Can the EU thrive in an era of power-based trade?
The European Union is not only a major stakeholder of the economic arm of the liberal international order. It is also one of its key building blocks. While the United States and Japan are also important actors that have historically supported an open, rules-based international economic system, it is not their political form—their existence as unitary nation-states—but rather their policies that have made a difference in the flourishing of liberalism at the heart of the global economy.
Not so the European Union. While the World Trade Organization, the World Bank, and the International Monetary Fund get more attention for their role in maintaining economic order and prosperity along Western lines, the EU’s institutional character—its pragmatic sharing of sovereignty, its promotion of economic cooperation, and its operation according to common rules—has made it the most important regional wingman for the three Bretton Woods institutions. Because of this structural role it plays in the global economic order, the importance of the EU will always be greater than the sum of its member states’ (liberal) economic policies.
The creation of the WTO nearly 25 years ago, with its binding dispute settlement and its mandate to expand the ambit of rules-based trade, happened in parallel with the EU’s own experience creating common and enforceable frameworks to smooth the functioning of its internal market of 28 countries and 500 million people. The two institutions reinforced each other’s world view, even if the political imperative for European unity following the destruction of the Second World War, and the like-mindedness of the EU’s 28 member states has meant that cooperation at the European level was always going to exceed what the diverse, 160 plus members of the WTO could reasonably expect to achieve.
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This article was originally published by E!Sharp on January 28, 2019.