OECD18 THEMES: The United States and Multilateralism

By Jack Dalrymple (The University of Melbourne - Faculty of Business and Economics)

In a forum that seeks to celebrate and restore the glory of free trade, one nation stands out for its withdrawal from the OECD’s goals of multilateralism in all but name. 

In many ways, this year’s forum - branded ‘what brings us together’ - owes its agenda to the anti-globalist movement characteristic of the United States at this time. The themes of inclusive growth, digitalization, and international cooperation respond to a perception that globalisation and digitalisation benefits only the few and leaves many behind. Thus, the focus of the OECD forum this year has been to address how the benefits of the increasing interconnectedness of the global economy can be shared more widely. 

In contrast to these ambitions, Wilbur Ross, Commerce Secretary of the United States and leader of US protectionist policies including its steel and aluminium tariff, stood out for his refute of multilateralism in front of some of its greatest proponents. 

It is clear that the United States’ new brand of multilateralism rests in a regression to bilateral agreements between nations. According to Wilbur, circumnavigating the variety of stakeholders and vested interests involved in delivering agreements between an array of states, such as in the TPP, takes too long and leads to bad deals. This ineffectiveness is endemic to multilateral institutes that have become “an excuse for people to pretend that they are fixing imperfections in the system”.

OECD nations, many of which, like Australia, are small open economies with a reliance on free trade, respond by offering to critique the system, but not to abandon it. As Emmanuel Macron, President of France, stated in his address on the future of multilateralism "If we want to move things forward, we need to make pragmatic reforms that will allow multilateralism to work and have an effective, real response to contemporary challenges." 

One clear source of reform - seemingly universally supported to varying degrees - is the WTO which acts far too slow when resolving disputes between states and lacks the power to ensure its rules are followed. The criticism launched at the OECD serves as a preview of the kind of talks likely to happen in Argentina for the G20 summit where this reform agenda will be launched. 

Yet, despite these offers of reform, the United States has already decided that multilateralism is dead in a practical sense. At least for now, multilateralism must learn new strategies to overcome the challenges of a withdrawal of United States leadership, in order to have any hope of achieving its goals.