The Global Trading System – What Went Wrong: CFR

The turn of this century saw promising and exceptional development in the global trading system with the World Trade Organization and many other multilateral trade agreements. But during the last decade, the loss of jobs due to automation and outsourced labor has led to nationalist, anti-globalization backlash and protectionist measures in many countries, including Europe and the United States. While the gains of increased global trade and the IT revolution are apparent, technology contributed to a divergence in wealth between the most developed countries and the rest of the world. Income inequality between high-school education workers and college-educated workers has never been higher, and workers’ declining leverage in a global trading system has led to wages under pressure and companies reaping higher profits. Stakeholders have not adjusted to the challenges, whether it’s the US maintaining sufficient education investment to help American workers or China playing a greater role in the trading system to offset US power. Both countries have begun to respond with protectionist measures, but more sustainable response include ending trade wars, reevaluation of international financial systems with leadership reform, and domestic policies that fight inequality, the root of all public grievances. – YaleGlobal