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1. Korea’s Trade Policy Agenda in an Uncertain US Trade Environment

Author:
Alan Wm. Wolff and Han-Koo Yeo
Publication Date:
07-2024
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics (PIIE)
Abstract:
This paper addresses how South Korea, a mid-sized ally of the United States, can best navigate clearly identifiable risks, crafting a positive and pragmatic international trade policy. Korea is heavily dependent on the United States for its defense. It is clear that US trade policy has recently shifted toward being more self-centered, a policy unlikely to be reversed any time soon. The United States is on the threshold of a presidential election that makes it unpredictable in its trade policy, which may become directly harmful to Korean economic prospects if there is a change in leadership. US trade policies under President Joseph Biden have been primarily aimed at onshoring rather than friendshoring, but they have not been actively hostile or threatening. If there is a second Donald Trump term, Korea might not be excluded from substantially increased tariffs—whether for protection, revenue, or leverage—despite the Korea-United States Free Trade Agreement (KORUS FTA). At the same time that Korea is watchful of developments in the United States, it needs to pay attention to its neighbor, China, the world’s largest trading economy, a country that has practiced trade coercion against it. South Korea is the world’s 13th-largest economy. It is a strong proponent and practitioner of free trade. It is one of a group of midsize free market democracies aligned with the United States that, ranked by GDP, includes Japan, Germany, and France (and therefore with others, the European Union), the United Kingdom, Canada, Italy, and Australia. The future of the global trading system that the market-oriented countries wish to enjoy is increasingly dependent on this group of midsize economies and the European Union. Korea has thrived in large part through its open trade policy that has made it the country with the world’s greatest number of free trade agreements (including with both the United States and China, as well as with the European Union). It shares strong economic security interests with the United States: It has its own K-CHIPS Act, which provides substantial subsidies to its semiconductor industry. It invests very substantially in critical minerals and batteries, as does the United States. Korea also collaborates with the United States in the production of vaccines to meet future pandemics.
Topic:
Climate Change, Bilateral Relations, Geopolitics, Investment, Trade, Economic Security, Semiconductors, Steel, and Critical Minerals
Political Geography:
Asia and South Korea

2. Is the World Trade Organization Still Relevant?

Author:
Alan Wm. Wolff
Publication Date:
12-2024
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics (PIIE)
Abstract:
There has been a profound shift in American foreign economic policy. The United States has abandoned promotion of a rules-based open international trading system and no longer supports the World Trade Organization (WTO). The United States and its allies created the current world trading system as an essential part of the liberal world order, a series of rules-based international organizations and agreements to help rebuild the global economy and foster peaceful cooperation after World War II. Today, rising populism, heightened geopolitical tensions, and persistent inequality are threatening this order. Wolff emphasizes that the WTO is still relevant to the liberal international order, and it is in the core interest of the United States and other countries to continue to support that order. But he cautions that the WTO needs major reforms if it is to survive as an effective force governing world trade. WTO members must engage in serious negotiations to find acceptable solutions to shared problems. The resulting agreements can be political commitments or adoption of binding rules. Regressing to a lack of accountability for one’s trade policy measures, however, would be unacceptably damaging.
Topic:
Economic Policy, Trade, WTO, and International Order
Political Geography:
North America and United States of America

3. Can the World Trade Organization be saved? Should it?

Author:
Alan Wm. Wolff
Publication Date:
05-2023
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics (PIIE)
Abstract:
Heads of state, trade ministers, and academics have repeatedly called for reforming the World Trade Organization (WTO), the institution charged with the stewardship of the global trading system. The durability and worth of the WTO are being increasingly questioned despite the fact that by almost all objective measures, it has been a great success, with world trade growing much faster than global GDP over the last 75 years. However, past success does not guarantee future performance. This Policy Brief examines the institution’s most serious defects and the multitude of challenges it faces. It suggests the institution needs to evolve to reach broad-based international trade agreements, adding much needed new rules to the world trade rulebook and developing effective means to settle disputes that would render the rules of the system enforceable once again.
Topic:
Economics, International Trade and Finance, Treaties and Agreements, and World Trade Organization
Political Geography:
Global Focus

4. Saving the WTO from the national security exception

Author:
Warren Maruyama and Alan Wm. Wolff
Publication Date:
05-2023
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics (PIIE)
Abstract:
For any member of the World Trade Organization (WTO) not making alternative arrangements, enforceability of the rules of the global trading system, a distinguishing feature of the WTO, ceased to exist on December 11, 2019, because the United States blocked appointments to the Appellate Body of the WTO dispute settlement mechanism. A major obstacle to the United States accepting any resolution of this impasse—thus permitting dispute settlement to once again be binding on all WTO members—is settling the issue of whether claims of national security to legitimize trade measures are reviewable. This is a red line for the United States, which argues this claim is nonreviewable. In the emerging area of great power competition, the United States is unlikely to accept a return to fully effective WTO dispute settlement absent a compromise that finds determinations of national security nonjusticiable. This paper offers a compromise: There would be no adjudication of whether a trade measure was justified under the WTO’s national security exception, but those WTO members adversely affected would have an immediate right to rebalance trade concessions themselves by imposing retaliatory trade measures against the WTO member invoking the exception.
Topic:
Economics, International Trade and Finance, National Security, and World Trade Organization
Political Geography:
Global Focus

