A Historical Overview of the 21st-Century Protectionism
| Autor | Nicolas D. Albertoni |
| Cargo | University of Southern California |
| Páginas | 5-23 |
Latin American Journal of Trade Policy 10 (2021) – ISSN 079-9668 – Universidad de Chile
5
A Historical Overview of 21st-Century Protectionism: How Did We Arrive at
This Point?
Nicolás Albertoni*
Abstract
The main goal of this paper is to situate current trade policy debates in a proper historical context by analyzing
the main trade policy milestones of the 21st-century. It does not attempt to offer an extensive historical
overview of trade policy, which has been done masterfully by other scholars, but to analyze the events that have
led to a stagnation of the multilateral trade system and rising protectionism. This paper begins with the winding
road of trade liberalization since World War II, briefly tracing how we arrived from the early stages of the
Bretton Wood System to the current moment of stagnation of the multilateral system and rising protectionism.
It then turns to four key events to understand the current new reality: China’s accession to the World Trade
Organization (WTO) in 2001, the Global Financial Crisis (GFC) of 2008 to 2009, the trade war between the
United States and China, and the effects of the COVID-19 pandemic in trade policy dynamics. It concludes
with some final comments on the relevance of understanding current trade debates from a historical
perspective.
Keywords: Protectionism, Multilateralism, Trade Agreements, COVID-19 pandemic.
Resumen
El objetivo principal de este artículo es situar los debates actuales sobre política comercial en un contexto
histórico adecuado mediante el análisis de los principales hitos de la política comercial del siglo XXI. No
pretende ofrecer un panorama histórico extenso de la política comercial, hecho magistralmente por otros
académicos, sino analizar los eventos que han llevado al estancamiento del sistema multilateral de comercio y
al creciente proteccionismo. El artículo comienza con el sinuoso camino de la liberalización comercial desde la
Segunda Guerra Mundial, y describe brevemente cómo llegamos desde las primeras etapas del Sistema Bretton
Wood hasta el momento actual de estancamiento del sistema multilateral y creciente proteccionismo. Luego
pasa a cuatro eventos clave para comprender la nueva realidad actual: la adhesión de China a la Organización
Mundial del Comercio (OMC) en 2001, la Crisis Financiera Global (GFC) de 2008 a 2009, la guerra comercial
entre Estados Unidos y China, y los efectos de la pandemia de COVID-19 en la dinámica de la política
comercial. Concluye con algunos comentarios finales sobre la relevancia de comprender los debates comerciales
actuales desde una perspectiva histórica.
Palabras clave: proteccionismo, multilateralismo, acuerdos comerciales, pandemia de COVID-19.
* Associate Professor, Universidad Católica del Uruguay. Associate Researcher, University of Southern California’s Security and Political
Economy (SPEC) Lab. Email: nalbertoni@ucu.edu.uy. Received: July 5th, 2021; accepted: August 30th 2021.
The author acknowledges Carol Wise, Jeff Nugent, Joshua Aizenman, Ben Graham, and Marcelo Olarreaga for their insightful
comments and suggestions, and thanks the Security and Political Economy (SPEC) Lab’s trade policy team for its excellent research
assistance. Earlier versions of this paper were presented at the University of Southern California’s Comparative Politics Group, where
excellent comments were received.
Nicolás Albertoni
A Historical overview of 21st-century protectionism: how did we arrive at this point?
6
“More than at any point in the past seven decades we seem to be in danger of forgetting (the
Bretton Woods) lessons”
Roberto Azevêdo (2019),
Former WTO Director-General.
Introduction
This paper does not attempt to offer an extensive historical overview of trade policy, which has been
done masterfully by other scholars (e.g., Wilkinson, 2006; Bhagwati, 2003; Baldwin, 1989). Instead, its
main goal is to situate current trade policy debates in a proper historical context by analyzing the main
trade policy milestones of the 21st-century. This paper begins with the winding road of trade liberalization
since World War II, briefly tracing how we arrived from the early stages of the Bretton Wood System to
the current moment of stagnation of the multilateral system and rising protectionism. It then turns to
four key events to understand the current new reality: China’s accession to the World Trade
Organization (WTO) in 2001, the Global Financial Crisis (GFC) of 2008 to 2009, the trade war between
the United States and China, and the effects of the COVID-19 pandemic in trade policy dynamics. It
concludes with some final comments on the relevance of understanding current trade debates from a
historical perspective.
The Winding Road of the World Trade System Since the World War II
The rise of protectionism in the 1930s was believed to be one of the primary causes of World War II
(WWII), and global leaders were anxious to prevent this from happening again. As a result, they convened
in Bretton Woods, New Hampshire, in 1944 to discuss the need for international institutions to lend
order to the world economy. A year later, the majority of these countries reconvened to discuss the
establishment of a new International Trade Organization (ITO), but their plan never came to fruition
due to isolationist politics in the United States (U.S.), with the ITO bill never sent by President Truman
to Congress for final approval. Thus, the lack of support from the U.S. was the final nail in the ITO
coffin. In its place, the General Agreement on Trade and Tariffs (GATT) became the de facto Bretton
Woods institution under which international trade was liberalized in the post-WWII era. Designed solely
to govern trade in goods, GATT was limited in the scope and control it could exert over trade policy.
The GATT’s first meeting, held in Geneva in 1947, resulted in the reduction of tariffs and created steps
towards the liberalization of global trade. The Cold War incentivized the United States to push its
democratic agenda, including liberal trade policies, on a global scale as the liberalization of trade
continued through the economic growth of the 1950s and 1960s. In the 1970s, however, economic
decline and the emergence of the East Asian newly industrializing economies (NICs) triggered a return
to protectionism. Since GATT restricted the use of tariffs, many countries resorted to non-tariff barriers
(e.g., quotas, subsidies). The 1982 ministerial meetings of the GATT reached a nadir in its history. It was
the first time since WWII that there was a decrease in international trade, which highlighted the
shortcomings of the trading system as the number of GATT members increased and the global economy
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