Vinod K. Aggarwal: The current rules-based order at the global level is dead

Vinod K. Aggarwal reflects on the concept of new economic statecraft for a new age. Drawing on his extensive background in political science, he brings a thought-provoking lens to economic research and policymaking.

With the global trade facing geopolitical tensions, what are the biggest risks to keeping the rules-based order?

I think the current rules-based order at the global level is dead, so the premise is incorrect. Much as we would like to think that this is a temporary problem and just about President Trump, the Obama Administration began blocking appellate judges going back to 2011, and this continued under the Biden Administration as well. On top of that, the WTO’s Doha Round essentially failed, so we have not had a new round of global negotiations for 30 years. So even though I am a big fan of the WTO, we have to be politically realistic.

How can academic research be made more useful and easier to understand for policymakers?

Most economists engage in various estimates of the benefits of free trade using different types of models. Many analysts now realise that these models depend on choices that affect calculations of benefits and that are not scientifically justified. But more critically, economists let their preferences for their models get in the way of understanding the political reality of trade policy. By ignoring the political pressures that come from the losers from free trade – which includes both some parts of labour and some firms – they have let populists dominate the agenda. The topic of active labour policies, the need to sometimes manage trade, and national security are issues that are simply not adequately studied given the zeal of pure free trade economists. Even though free trade brings great benefits, we need a political economy approach to trade that does not make politics just one more variable in a model.

What are your expectations for the conference?

This is a great opportunity to engage with academics and policymakers. As someone who has been working on the concept of new economic statecraft, I look forward to sharing my work and exchanging ideas with leading analysts of the global trading system.