The Free Trade System Facing the Threat of Collapse

Triggered by the United States imposing tariffs on Chinese imports and subsequently China`s retaliatory action, the exchange of tariffs has escalated into a full-blown trade war between the two countries in 2018. The United States is aiming to reduce or eradicate its trade imbalance by using protectionist measures. There are two main reasons behind protectionism in the United States. One is an attempt to secure jobs in certain sectors of US industry. Another reason is the alarm it feels in the face of China’s rapid development in information technology (IT) and other areas of advanced technology. The latter concern is shared by many members of the US Congress and business leaders, and this makes it possible that measures against China may continue long beyond the Trump presidency. I propose three options that the rest of the world can take in these circumstances to persuade the United States to return to a rule-based free trade system: (1) a possible U-turn in US policy would be brought about by the increasing severity of the negative impact of protectionist measures on the US economy itself; (2) the world’s major economies -Japan, the EU, China, and so on- to work toward comprehensive and liberal regional integration without the United States on trade and investment, and thus push the United States into a disadvantageous position; and (3) countries that share interests in common, like Japan and the EU, to involve the United States in efforts to reform the World Trade Organization (WTO).This essay was originally published on Kokusai Mondai [International Affairs], No.677, Dec. 2018.articl