In his January 2nd, 2024, Law & Liberty essay (“Free Trade’s Origin Myth“) Oren Cass writes this:
After the Cold War’s end, a bipartisan consensus solidified amongst political leaders who accepted the free-trade consensus and accelerated globalization, in quick succession forming the North American Free Trade Agreement (NAFTA), launching the World Trade Organization (WTO), and granting China permanent normal trading relations (PNTR) as a WTO member. Standing in the White House briefing room in 2000 to present, a letter signed by 149 economists supporting PNTR with China, Nobel laureate Robert Solow explained, “An awful lot of the intellectual power of the economics profession has signed this letter. And it’s such a simple proposition it doesn’t really require that. You could not generate a hard exam question out of the material here.” Writing in the Wall Street Journal, Clinton’s Treasury Secretary, Larry Summers, crowed, “On this issue there has been only one answer.”
Although I’m certain that the error is unintentional, in this paragraph Cass’s account of the change in trade policy during the 1990s is misleading.
It’s true, as Cass indicates, that, like NAFTA, the WTO came into existence after the Cold War ended. NAFTA went into effect on January 1st, 1994; it was an extension of the (still Cold War era) 1988 Canada-United States Free Trade Agreement. The WTO began exactly one year later, on January 1st, 1995. But the 1995 creation of the WTO was nowhere nearly as momentous as Cass supposes. The WTO is the seamless successor of the General Agreement on Tariffs and Trade (GATT), which was formed in 1947 (and began operating in 1948) – and continued, with much success, until 1995 to lower worldwide trade barriers. (See, for example, Daniel Griswold, Mad About Trade, Chapter 7, and Douglas A. Irwin, Free Trade Under Fire, Chapter 7.) Indeed, the WTO is the result of an agreement reached in April 1994 during a GATT ’round’ (the Uruguay Round). Much of the original GATT text remains in place in the WTO. The WTO continues the trade-liberalizing work of the GATT. The creation of the WTO in the 1990s, therefore, was not the momentous, post-Cold War change in trade policy that Cass mistakes it as being.
You might believe that I here pick what is only a nit. Perhaps. But I think this point to be significant. In his essay, Cass finds ominous relevance in the fact that the U.S. trade deficit in 1992 was small in comparison to most of the other annual trade deficits since 1976. (The U.S. trade deficit generally rose in size from the mid-1970s until the mid-1980s, when it began to shrink in size. Never disappearing, it reached its post-1976 smallest annual level in 1992, when it again began to rise in size.) Cass wants his readers to believe that the mid-1990s change in the course of annual U.S. trade deficits was caused by radical changes in trade policy, such as the implementation of NAFTA and the creation of the WTO. But even if we follow Cass and ignore the generally increasing size of annual U.S. trade deficits from the mid-1970s to the mid-1980s – and even if we stipulate, contrary to fact, that U.S. trade deficits pose a problem for Americans – the increasing size of annual U.S. trade deficits starting in the mid-1990s cannot plausibly be attributed to the creation of the WTO (or, for that matter, to NAFTA – but that’s another story).