EU Steps Up Aggressive Multilateral Alliances...BRICS at Odds with U.S.? [De-Globalization? New Order!] ⑩

What Should Korea Do?
"U.S. Tariff Policy Unlikely to Change"
EU Expands FTAs..."Multilateral Alliances Led by the EU"
"BRICS Unlikely to Form a United Front Against the U.S."

As the United States pursues a unilateral tariff policy that is shaking the foundations of the international trade order, the world is closely watching where the global trade system is headed. However, there is still no replacement trade regime in place, nor are there meaningful discussions underway to establish one. Some experts predict that for the next 7 to 10 years, the world will experience a chaotic trade environment, marked by the absence of global trade norms, with countries joining forces for survival while simultaneously keeping each other in check. Although cooperation and conflict have always coexisted in the past, the World Trade Organization (WTO) rules at least served as a safety net. The current situation, where trade norms have been effectively neutralized, is unprecedented.

Asia Economy interviewed international trade experts to assess the current state of the global trade order and its future direction. Interviews were conducted with Alan Wolff, Senior Fellow at the Peterson Institute for International Economics (PIIE) and former WTO Deputy Director-General, who previously served as a U.S. trade official; Ignacio Garcia Bercero, Non-Resident Fellow at Bruegel and former Chief Negotiator of the Korea-EU Free Trade Agreement (FTA) at the European Commission, where he worked for over 30 years; and Moon Ilhyun, Professor at China University of Political Science and Law. The interviews, conducted via written correspondence and phone, examined the sustainability of U.S. tariff policy, its ripple effects, and how countries are expected to respond.

United States Unlikely to Change Tariff Policy..."U.S. Restructuring Trade System Around Its Own Interests"

Researcher Wolff dismissed the idea that the U.S. tariff policy is a 'short-term event.' He stated, "There is no sign that President Trump will abandon the tariff policy any time soon," adding, "I do not believe the Supreme Court will overturn the President's tariffs. The majority of the Supreme Court has supported the President in various respects." He pointed out that the U.S. collects about $300 billion in annual tariff revenue, providing a strong fiscal incentive. As a result, he predicted that the tariff policy would not only continue throughout Trump's second term but would likely persist under the next administration as well.

Researcher Wolff interpreted the Trump administration’s aggressive tariff policy not as an attempt to dismantle the existing global trade order, but as a strategy to restructure U.S. trade around domestic interests. He said, "The U.S. tariff policy is reshaping U.S. trade itself, and other countries are highly likely to strengthen their mutual relationships." In other words, he views the Trump administration’s trade policy as a trend of 'restructuring' rather than 'exiting' the system. This also suggests he does not agree with perspectives that define the U.S.’s assertive trade policy as an 'exit' from the global trade order.

EU Takes Bold Steps Toward Multilateral Solidarity..."EU Can Play a Leading Role"

Since the U.S. announced reciprocal tariffs in April this year, the European Union has worked to sign new trade agreements and strengthen existing ones. On July 13, Ursula von der Leyen, President of the European Commission, and Prabowo Subianto, President of Indonesia, announced at a press conference that they had reached a political agreement to advance a free trade agreement (FTA), with the signing scheduled for September 23. In May, the EU also began official FTA negotiations with the United Arab Emirates (UAE). The EU is also pushing for the formal signing of an FTA with MERCOSUR (the Southern Common Market) within this year. On September 3, the European Commission announced on its website that it had submitted a proposal to the EU Council to sign the EU-MERCOSUR Partnership Agreement (EMPA). The EU is also aiming to conclude an FTA with India by the end of the year. In a press release on September 17, the European Commission stated, "The EU has proposed a new strategic agenda to elevate relations with India to a higher level," and added, "Europe is already India's largest trading partner and is working to finalize the FTA by the end of the year."

On June 26, President von der Leyen proposed establishing a new free trade framework to replace the World Trade Organization (WTO), stating that both the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the EU are seeking 'structured cooperation.' The CPTPP is a multilateral free trade agreement launched in 2018 by Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam; the United Kingdom joined in December last year.

