America and the Trade Regime: What Went Wrong?

The era of American leadership in the multilateral trading regime has ended. This paper argues that this current antipathy to trade is unsurprising: support for US leadership of the regime has always rested on a precarious balance among domestic interests. To overcome a historic bias in favor of home market production, American leaders created incentives for exporters to organize while creating roadblocks for import-competing firms and their employees. The dominance of the exporters’ voice had a significant influence on the policies the US pursued in the design and execution of the global trade regime. Most importantly, the absence of labor's voice undermined the prospect for “embedded liberalism” and instead resulted in an anemic system of adjustment for job loss at home and limited support for worker interests within the regime. While policymakers’ decision to shift power away from potential “veto” groups may have been necessary for US leadership of the Liberal International Order, this institutional design undermined a robust response to the economic dislocation thought to be a result of globalization. The result was a fracturing of the coalition in support of American leadership in the GATT/WTO regime.