5. Food insecurity: What can the world trading system do about it?

Author:
Alan Wm. Wolff
Publication Date:
10-2023
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics (PIIE)
Abstract:
Russia’s invasion of Ukraine, a major supplier of grain to the Middle East and Africa, has triggered deep concerns over access to affordable food across the globe. The alarming rise in food insecurity across the world due to conflicts makes it increasingly urgent to set ground rules for sharing food in global markets and getting food to places most in need to avoid starvation and famine. The most glaring and relevant gap in the rules of the world trading system pertains to sharing food in times of scarcity. The authors recommend using the World Trade Organization’s (WTO) long-standing accords on agriculture as a basis to provide guidelines for supplying food to global markets, especially areas in need. The most obvious shortcoming in the rules is that WTO members are largely free to restrict exports of food. The WTO rules need to be updated to take into account climate change, extreme weather, military conflicts, pandemics, and other factors that interfere with food production. The WTO can specify factors that an exporting country must take into account when imposing an export restriction on food, and it can require consultations to deal with severe disruptions in world food trade. It can also serve to mediate the interests of food exporters and importers in enhancing food security.
Topic:
Agriculture, World Trade Organization, Food Security, and Trade Policy
Political Geography:
Global Focus

6. Have trade agreements been bad for America?

Author:
Alan Wm. Wolff, Robert Z. Lawrence, and Gary Clyde Hufbauer
Publication Date:
12-2022
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics (PIIE)
Abstract:
Many Americans are persuaded that trade agreements of the last 40 years have been a costly mistake. To be sure, open markets leave some people behind, and promises to help those hurt were broken. But on balance, expanding trade has greatly benefited the US economy, and policy approaches taken need to be built on rather than abandoned. Alan Wm. Wolff, Gary Clyde Hufbauer, and Robert Z. Lawrence say more must be done to help those harmed, but protectionism is not the solution. The international trading system needs more outspoken US support and leadership if it is to be maintained and improved.
Topic:
International Trade and Finance, Treaties and Agreements, Economy, and Trade
Political Geography:
Global Focus and United States of America

7. WTO 2025: Restoring binding dispute settlement

Author:
Alan Wm. Wolff
Publication Date:
04-2022
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics (PIIE)
Abstract:
Binding dispute settlement—the ability to obtain a final judgment of whether a member of the World Trade Organization (WTO) has acted inconsistently with its obligations—was the defining attribute of the WTO as created in 1995. Global commerce thrived on having the certainty provided by its taking place within this system. For well over a decade, the United States had complained that the dispute settlement system was undermining the trade remedies—antidumping, countervailing duties against subsidies, and safeguard actions against injurious imports—that were allowed under the WTO’s rules. When a populist US administration assumed office in 2017, it blocked appointments to the WTO’s Appellate Body. Today, the WTO dispute settlement system has become balkanized. The European Union and a number of other countries have banded together to put into place an alternative mechanism. Outside this system are the other two-thirds of the WTO members, including the United States. For most WTO members, no definitive result can be reached as to whether WTO obligations have been violated, as there is no assurance that WTO dispute settlement will be binding for them. This paper addresses how to reconstruct a system that the United States could join that would be broadly acceptable to others. It sets out a wide range of elements for negotiators to consider to rebuild the WTO dispute settlement system and make WTO agreements enforceable again.
Topic:
Economics, Trade, WTO, and Disputes
Political Geography:
Global Focus

8. WTO 2025: Enhancing global trade intelligence

Author:
Alan Wm. Wolff
Publication Date:
04-2022
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics (PIIE)
Abstract:
International trade flows based on information. Is the foreign market open? What are the conditions for entry? Are there customs duties to be paid and other regulations that need to be satisfied? Businesses thrive on getting as much certainty as they can find, and this requires reliable information. Is the competition subsidized? Are the competitors favored state-owned companies? During the pandemic, governments needed to know if food and medical supplies were going to be available from foreign sources and, most importantly, how available vaccines would be as most of the world’s countries could not produce any. Effective public policy cannot be made in the dark. The World Trade Organization, and the General Agreement on Tariffs and Trade before it, were founded with the idea of providing transparency. But more is needed to understand why trade is taking place, and even more important, when it is not, why not?
Topic:
Economics, Markets, Trade, and WTO
Political Geography:
Global Focus

9. WTO 2025: Getting back to the negotiating table

Author:
Alan Wm. Wolff
Publication Date:
05-2022
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics (PIIE)
Abstract:
The negotiation of multilateral agreements has stalled at the World Trade Organization (WTO). The action is among groups of like-minded WTO Members, either regionally or in open plurilateral agreements (OPAs) in Geneva at the WTO. There is currently no consensus among WTO Members to include plurilateral agreements officially in the set of WTO agreements. Many additional challenges require multilateral—that is, global—agreements: the pandemic, food security, and climate change, among them. A breakthrough is needed to get WTO negotiations back on track.
Topic:
Climate Change, Treaties and Agreements, Food Security, Multilateralism, COVID-19, and WTO
Political Geography:
Global Focus

10. WTO 2025: Constructing an executive branch

Author:
Alan Wm. Wolff
Publication Date:
05-2022
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics (PIIE)
Abstract:
The World Trade Organization (WTO) as an institution accords much less of a role to its chief officer and her staff, namely the WTO Director-General and the Secretariat, than do any of its sister international organizations—the World Bank, the International Monetary Fund, the Organization for Economic Cooperation and Development—to their chief officers and staff. The WTO Secretariat is much smaller than its peer international organizations and underfunded. In considering WTO reform, this deficiency needs to be rectified if the WTO’s performance is to live up to its Members’ needs.
Topic:
Economics, World Bank, IMF, WTO, and OECD
Political Geography:
Global Focus