Bercero, a senior researcher representing the European perspective, predicted in a phone interview with Asia Economy on August 25 that "the global trade order will effectively be in a vacuum for at least the next 7 to 10 years." He stated that to endure this period, it is necessary to uphold the commitment to respect WTO rules while forming new alliances involving as many countries as possible. He emphasized, "In this situation, the EU must comply with WTO norms and simultaneously take a leading role in reforming the WTO."

Gene Grossman, a renowned scholar in international trade and political economy and professor of international economics at Princeton University, also said in a recent video interview with Asia Economy, "It is desirable for the EU, Canada, Japan, and South Korea to build a new global trade order excluding the United States," and added, "The EU can play a leading role."

However, Wolff, representing the U.S. perspective, dismissed the possibility that the EU, China, or middle powers could lead a new trade order in place of the United States. He said, "Neither the EU nor China has ever stepped in to replace the U.S. The same goes for middle powers. However, cooperation among like-minded countries will increase."

China's Response to the U.S.?..."U.S.-China Relations to Feature Both Conflict and Cooperation"

On September 8, Chinese President Xi Jinping attended the BRICS summit via video and criticized the United States, stating, "Some countries are repeatedly launching trade wars and tariff wars, causing severe shocks to the global economy and seriously undermining international trade rules." Since the trade war initiated during President Trump’s first term, China has continued to portray itself as a 'defender of free trade.' However, through massive subsidies, technology theft, and intellectual property violations, China has disrupted the free trade order and provided grounds for the U.S. to undermine the WTO system. For this reason, it will be difficult for China to play a leading role in forming a multilateral trade order excluding the U.S. in the future.

Researcher Wolff expressed caution regarding U.S.-China relations, saying, "They are unpredictable." He noted, "While Congress and the government overall maintain a hardline stance toward China, President Trump may leverage his personal relationship with President Xi to find a basis for negotiation."

Professor Moon Ilhyun of China University of Political Science and Law predicted, "In the future, U.S.-China relations will continue to be complex, featuring both conflict and cooperation." He explained that China is strengthening alternative alliances such as the Shanghai Cooperation Organization (SCO) and BRICS, while also leaving room for negotiations with the United States. Professor Moon added, "The more the U.S. ramps up pressure, the more China will focus on rallying the Global South, but on specific issues such as fentanyl or grain imports, China will seek U.S. concessions through negotiations."

"BRICS Unlikely to Present a United Front Against the U.S."

President Xi also stated, "At this critical moment, BRICS countries must be at the forefront of the Global South-referring to emerging and developing countries mainly in the Southern Hemisphere-to defend multilateralism and the multilateral trade system." However, many believe that BRICS countries face divergent interests, making it difficult for them to oppose the U.S. as a single bloc.

Researcher Wolff pointed out, "U.S.-China relations are likely to remain cautious due to geopolitical reasons," but added, "This is not the case for U.S. relations with India and Brazil." India, traditionally a representative of the Third World, has pursued pragmatic diplomacy between the U.S. and China. On September 1, Indian Prime Minister Narendra Modi attended the Shanghai Cooperation Organization (SCO) meeting in Tianjin, China, but did not attend the September 3 military parade in Beijing’s Tiananmen Square marking the 80th anniversary of China's victory, which was attended by most anti-Western leaders. Brazil and South Africa have also been subject to 50% and 30% tariffs from the U.S., respectively, but must maintain their relationships with the United States.

Jung Ingkyo, former Chief Negotiator for Trade, stated, "It remains to be seen whether BRICS countries, even if they endure significant economic losses, will forgo the U.S. market to form a meaningful economic and trade bloc among themselves." He added, "However, the U.S. will likely put these countries in a 'prisoner's dilemma' situation and try to peel off one or two countries through negotiations to bring them to its side and thus control BRICS."