The Political Economy of World Trade

The global trading system is in disarray. U.S. In 2017 President Donald Trump pulled the United States out of the Transpacific Partnership (TPP), then in May 2018 he unilaterally placed tariffs on steel and aluminum imports. He is now threatening tariffs on car imports. The trade dispute between the United States and China threatens to seriously escalate. The United States are putting the global trade order in jeopardy by blocking nominations for the appellate body of the World Trade Organization (WTO). The G20 Summit in Hamburg in July 2017 fell short of previous declarations of the G20 on trade and investment. Since then, G20 negotiations have proven more than difficult. The WTO’s Doha Round has not delivered any progress for years. What is going on? Are we facing the end of the post-World War II global trading order?

Following up on the introductory economics classes of the first semester, “The Political Economy of World Trade” aims at providing a hands-on approach to the analysis of international trade relations. This course has a strong policy orientation, using current issues and challenges in trade policy-making as the starting point of each session. Economic research and theoretical elements will be studied in order to come up with concrete policy options.

Our class features four sections: drivers of world trade; the political economy of trade policy-making; the multilateral trading system; preferential trade agreements. We start our class with an introduction to trade theory, asking why countries trade. We then venture into empirics, identifying the drivers of trade. In this context, we will analyse global and regional trade patterns. We will also learn about the effects of trade/trade liberalisation on economic growth and development. The second section of our class is devoted to the political economy of trade policy-making. We will study different theories and explanatory approaches and apply these to U.S., EU and Chinese trade policy-making. Subsequently, in the third section of our class, we study the WTO and analyse its legitimacy and effectiveness. We will learn about the WTO’s Doha Development Round and explain why negotiations have stalled. Furthermore, we will study WTO dispute settlement, its legitimacy and effectiveness. In the fourth section of our class, we will take a close look at preferential trade agreements and study whether PTAs are a stepping stones or a stumbling block for the multilateral trading system.

This course is for 2nd year MIA and MPP students only.