The majority of the world will continue to remain dedicated to building a new multilateral system, despite the United States's decision to withdraw from multilateral institutions and conduct trade on a bilateral basis, said Nobel laureate Michael Spence.
Speaking at an exclusive interview with China Media Group (CMG), Spence, a professor at New York University and co-recipient of the 2001 Nobel Memorial Prize in Economic Sciences, said that most countries continue to oppose the unilateral approach adopted by U.S. leadership. "We lived in a world that had a multilateral system that institutions and rules worked pretty well. The United States is not, under this administration, the Trump Administration, is not interested in those. They don't view multilateral structures as helpful. They view them as a place where the United States gets taken advantage of. So they are withdrawing from multilateral institutions, the Paris Climate Accords, the World Health Organization," Spence said.
The economist stressed that the world needs to establish a new multilateral system that can coexist with the transactional, nationalist system pursued by the United States.
"But the multilateral system is important. So I think the more important longer-run question is, are we going to have a multilateral system, who are going to be its principal sponsors, and what's it going to look like? I think by now it's pretty apparent to people that whatever that system looks like, it won't look like the old system, that international policy making won't allow these outcomes to be determined purely by market considerations, return on investment, comparative advantage, that kind of thing. That's the world we lived in. There's, I would say, zero chance we're going back to that world," said the Nobel Laureate.
"I don't think the rest of the world is going to start adopt the American bilateral negotiated agreement approach to trade. And so at some level, there's going to be continuing trade in the 75 percent of the world economy that's not the United States. And so that constructing, I think, in the best scenario, a multilateral system that's more complex, more fragmented kind of side by side and in parallel with an American approach to trade that's more transactional and nationalistic and certainly kind of bilateral in structure. That's an element of the complexity by the way. I mean having those two things going along side by side is probably not all that easy to accomplish, but that that seems to be where we're going," Spence said.
Multilateral system remains crucial despite setbacks: Nobel laureate
