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Geopolitics and the World Trading System

Author

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  • Aaditya Mattoo
  • Ruta,Michele
  • Staige,Robert W.

Abstract

Until the beginning of this century, the GATT/WTO system worked. Economic research provided a compelling explanation. It showed that if governments maximize the well-being of their own countries broadly defined, GATT/WTO principles would facilitate mutually beneficial cooperation over their trade policy choices. Now heightened geopolitical rivalry seems to have undermined the WTO. A simple transposition of the previous rationalization suggests that geopolitics and trade cooperation are not compatible. The paper shows that this is only true if rivalry eclipses any consideration of own-country well-being. In all other circumstances, there are gains from trade cooperation even with geopolitics. Furthermore, the WTO’s relevance is in question only if it adheres too rigidly to its existing rules and norms. Through measured adaptation to the geopolitical imperative, the WTO can continue to thrive as a forum for multilateral trade cooperation in the age of geopolitics.

Suggested Citation

  • Aaditya Mattoo & Ruta,Michele & Staige,Robert W., 2024. "Geopolitics and the World Trading System," Policy Research Working Paper Series 11009, The World Bank.
    • Handle: RePEc:wbk:wbrwps:11009
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    File URL: https://documents.worldbank.org/curated/en/099533512192419044/pdf/IDU-f2e421d3-ab37-4af0-a95d-0aa8aab716bf.pdf
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