ABSTRACT
A first area in which the drift away from liberal internationalism can be seen is in the economic sphere. Even before the epoch-making financial crisis struck, the European Union (EU)’s allegiance to economic liberalism was waning. Its adherence to liberal norms in trade and finance had become more selective and instrumentally self-serving. This was often masked by widespread hagiography of Europe’s immense economic power and advanced model of market integration. Few would disagree that the latter constitutes a primary source of Europe’s international power. But from the mid-2000s, it has been put to increasingly illiberal use. The EU has for long been reluctant to open some areas of its market to
global competition. Developing countries have long seen the EU as a tough trade negotiator. During the 1990s, however, the general direction of change was towards greater market liberalization. Steps were incremental rather than dramatic, and reversals not entirely absent. But by the early 2000s, Europe was certainly more open to international competition than it had been a decade earlier. For many observers, the EU’s core business was about extending its own vanguard internal market provisions to the global scale. Since the mid-2000s, the trend has reversed. The EU has become less will-
ing to contemplate the trade-offs required to make further progress in trade liberalization and has prioritized bilateral trade deals over multilateralism. The financial crisis has accelerated these illiberal trends. European leaders insist that recovery from the crisis requires that the temptation of protectionism be resisted. But the reality of their policy decisions belies such assurances. While the crisis reveals market pathologies that quite rightly invite new roles for the state, European responses threaten to unravel core tenets of economic internationalism far beyond the confines of the financial sector. Today, the reticence extends beyond protectionism in a few sectors of economic activity. Faith in the liberal model has been shaken to its roots.
