the WTO's judicial function into a serious malfunction. There is speculation that US behavior at this time is an expression of its strong dissatisfaction with strict judgments of the Appellate Body on US trade remedies. In any case, the US response in question is undoubtedly an action capable of throwing the international trade system into a malfunction, and of fatally compromising the international community's trust in US leadership. Incidentally, the present author does not believe that all of the US assertions are unreasonable. US assertions against China's infringement of property rights, demands for compulsory technology transfer, and subsidy measures to safeguard its state-run enterprises are winning sympathy from the majority of developed countries. China has not notified its subsidy measures to the WTO in defiance of its obligation of notification. Lack of sufficient information from China is preventing developed countries from seeking solutions in accordance with, among others, the WTO Dispute Settlement Procedures.

It may still be arguable whether recent US foreign policies and trade policies based on "America first-ism" should be discussed on the same level with the long-term phenomenon of "the collapse of an empire." Nonetheless, those policies admittedly reflect the rise of identity politics in the United States. The July-August issues of the Foreign Affairs magazine featured the topic "Which world are we living in?" The feature articles are structured in a manner of comparing the three worldviews of Realist World, Liberal World, and Tribal World. In addition to the three are presented Marxist World, Tech World, and Warming World --- six worldviews in all. Articles on Realist World and Liberal World discuss the current situation of international politics from the standpoint of realism and neo-liberalism --- the contemporary trends of international relations theory ---, whereas articles on Tribal World analyze the current situations around the world from the viewpoint of the emerging identity politics. Moreover, the same articles touch upon the political trends of white people in the United States, along with the sectarian politics in the Middle East. The current US domestic politics is considered to feature the emergence of identity politics.

Walter Russell Meade, a prominent US historian, describes the dynamism behind Donald Trump's victory of the Presidential election as the "Jacksonian Revolt," in which the white people recapture their country from elites and minorities. He argues that the Trump diplomacy's peculiarities cannot be fully explained by economic factors like income disparities or social factors such as reducing whites' average life expectancy and the spread of opioid abuse. According to Mead, there are four archetypes in US diplomatic thought --- the Wilsonians (focusing on the legal and ethical aspects of the international order), the Hamiltonians (focusing on the interests of US corporations), the Jeffersonians (adhering to US democracy), and the Jacksonians (a populist archetype strongly reflecting the culture of the common people). The current rise of the Jacksonians that had remained on the fringe for a long time means that of identity politics. It is a phenomenon that can be thought of as "white nationalism." It is anything but a transient phenomenon under the Trump administration alone. Therefore, the United States will, in the foreseeable future, continue to be unwilling to provide the international community with its own public goods in the capacity of an "empire" as in the past. Toshihiro Nakayama, in the May 2018 issue of the "ASTEION" magazine, states that the Trump diplomacy does not come under any of the above four categories, but rather seems to be akin to that of the "Davisonians," which is a diplomatic school named after Jefferson Davis, President of the Confederate States, who tried to cling to the old regime in contest against the industrial culture of the North encroaching into the South.

As mentioned above, in many parts of the international community, the stabilizing function of the universalism (public goods) provided by an empire or a hegemon is now becoming increasingly precarious, while actors with nationalistic, religious or other ideological, emotional backbones appear side by side. There are signs that the international order will become unstable. Incidentally, the present author uses the terms "hegemony" and "empire" synonymously in this paper. There are various assertions about the differences between these two concepts. "Hegemony is distinct from Empire because a hegemonic power rules by influencing other states rather than by controlling them or their territory." (Oxford Bibliographies) On the other hand, Niall Ferguson argues, "With a broader and more sophisticated definition of empire, it seems possible to dispense altogether with the term hegemony." This is because the difference between the two concepts is no other than their mode of domination, indirect or direct. The present author uses the two terms following Ferguson's opinion.

