Historical Foundations and the Interwar Breakdown
At the end of the 19th century, the world entered a first, intense phase of globalization. Railways, steamships, and the telegraph connected markets; international trade soared, and capital moved almost freely under the gold standard. This period, often idealized as the Belle Époque, generated enormous wealth—but also deep imbalances. Wealth concentrated in narrow economic elites, while large segments of society remained excluded from prosperity. At the same time, the great powers entered into an increasingly fierce commercial and geopolitical competition for markets, raw materials, and spheres of influence.
The First World War violently interrupted this first globalization, leaving behind a fragile international system: over-indebted European economies, unstable monetary balances, and societies deeply traumatized. The League of Nations, created in 1919 to prevent a repetition of the catastrophe, was weak. The non-participation of the United States—the world’s strongest economy—deprived the institution of the necessary political and economic weight. Without enforcement mechanisms and without genuine multilateral commitment, the League was unable to contain the centrifugal forces.
The financial collapse of 1929 exposed all these structural weaknesses. The crisis, which began as a stock-market shock in the United States, turned into a global depression. Instead of a coordinated international response, states resorted to economic nationalism. The climax was the American Smoot–Hawley Act of 1930, which sharply raised tariffs on thousands of products. Trading partners responded with countermeasures, and the world entered a generalized “tariff war.” International trade collapsed, export-oriented economies suffocated, and the recession deepened.
Thus, the over-concentration of wealth during the first globalization, the failure of international institutions, and the shift from economic cooperation to protectionism created an explosive mix. Economic collapse fueled social despair and political radicalization. In this environment, nationalism and authoritarianism flourished, ultimately leading the world into a second, even more devastating, global war.
After the Second World War, the idea prevailed that promoting interdependence and commercial cooperation among nations would eliminate the risk of global wars and protect our shared humanity from the horrors of mass bombings, genocide, famine, disease, and conflict. Seventy-five million people had lost their lives during the Second World War, which in fact had already begun before the First World War in the form of commercial and tariff wars between states. Today’s global trading system has its roots in the first binding General Agreement on Tariffs and Trade (GATT) of 1947.
From Multilateralism to Unilateralism and the European Crossroads
For more than sixty years—from 1947, and from 1995 onward as the World Trade Organization (WTO), until the collapse of the multilateral negotiations in Doha in 2008—GATT/WTO functioned effectively through negotiations and public dispute settlement, largely ensuring the peaceful cooperation of its 168 member states. The expansion of international trade after the Second World War is assessed as positive: intergovernmental commercial exchanges increased three hundredfold since 1947 and today represent 60% of global trade, while over the same period average global tariffs fell from 25% to around 10% by 2020, before the onset of the contemporary tariff and trade rivalries initiated by the United States outside the WTO framework.
This was followed, in 2008, by the withdrawal of the United States and its allies from WTO multilateral negotiations and agreements, and the promotion of bilateral negotiations based on the logic of the “law of the strong” even in international trade. In 2019, the United States also blocked within the WTO the appointment of public judges to the Appellate Body for interstate dispute settlement, promoting instead private corporate arbitration.
Foreseeing the inability to advance further market deregulation for the dominance and expansion of American corporations within the WTO framework, the United States under President Trump adopted a strategy of continuous undermining of the WTO and of promoting “divide and rule” policies through a new type of bilateral, neoliberal agreements, for the following reasons:
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Whereas the WTO provides for public arbitration of disputes between states, within bilateral agreements the United States promotes corporate arbitration, whereby companies are able to sue governments before new corporate courts (ISDS mechanisms).
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Whereas in the WTO regulations on intellectual property (corporate patents, GMOs, biological products, new technologies, etc.), as well as phytosanitary measures, control of genetically modified organisms, industrial standards, and public health issues are agreed multilaterally among states, in bilateral trade agreements the lobbying representatives of multinational corporations participate through regulatory cooperation committees.
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Whereas in the WTO public policies (public procurement and services, public goods, environment and water, investment, education, culture, social rights, sustainable development of local communities and countries) fall under state competence, in bilateral trade agreements these are placed on the negotiating table, subject only to a clause of potential exemption.
The rise of the far right in the United States and in Europe, alongside the expansion of the spheres of influence of the authoritarian regimes of Russia and China and of nationalist currents internationally, is both the result and the generative cause of a more aggressive neoliberal policy at the global level. This policy deregulates markets, dismantles environmental and social product standards, and commodifies and privatizes public goods for the benefit of corporate oligopolies. As a result, 50% of global wealth is today concentrated in 1% of the global business elite, creating surplus countries and deficit countries with high public debt through unfair competition, tax evasion, and tax havens.
