The Global Trading Order Is Getting Realigned Again
The Russia question is dominating nearly every conversation in Geneva these days.
Over the past three weeks most United Nations meetings kick off with some sort of diplomatic row over Russia’s war with Ukraine.
Usually, the Ukrainian delegation will describe the horrors inflicted upon it by Russia and then Ukraine’s allies will clap and offer their support.
When it’s Russia’s turn to speak, delegates will scowl or even leave the room as Moscow’s delegation cynically attempts to deflect or deny the cruel realities of its unprovoked invasion.
For an outsider, the performance may seem like a strange sort of war-time kabuki theater. But make no mistake, there is an unprecedented shift evolving at the multilateral level that will slowly but surely realign globalization’s trajectory.
Last week, the European Union and the group of seven countries — which includes the U.S., Japan, Canada, and Australia — announced that they would suspend their most-favored-nation treatment for Russia, putting it in the company of other pariah states such as Cuba and North Korea.
In denying Russia its MFN treatment, these nations essentially rejected the World Trade Organization’s cornerstone principle and cast aside their belief that a rising tide will lift all boats. (Click here for Bloomberg’s QuickTake explainer on the issue.)
If anything, Russia’s invasion and the west’s sanctions are showing that a waning tide sinks all boats.
Global Corrosion
That’s because this situation “will speed up the corrosion of globalization already underway,” argued Adam Posen, the president of the Peterson Institute for International Economics, in a recent Foreign Affairs
