Summary
Major trading powers, including the EU and the US, are increasingly using unilateral trade-related measures (i.e., measures likely to affect international trade and investment) to pursue non-trade objectives such as national security or climate change mitigation. At the same time, the polarization of international trade relations is increasing, with growing ideological divisions and contrasts in trade policies, economic alliances, norms, and outcomes between polities. These two trends suggest that the major trading powers are increasingly acting outside the cooperative, multilateral trading system of the World Trade Organization. The resulting dynamics could reshape the distribution of power in the international economic order and lead to economic fragmentation. This could make it more difficult to address the major global challenges of our time, such as climate change and economic inequality.
This paper defines unilateralism as actions taken by a single polity without international consent under the (threat of) use of economic and/or political power. It examines how unilateralism relates to the EU’s trade policy. The paper then theorizes that unilateral trade-related measures both respond to and exacerbate the polarization of global trade relations, creating a “chicken-and-egg” situation. The exact direction of causality is almost impossible to determine. The paper therefore suggests that the adoption of unilateral trade-related measures to implement trade policy creates a vicious circle of tit-for-tat unilateralism. “Toxic” unilateralism may have negative consequences for both international trade and international law. To begin with, it may lead to the disruption of trade relations, the realignment of trade alliances, and the marginalization of developing and least developed economies. Moreover, it may have a negative impact on compliance with multilateral rules and on their effectiveness. As a result, “toxic” unilateralism may undermine confidence in the multilateral framework and reduces the willingness to cooperate on global challenges. To illustrate this “toxic” dynamic, the paper examines the EU’s Carbon Border Adjustment Mechanism and the Anti-Coercion Instrument.
The paper then attempts to outline possible solutions. It does so by offering a narrative history of the 1920 and 1930s, which witnessed a similarly pernicious dynamic that eventually contributed to global instability. It then discusses why “re-globalization” (i.e., a redo of globalization with a focus on post-neoliberal values) might be a possible way forward. This would require more flexible trade negotiations and greater engagement with non-state actors. While unilateral action may be justified as a “quick fix” in the face of stalemate and urgency, multilateralism offers clear advantages such as stability and predictability within an institutionalized framework for cooperation.
Biography
Sophie Bohnert holds a Bachelor of Laws and a Master of Laws in Business Law from the Vienna University of Economics and Business/Maastricht University. She also holds a Bachelor of Science in Business, Economics and Social Sciences with a major in Business Administration from the Vienna University of Economics and Business. During her studies she worked as a Tutor at the Institute for Company Law and as an eLearning Assistant at the Institute for International and European Law at the Vienna University of Economics and Business. In 2024, she graduated from the College of Europe with a Master’s degree in European Legal Studies, specializing in European law and economic analysis, from the College of Europe. In the same year, she was awarded a doctoral degree from the Vienna University of Economics and Business. Her doctoral thesis provided a comparative legal analysis of the phenomenon of common ownership under US antitrust law and EU competition law. During her doctoral studies, she worked as a Teaching and Research Assistant at the Institute for International and European Law of the Vienna University of Economics and Business. Sophie has been one of the editors of the CELIS blog since September 2023.
