China and the Emerging Powers in International Trade Relations: The Future of the Multilateral Trade System, the Role of Free Trade Agreements and New Unilateralism

Abstract

The shifting trends in trade relations between the major partners indicate that we are witnessing the emergence of long-term changes in international trade policy that extend well beyond current events. Does this development in international trade relations point to a future characterized by conflict, as is suggested by the disputes of the US with China and the European Union – a future informed by aggressive unilateralism and a retreat from international law and multilateral cooperation? At the time of the founding of the World Trade Organization in the mid-90s and the considerable achievements around multilateral trade system liberalization brought about through the new WTO treaty texts, the implications posed by the emerging states were somewhere off in the still distant future. In the course of rapid development, we have now reached that future, and we have a clearer view of the actual form it takes. It raises the question of how the global power balance will unfold in the face of the continuing growth in the importance of Asia, in particular China, and the concurrent relative loss of importance of the West. And does the currently observed rise in unilateralism point to a future in which the previous model of a liberal trade order can no longer be maintained, and in which multilateral structures are increasingly replaced by forms of an alternative trade policy? This article explains the striking movements in trade policy as being intimately related to overarching changes in the overarching world order: The changes in trade policy strategies are evolving as a response to global changes in the competitive environment, in which the emerging powers are gaining importance not only economically but politically and geopolitically as well. This is the background against which the author will discuss the perspectives of the shifting international trade regime, which simultaneously expresses an ever more clearly defined reorganization of transnational relations.