William Watson: A lament for the postwar trading system

The entrance of the World Trade Organization headquarters in Geneva, Switzerland. Photo by FABRICE COFFRINI/AFP via Getty Images files

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My beach reading this summer is the WTO’s World Tariff Profiles 2025. Yes, it’s a brick: I do like to snooze on the beach. The title says 2025 because that’s when it comes out. But the tariffs are all for 2024. Scrolling through the tables already produces nostalgia for a time now maybe gone for good. The proud tower of the postwar liberal trade regime, though not quite yet fallen, is under severe bombardment from Washington.

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The Proud Tower was a 1966 book by American historian Barbara Tuchman, a followup to her wildly successful The Guns of August, the story of how, almost accidentally, European leaders started World War I. The Proud Tower was a series of sketches of the Edwardian era that trench warfare pounded into ruins. The phrase itself Tuchman got from Edgar Allan Poe’s “The City in the Sea”: While from a proud tower in the town/Death looks gigantically down.

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(Texans, take note: One of the book’s chapters tells how U.S. House speaker Thomas Reed handled the “disappearing quorum.” The rule used to be that if House members didn’t respond when their name was called, they didn’t count towards the quorum and so by staying silent could block proceedings. Reed simply directed the clerk to count everyone present. When one member objected, Reed replied he was only “making a statement of the fact that the gentleman from Kentucky is present. Does he deny it?” Whether Reed would have used the police to track down absent members, as Texas is currently doing with its disappearing quorum, is impossible to say.)

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The apparently imminent end of the WTO regime won’t involve as much death and destruction as the end of the long peace did in 1914. But over the past few decades liberal trade has helped lift literally billions of people around the world out of poverty and that will be put at risk.

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Reading through the tables, how different a time last year already seems! The simple average of U.S. tariffs was 3.3 per cent. The simple average on non-agricultural products: 3.1. The equivalent percentages for us were 3.8 and 2.0.

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How is it we had a higher average tariff than they did (3.8 per cent versus 3.0) but a lower tariff on non-agricultural products (2.0 versus 3.1)? Because our ag tariffs were higher: 15.0 per cent versus the Americans’ 5.0 per cent. Agriculture is the most protected sector everywhere. All over the world, farmers know how to do politics. Money may be the mother’s milk of politics, but cow’s milk is its obsession.

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When you weight the tariffs by how much trade they cover, U.S. tariffs were 2.2 per cent overall and just 2.0 per cent on non-ag products. That compares with 3.4 and 2.3 per cent for us. We talk a good game about what great free-traders we are but our average tariffs were higher than the Americans’. (Our sanctimony may be one reason they think we’re nasty.)