Professor Petros Mavroidis offers a coherent account of the current predicament in world trade in his book, Industrial Policy, National Security, and the Perilous Plight of the WTO. The work tackles the difficult question of interpreting Article XXI of the General Agreement on Tariffs and Trade (GATT), which may be invoked to justify industrial policies in pursuit of national security goals. As the author accurately argues, the lack of clear legal guidance on how to appropriately interpret the provision is spurring significant discord throughout the international legal community. In this book, the author provides a thorough exploration of the conundrum in international trade law, ultimately suggesting that the European Union (EU) can play a decisive role in reform of the World Trade Organization (WTO).
The author begins by retracing the practice of implementing industrial policies to protect the semiconductors sector from the 1980s to the present. The history of the strategic competition serves as an essential segue to understanding why the semiconductors sector has become a key government-protected sector. Against this landscape, the author underscores the disjointedness between the WTO’s national security law and practice. Beyond the obvious reasons, the author also delves into additional factors that contributed to the creation of a legally short-sighted text of Article XXI GATT. For instance, the author supports Claude Barfield’s view, which argues that there is an imbalance between effective adjudication and ineffective legislative process. The author also highlights the absence of a WTO mechanism to internalise positive externalities of Member States’ actions relating to subsidies. The author further explains the lack of coherence on the justiciability of Article XXI GATT. In sum, because the adjudicative body is compelled to render judgment on security issues under a narrowly framed text, the WTO continues to navigate a precarious path.
The liberal international order was a priori designed to serve as a mechanism for averting conflicts amongst States. Montesquieu first advanced the idea of ‘doux commerce’, arguing that trade would promote cooperation and peace in the world. However, the author disputes this argument, siding with the views of Adam Smith and John Mayard Keynes that connectivity across nations does not prevent wars and conflict completely. Doux commerce is only partly true, for deeper integration can be weaponised as a license for bad behaviour.
Employing the hegemonic stability theory of Charles Kindleberger and inspired by the concept advanced by Joseph Nye, the author then contends that the WTO is in a Kindleberger Trap of its own: an impasse in which the two most powerful nations—the United States and China—are either unwilling or unable to lead the rules-based system.
To address this challenge, the author proposes a potential solution—the EU could be the instigator of the WTO renewal with the help of the Group of 20 (G20) Member States. The author identifies several characteristics that establish the EU as a legitimate and appropriate candidate to support this proposal. For instance, the EU’s experience in economic security serves as a quintessential paradigm for dealing with economic coercion. In addition, the EU’s role as a mediator in past trade negotiations underscores its proven track record in navigating complex situations within the WTO. For these reasons, the author finds that the EU represents an ideal candidate to help resolve the challenges posed by industrial policies and the application of international trade law.
Finally, the author concludes with an emphasis on the costs of a ‘non-WTO world’ (273), further voicing the need to reform the institution. The author argues that it is costly to simply allow the demise of the WTO. The sole viable solution to this challenge lies in multilateral cooperation within the framework of the WTO. As the author correctly recognises, ‘[f]or rules to matter, they must be relevant and material. They must be in sync with contemporaneous realities and anxieties’ (285). As the key channel of communication for trading nations, the WTO could still serve as a crucial platform for global cooperation in seeking solutions.
With great respect for the book’s comprehensive scope, perhaps one area that might merit further exploration is transnational subsidies. In addition to direct financial contributions to foreign producers or subsidiaries abroad, transnational subsidies can also take the form of official development assistance (ODA) directly to developing countries. While the author does discuss some international investment programs, such as China’s Belt and Road Initiative, in explaining transnational subsidies the book does not fully assess ODA practices in the form of transnational subsidies of other key stakeholders in the strategic competition, like Japan. A comparative analysis on development aid or alternative forms of transnational subsidies could be useful in achieving a more holistic perspective, thereby shaping our understanding of how subsidies can align with the existing WTO framework. Considering the breadth of the book’s focus, however, the inclusion of these themes would have been inherently difficult. Future studies could expand on this point and explore the variations in transnational subsidies.
As an eminent trade lawyer and legal scholar, Professor Mavroidis leverages his expertise in international trade law to present a comprehensive analysis of the challenges facing the WTO. He analyses the historical implications of the strategic competition, the defects of the existing legal framework and the significance of the WTO Kindleberger Trap. Most importantly, the work proposes a promising WTO reform strategy for policymakers, practitioners and legal scholars to contemplate. The author invites readers to not only reflect on the root cause of the current WTO crisis but also to renew their faith in multilateral cooperation and their hope for the future of the WTO, looking to the EU as the instigator of this renewal.
