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Despite considerable tensions, China and India formed a surprising alliance at the WTO. Their alliance proved highly successful, bringing an end to American dominance and sharply curtailing the ability of the US to set the rules of global trade. However, the article shows, a key risk of soft balancing within an international institution is that, if successful, it may cause the dominant power to abandon the institution altogether. The US responded to China and India’s soft balancing by turning away from the WTO, actively undermining its rules and enforcement mechanism, and pursuing its interests through bilateral channels. The article thus identifies a distinct and previously unrecognized wedge strategy—vertical forum-shifting, or moving the action from international institutions to bilateral negotiations, to split an adversary coalition.

Balancing, Threats, and Wedges in International Political Economy: The Origins and Impact of the Sino-Indian Alliance at the WTO