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Cooperation or Hegemony

The contemporary global trade system has experienced significant changes over the last few decades. It has gradually developed into a rule-based bureaucratic regime. The commerce regulations are originating from international agreements that attempt to facilitate and sustain economic development. These trade rules are often categorized against the decrees of the developing national governments that mostly seek to restrain those advancements. One of these nations is the United States, which is widely recognized as the main players of the transnational trade. Because of this, it has become a hegemon and in its preeminent position, it promotes balance of universal trade systems. It consists of maintaining international matters such as finance, trade, foreign relations, etc. The USA emphasizes its vital role in formulating global rules for minimizing policies of protectionism in international regulations. Besides, it maintains that this practice will decrease the ongoing uncertainty and imbalances of international trade alliances and facilitate overall stability. However, the third world countries perceive that there is no hegemon in the modern trade world, which in fact is controlled by the United States. They are pointing out that there is no use of a powerful ruler if the nations are coopering with each other. Their idea is that dominion is lacking in the current world trade system that is controlled by the USA. Because of this, there is a shortfall of obligations to such a commanding state, since countries can coordinate with each other. Nonetheless, I tend to agree that the United States is one of the leading bodies of the global trading system. Therefore, she attains the principal duty of sustaining the stability of the existing international trading systems. It is essential since a leading position of the US is fundamental for the establishment and perpetuation of free trade. This paper will outline the reasons why the United States is the architect of global trading systems.

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The USA upholds free trade that is noteworthy in promoting peace to the participating countries. This concept of free commerce makes it efficient for a distinct hegemonic power to control international relations. The neoclassical trade ideology relies on the presumption that states act to optimize their cumulative economic utility. It directs to the conclusion that optimum universal welfare and Pareto sufficiency are accomplished under the practice of free trade. Additionally, the neoclassical approach holds that productive trade rules can be utilized for resolving domestic challenges and for speeding up infant industries. The liberal ideology that free commerce bolsters relies on various key hypotheses. Relative opportunity cost is the first assumption. For instance, military and economic depressions tend to interrupt normal trade conditions. As a result of this, massive economic consequential costs will obscure the dependent nations from the combatant force for resolving the political crisis. A crucial example is how the events of the First World War and the Great Depression affected the global trade system. Another instance that disrupted international trade was the potato drought of 1840. It led to the abolishment of the Corn Laws that had severe repercussions on the national economies at the time. As a result of this, the US did not assume the primary position of global commerce until the nations were severely affected by the major wars that took roughly six years.

The emergence of the US as the biggest trading nation in the world after the First World War is another noteworthy reason for its recent hegemony. There was a possibility that national events interfering with the US trade capacities would have a significant influence on international commercial alliances. An important event was the Smooth-Hawley Act that elevated the US tax rates to extraordinary levels. Additionally, it raised the capacity of the tariff coverage that brought severe effects to those nations who were relying on commercial protectionism. It raised the levies of the US and as a result, all the major trading states that adopted protectionism at that period was affected. At that time, the US had complex social structures and institutional infrastructure. It utilized Congress to formulate new trade agreements that introduced the policy of liberalism. It would enhance the concept of free and secure trade with engaging nations. From this point, the US became a hegemonic state in international commercial matters.

Attempts of developing liberal international trade conditions via the Reciprocal Trade Agreements (RTAA) of 1934 are another precondition of the US hegemony. The main ideology was to formulate a new trend in the global market that leaned towards liberalism. It was to replace the former commerce tendency that relied upon protectionism that had begun towards the end of the nineteenth century. The RTAA was not a breath-taking turnabout in protectionism because the US duties were high at the time. Additionally, all the major trading states were adopting protectionist policies at the time. This act represented a contemporary part of a long process of nations conceding their economies to overseas imports. It generated a massive revolution in the US and even in the global trade policy. The shift from protectionism to liberalism has been a fundamental part of the US Commerce policy’s structure since 1934. The RTTA was revolutionary since it acknowledged that establishing levy rates may no longer be an entirely unilateral policy by a country state. It determined that this was a bilateral matter that should be addressed through negotiations. Since this point, the US became a hegemonic state that incorporates differing preferences for an open structure.

