The Cooptation Dilemma: Explaining US Contestation of the Liberal Trade Order

Abstract

While the United States (US) acted as a liberal hegemon in setting up the Liberal International Order (LIO), it is increasingly contesting the inclusive legacy institutions underpinning the LIO and is instead moving towards alternative, more exclusive institutions. Why is the US contesting the institutions it once set up to stabilize the LIO? We argue that hegemonic contestation is the result of a reactive sequence that is endogenous to cooptation-based orders where hegemons face a trade-off between inclusion and control. This Cooptation Dilemma is particularly pronounced in strongly institutionalized liberal (sub-)orders, such as the international trade regime. It unfolds in three stages: Privileging control, the liberal hegemon first creates exclusive institutions, which are likely to breed contestation by excluded states. To tame their contestation, the hegemon secondly includes previously excluded states into the order, making the previously exclusive institutions more and more inclusive. To compensate for the related control loss, the hegemon finally promotes alternative, more exclusive institutions, successively turning away from the inclusive legacy institutions. We demonstrate this reactive sequence by tracing the process that led to the US contestation of the World Trade Organization (WTO). Our findings suggest that cooptation-based orders in general and strongly institutionalized liberal orders in particular are prone to dynamic instability.