Trading Blocs and Trading Blows: GATT’s Conflictual Path to Trade Liberalization, 1947–67

Abstract

At the end of the nineteenth century, the global economy was highly interconnected and interdependent: this was the climax of the first wave of globalization. Over the next 50 years, protectionist policies, recessions, depressions and two world wars reversed this state of economic affairs. Bilateral and barter trade agreements flourished, autarkic aims prevailed, the commitment to foreign lending was sapped and demand for international commodities disintegrated. Many officials and policymakers in the 1940s believed that the establishment of a global trade system had to restore a high level of interdependence and exchange. They also believed that a liberal global economy was a general condition for peace. The classic liberal axiom that trade and peace went hand in hand whereas wars and the absence of trade were bedfellows informed this view. Cordell Hull, the American Secretary of State (1933–44) and an architect of the postwar trade order, was a successor to Montesquieu, Kant, Cobden and Mill, although he might not have appreciated the finer points of liberal economic theory. He explained this thinking in his memoirs when he wrote that ‘unhampered trade dovetailed with peace; high tariffs, trade barriers, and unfair economic competition, with war’.¹