Dear Capitolists,

This week, we’ll skip straight to Part 2 of my thoughts on the grand narrative of “de-globalization” sweeping the (um) planet. You can read part 1 here, to which I’ll just add these useful notes and chart by a fellow skeptic, Jeffrey Kleintop of Schwab:

Now on to part 2…

Then there are the business rules

The second big misunderstanding about all this talk of deglobalization concerns the rules governing global trade, particularly at the World Trade Organization. Yes, the WTO agreements generally prohibit a member country from discriminating between other members (principle of “most favored nation”) or in favor of its own entities (“national treatment”), and they generally encourage members to “channel” trade restrictions into tariffs and “tie” these tariffs at relatively low levels. However, these rules also contain a myriad of exceptions to the principles of non-discrimination and trade liberalization – for things like subsidies, trade remedies (anti-dumping, etc.), supply restrictions, quotas, environmental or health regulations, and even high tariffs on “politically sensitive” items. Most of these measures are subject to certain conditions (which sovereign nations, including United Statescan and sometimes do ignore), but the rules generally do allow WTO members to deviate from pro-trade principles and reflect, as my former colleague from Cato Simon Lester just explainedthe political balance between free trade and protectionism that has underpinned the multilateral trading system since its inception in the 1940s. It has never been “unfettered free trade” and probably never will be.