The 2018 Trade Wars as a Threat to the World Trading System and Constitutional Democracies

Abstract

The American and Chinese trade wars of 2018 risk undermining not only the law of the World Trade Organization (WTO), as explained in Part I, but also the democratic mandates given by parliaments when they approved the 1994 WTO Agreement. Illegal import tariffs (e.g., as imposed by US President Donald Trump) and the collective undermining of the WTO dispute settlement system run counter to the WTO principles that are incorporated into the trade laws in the United States of America (USA/US), dealt with in Part II, and in the European Union (EU), detailed in Part III. Multilevel governance of global public goods (PGs)—like the WTO trading system, which has helped lift billions of people out of poverty by promoting unprecedented economic welfare, transnational rule of law and compulsory third-party dispute settlements—cannot remain effective if citizens and democratic institutions fail to hold their governments democratically and legally accountable for violating ‘PGs treaties’ (Part IV). This contribution uses the example of the USA and the EU to argue that constitutional democracies—including Asian democracies like India, Korea and Japan—must adopt more specific trade legislations to protect the WTO legal system. Multilevel governance of transnational PGs requires empowering citizens, parliaments and courts of justice to limit populist abuses of trade policy powers to tax and restrict citizens in manifestly illegal ways that reduce general consumer welfare, non-discriminatory competition and rule of law.