The European Union has so far promoted the democratic reform of the World Trade Organization, albeit with shortcomings—particularly regarding the inclusion of green policies, fundamental rights, and the agri-food sector of Southern Europe—and generally moves in a positive direction compared to other dominant trade blocs, by:
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Promoting multilateral agreements and rules within its framework;
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Integrating into multilateral agreements the 17 UN Sustainable Development Goals and the objectives of the 2015 Paris Agreement on climate change, environmental protection, the circular economy, fundamental rights, biodiversity, and digital democracy through regulatory oversight of artificial intelligence.
For these reasons, the EU’s international trade policy is not a technocratic exercise. It is deeply political, determining who wins and who loses, which producers survive, which workers are protected, which regions develop, and which planetary resources are preserved. From the General Agreement on Tariffs and Trade of 1947 to today’s shaken WTO system, the history of international trade reflects the history of power, of the global interstate, economic, and social balance of forces.
The European progressive approach holds that trade can be a vehicle for justice, environmental protection, and social progress, provided it is governed by democratic and transparent multilateral rules—not by the power of the strong. The current crisis of the WTO, the withdrawal of the United States from the WTO and from most international organizations, and the shift of major economic powers from multilateral agreements to unilateral and bilateral practices, as well as to tariff and trade wars, is not a “technical” problem; it is a threat to the very edifice of a multilateral, cooperative international order created over the past seven decades. It recalls the gray era of the interwar period.
In this context, the European Union stands at a critical crossroad: it must defend the multilateral system on the basis of a progressive, sustainable, socially just international trade—trade that does not serve deregulation but rather fair reform and a creative balance between market, society, and environment. At the same time, it must necessarily pursue bilateral trade agreements of the Mercosur type (which, however, must not sacrifice environmental and social standards or the sustainability of its agri-food sector), and advance its external and defense policy to secure its strategic autonomy. For this policy to be sustainable amid an explosive environment and often contradictory objectives, Europe must reconnect with the Enlightenment values that gave birth to it. It must strengthen its diplomacy, its globally recognized democratic regulatory capacity known as the “Brussels effect,” and avoid sacrificing cohesion policies by entering an arms race with an inevitably harmful outcome for all peoples.
Militarization, Inequality, and the Threat to Peace
Recent data from the Stockholm International Peace Research Institute (SIPRI) confirm what is already evident in economic reality: the global arms industry is not only expanding, but is also reinforcing the economic and political concentration of wealth in critical strategic sectors. Specifically, the total value of arms sales and military services by the world’s 100 largest companies in 2024 reached a record USD 679 billion, marking a 6% increase compared to the previous year—the highest level ever recorded.
This boom is not accidental; it is directly linked to intensifying geopolitical instability and ongoing armed conflicts, such as those in Ukraine and the Middle East, which have driven global demand for armaments and military services to unprecedented levels.
These data portray a reality in which war production is elevated to a pillar of economic “growth”—not only because of increased public spending, but also due to the rising investment of private capital and the enhanced position of these corporate groups within global markets and supply chains. At the same time, the focus on military expenditure and defense technologies absorbs public resources that could otherwise be allocated to social policies such as health and education, with significant consequences for social cohesion and the redistribution of wealth. The UN website underlines in the ”True cost of Peace” article that with 4% of global military spending we can eradicate the world hunger. https://www.un.org/en/peace-and-security/the-true-cost-of-peace
Linking this structure to macroeconomic thinking makes it clear that a global economy without structural redistributive policies further amplifies inequality and the political influence of major private interests. As macroeconomic textbooks have long taught us, when wealth becomes concentrated in few hands, the available choices narrow: either social redistribution advances, or new markets are opened—or societies are driven into local or even generalized wars. In today’s context, this latter tendency threatens to become not merely a possibility but a strategic choice of elites, simultaneously strengthening the economic power of the arms industries and their political weight within contemporary societies.
What is most alarming is not only the accumulation of weapons, but also the shift in paradigm: preparation for war is presented as the defense of values, and the retreat of social policies as a necessary price. Thus, the economy ceases to serve society and begins instead to shape it in terms of fear. And then the “coffins draped in flags” cease to be a metaphor—already invoked by dominant political circles—and become a plausible future.
Regrettably, under today’s dynamic of attempted militarization—even of human thought itself—the cause of peaceful coexistence and international cooperation lies in the hands of the democratic institutions, progressive citizens and their peace movements.
Before it is too late.