While signs of the prevalence of identity politics can be observed throughout the world, there are regions and actors that strengthen their universalistic inclination. A typical example is the EU. While promoting its intra-regional integration in a universalistic direction, the EU has been contributing to the international community by actively engaging in the construction of systems based on universal values. As for the EU's intra-regional integration, its "three pillars" or frameworks --- European Community (EC), Common Foreign and Security Policy (CFSP), Police and Judicial Co-operation in Criminal Matters (PJCCM) --- stipulated in the Maastricht Treaty (effective in 1993) which decided to launch the EU and to introduce the integrated currency Euro, were abolished by the Lisbon Treaty (effective in 2009). Instead, Article 207, Paragraph 1 of the Treaty on the Functioning of the European Union (TFEU) stipulates that the economic integration agenda --- the formation of a unified market in the region and a common trade policy against the outside world --- that had been contained in the "silo" (EC) should be implemented not only from the viewpoint of free tradeism but as part of common diplomatic and security policies that pursue EU values and concerns, including sustainability, poverty eradication, and human rights. As a result, for example, the G7 Elmau Summit in 2015 chaired by Germany propounded the concept of "responsible supply chain" against the backdrop of the growing global public opinion on supply chains and human rights such as the "UN Guiding Principles on Business and Human Rights." The "Sustainable Development Goals" (SDGS), an important document on basic guidelines in international public policies, is considered to have been formulated by European initiatives.

The European-led universal international system, as a new international relations theory, has an affinity with the "global governance theory" that appeared in and after the 1990s. It is a trend to theorize on the solution of global problems through cross-border collaboration among non-sovereign state actors like NGOs. Furthermore, as a recent extension of the global governance theory, some jurists like B. Kingsbury and K. Davis who have keen interest in the development of developing countries are apt to focus their attention on "the impact of indicators on global governance." According to them, the process of setting "indicators" such as rating agencies' credit ratings and international NGO's corruption awareness index is a political process and "indicators" themselves are a variation of law. These experts are attempting to formulate a theory on factors necessary to enable "indicators" to acquire influence, legitimacy, and authority. Actually, disciplines and indicators created by non-governmental organizations, such as FTSE4 Good Index, ISO 26000, and Corruption Perception Index, exert strong authority chiefly in sustainability-related agenda. According to the annual questionnaire surveys conducted by the World Economic Forum targeting leading economic figures, risk factors recognized by international public opinion are shifting chronologically from economic risks to social risks, and the areas where international disciplines are needed most today are social issues including sustainability.

In formulating a function of stabilizing the international community, the essential question is how to establish a legitimate "authority" and how to solve global issues dependent on the authority, that is, how to create a system to materialize an appropriate allocation of resources and interest adjustments? Significant in this connection are the creation of an adjustment function to realize justice when political units confront each other over their interests, and the establishment of an "authority" on which the adjustment function depends. Thus, the construction of a "norm" system, which is a system of interest adjustments depending on some "authority," is the most essential solution for stabilizing the international community. (There are various forms of norm or criterion. Highly normative criteria are to assume a form of international law, whereas less normative criteria a form of soft law.) International systems supported by law should also be sustained by some authority based on hegemonic power; but in the case that the hegemon does not have the intention to support international systems, that is, the situation where an "authority vacuum" occurs, some "authority" should be brought in from somewhere else. The source of authority need not be a hegemon nor even a sovereign state. It might be possible for us who form the international community to create such an authority. In the world of the Middle Ages where a sovereign state was yet to be born to become a basic unit of the international community, the greatest source of authority was the Roman Church. On the other hand, secular authority was distributed among feudal lords. Merchants also acquired some authority to enact and enforce Lex mercatoria prescribing their own wide-area business.

At present, there are symptoms that the United States is likely to abandon the international trade order that the country itself developed to maintain and strengthen its hegemony. A vacuum is about to come into being. The appearance of a new "authority" to fill in the "vacuum" is being awaited. In the international community, as mentioned earlier, two directions are perceived --- "the foregrounding of identity politics" and "the rise of sustainability as a norm." In reality, these seemingly opposite directions are identical in that actors' motives are not materialistic interests but ideational interests. In order to stabilize the international political system, including international commerce, by filling in "the authority vacuum," it will be necessary to establish, in addition to the conventional disciplines of "Geo-Politics" and "Geo-Economics," "Geo-Normative" that aims at creating a norm system founded on some "authority" by adopting a non-traditional idea that actors' motives are associated with ideational interests. Japan should understand and embody universal values to play a leading role in this process.

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