Protectionism and the Decrease of WTO Enforcement Power

• In Event: Protectionism in the 21st Century

Abstract

A wide range of theories contend that protectionism drives leaders to undermine the WTO in return for political gain. To what extent can the WTO tolerate protectionism? In other words what is the role of domestic support for free trade in sustaining the WTO? I develop a cooperation model where the WTO, as a verifying body, utilizes domestic support for free trade to impose punishment to countries using escape clauses. The model shows that an increase of protectionism alone is not a sufficient condition for explaining the disruption of the WTO. Instead, it becomes unsustainable when there is insufficient growth in support for free trade as countries grant larger trade concessions amidst increasing efficiency in cooperation. Consequently, the level of support necessary for the WTO is determined by its efficiency, indicating that even increased support can lead to the organization’s weakening. Lastly, the model shows that to sustain heightened cooperation under protectionism the WTO reform should aim at decreasing their stringency to prolong cooperation.

Author

• Jihwan Jeong, Harvard University