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Appreciation of its position in the global market is another imperative reason. The era of 1947 was significant to the US trading system. The US possessed approximately 70%of the global gold reserves. This figure had not dipped below 59 percent of global reserves even in the forthcoming decades. As a result of this, the dollar itself became a base currency for international trade. For the next few years, the nation accounted for roughly 17%of the global trade. Its share of the global trades was one and a half times the original share of Great Britain, the next leading state. Surprisingly, in the 1960 US accumulated 20 percent of the entire international trade. The figure was twice that of Britain and equal to the combined total of three prominent European economies – France, the UK, and West Germany. Besides, its primary accumulated merchandise of foreign expenditures rose from $7 billion in 1947 to approximately $100 billion in 1973. This figure depicted 51%of the global foreign financing that year. In total, the main factors of the international economic development determined that the US took a leading position in the world trade.

Mobilizing the creation of a general agreement on tariffs and Trade (GATT) and the international trade organization (ITO) is another crucial point. The US was instrumental in establishing the GAAT after the events of the Second World War. It saw a need for the states to have a major reconciliation on the levies and trade. It would further promote international trade to sustain the economic restoration of the catastrophic consequences of the war. America was very successful in the global economy at the time. A system in which a particular state is hegemonic is likely to manifest the values of that leading country. It was a similar case of the trading system that was established under the GATT after the Second World War. The focus was to minimize the impediments in international commerce via the minimization of the existing tariffs, allocation, and financial aid. Trade liberalization was regarded by the Americans as a suitable goal in intellectual terms. It was conforming to the national interests of the US because the country was would gain from free international trade. The agreement also seemed to adopt multilateralism, which was an essential element of American values. It propelled the US to mobilize other participating states in signing the GAAT agreement.

Promoting the establishment of the European Union for regulating the negotiations of global trade agreements is another important condition for the US hegemony. The structure of modern international commerce focuses on the US to European Union (EU) bilateral ties. The period of the 1960s witnessed significant changes in world trade. There were adjustments to trading negotiation in the Kennedy round. The six European nations consulted as a single bloc. The Tokyo Round was essential in finalizing the transition when the EU incorporated the United Kingdom. It made the EU the biggest economic organization in the world. Moreover, the talks in the Tokyo round could be considered as a pyramidal procedure. The USA was the principal player in the diplomacy processes. Its economic growth was booming, and other smaller states relied on the US for their growth. Because of this, it was able to arbitrate with the EU on matters of agricultural crisis at the “Blair House”. It reached a concession very late in course of negotiations. This situation proves the importance of a hegemonic state in a multilateral trade agreement. Global trade concessions are mediated and approved by a union instead of a particular representative state. It allows the EU to communicate with a single voice with its global trade partners.

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Instigating the formation of the world trade organization (WTO) for facilitating international trade is another decisive cause of US hegemony. The WTO was established in the outcome of Uruguay round diplomacies that were finalized in late 1993. It was constituted by agreements between major states in the world. These compliances were essential for developing trade regulations concerning agriculture, services, and intellectual resources that are still efficient to date. The US, more than any other single country, was instrumental in the formation of the World Trade Organization. It is very important for the strength of the system. Besides, US hegemony is indispensable to the system’s success. The WTO stated that participating states should approve the agreements and other trade concessions as a single piece. It will promote them to change their domestic laws in alignment with such agreements. The US ensured that the organization embraced principles of market accessibility, national sustenance and smooth exportation of subsidies. This enhances free trade, legitimate regulations, and a safe world economy. Without the effective leadership of the US, the WTO would not have been an effective global organization.


In conclusion, the US is the focal player in the global trading system. Its ultimate role in Doha diplomacy was reaffirming the transition that the global trade system has undergone since the post-WWII period. The leadership of the US has seen impressive results across many nations. Today, the states participate in the exchange of goods and services with minimal restrictions from national administrations. Participating states are able to reach trade concessions via international diplomatic missions presided by a hegemonic state, which is the USA. Additionally, the global system of trade, controlled by the US, assists in maintaining peace in modern countries. The commercial activities are operating smoothly and the participating nations can sustain healthy international ties. It has minimized the political conflicts in international trade. The implementation of WTO provides assurance to international peace. The economic wars of the 1930s are decisive pieces of evidence for how protectionism can put countries in a no-win situation. It allowed nations to fail in global trade. Trading controversies are resolved constructively by the participating states. Modern nations are opting for negotiations for addressing differences in order to achieve increased income and growth. Most importantly, the US needs to continue to be a hegemonic state in matters of the global trade system. It has demonstrated its adequate power and support of free trade principles across the whole world. The multilateral trading system is much too important to fail and the world relies on it.