4. Conclusion
There is no doubt that the US’s retreat from international economic governance has given the global trading system its biggest shock for decades, perhaps since the liberal order was constructed in the aftermath of the Second World War. There is also a danger, probably less immediate, that wayward policymaking in Washington means the US dollar will cease to underpin the international banking and trading systems.
Is it obvious that the world needs a new leader in both areas? If so, how could one emerge and operate? In monetary affairs, the need is not pressing and the path forward for potential rivals reasonably clear, if of uncertain length. Trade is much trickier. The old game of a dominant player enforcing consensus values in the trading system, which in any case never really delivered a truly global multilateral arrangement, is very likely gone. No future government is likely to take up that role again. The big powers need to be more flexible and imaginative. They need to replace a single anchor with a set of stays to hold the global system upright, make that system more flexible, and aim to cover new areas as well as possible rather than bring them under the same set of institutions.36
In the meantime, leading economies such as Japan, China and the EU need to find any way they can, however ad hoc and partial, to prevent the US from destroying institutions such as the WTO dispute settlement system. The important thing is not to preserve all organizations as they currently are. Indeed, the US assault on institutions such as the WTO has underlined their vulnerability and their need for renewal, which should include wider coverage for their rules and nimbler governance.
The task of leading economies – including of future, more cooperative US administrations – is to use creativity and coalition-building. The challenge is to carry forward the principles of rules-based trading without again relying on a single country to bear an outsized part of the burden of translating them into practical governance.
36 Pisani-Ferry, J. (2018), ‘Should we give up on global governance?’, Bruegel, 23 October 2018, http://bruegel.org/2018/10/should-we-give-up-on-global-governance/ (accessed 17 Jun. 2019).