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Trump threatened to leave the WTO a while back. (This might be understated, but I won't search how many times he may have said that.)

What I want to ask is: what would be the consequences for a country, big or small, if it just left the WTO? I assume (economic) size might make a difference in outcomes, although I could be wrong on this.

As far as I know there aren't any concrete example of countries who left, but if I'm somehow wrong on this (too), then we could have a concrete example of the consequences. If not, then perhaps we'd have to rely on some published analyses of such WTO-exit scenarios for an answer.

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    @JJJ: I don't know. Is there an economic shock effect for leaving, for instance? It's part of the question.
    – Fizz
    Mar 31 '19 at 20:14
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One way to try to answer this is to look at the benefits of the WTO. The main two are Most Favored Nation and National Treatment:

  • Most Favored Nation basically says that if you lower a trade barrier for one nation you have to do the same for the others.

  • National Treatment basically means that you can't discriminate between locally produced goods and foreign goods. I'm not privy with the details but I'd spitball this is related to not favoring local businesses in government contracts, or at least not in broad daylight.

Conversely, if you were to leave the WTO, it would mean that your existing trading partners can now:

  • Lower trade barriers with other WTO members without lowering them for you; and increase trade barriers on you.

  • Favor their own local producers, and those of other WTO members, in lieu of yours.

(This of course goes both ways.)

A third benefit that you'd lose is the well oiled dispute resolution mechanism. (Edit: or as you point out in a comment, what used to be a well oiled mechanism.) Going forward you'd need to go negotiate arbitration clauses and put language to that effect in each trade treaty. Which I would imagine is not a big deal in practice. It would probably carry less predictable outcomes, but at the same time it could end up benefitting you on average if you're the 800 pound gorilla in the room.

A fourth benefit might also be that WTO members don't seem to go to war with one another very often. (They do impose sanctions on each other from time to time, though -- e.g. Russia.)

As to what the practical downsides and economic damage would be for any country that leaves, it would depend on the country and how much it trades internationally. Economists generally agree the WTO increases trade, so one might imagine trade falling when a country leaves, but by how much is frankly anyone's guess.

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    "Favor their own local producers, and those of other WTO members, in lieu of yours." - wouldn't this go both ways, so that the country leaving WTO could favor its own local producers? (this seems to be the main argument for those who want to leave WTO)
    – vsz
    Apr 1 '19 at 6:09
  • @vsz: Yes. When answering the question yesterday I got the impression OP was only curious about the main downsides. Edited. Apr 1 '19 at 6:27
  • Well, the WTO dispute resolution is largely deadlocked as a result of an appointment-blocking policy initiated by Obama and accentuated by Trump; see p. 18 in europarl.europa.eu/RegData/etudes/STUD/2018/603882/… So describing it as "well oiled" might be a bit of a stretch.
    – Fizz
    Apr 1 '19 at 12:32
  • @Fizz: Good point. I hadn't been following what the WTO had been doing since the early 2000s, and have edited your link into the answer. That said, as I noted a bit further into the paragraph, even if it worked fine I'd be suspicious this would make much of a difference for the US (or the EU, or China, or Japan), which basically are the 800 pound gorillas in the room. Apr 1 '19 at 13:01

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