Multilateralising Regionalism: The Book

Richard Baldwin writes:

The world’s most important trade talks – the Doha Round – appear to be slipping into a coma while key nations play a waiting game. What are they waiting for? Some are waiting to see if Europe commits to unilaterally dismantling the EU’s massively distortionary agricultural policies during its 2008/2009 review. Others are waiting to see if the next US president is more protectionist or more accommodating. And the major developing nations see their exports growing at double-digit rates despite the stalemate, so what’s the rush?

But trade liberalisation is not standing still. Nations around the global are falling over themselves to liberalise trade regionally, bilaterally and unilaterally. The world trade system is labouring under a massive proliferation of regional trade agreements and the problem gets worse month by month. The resulting tangle of trade deals conspires to inject both inefficiency and discrimination against poor countries into the multilateral system.

Most amazingly, the WTO has had next to no involvement in this important development. The WTO – and this means the WTO membership since the institution only does what its members want – has adopted the role of “innocent bystander”. Key figures in world trade – negotiators, ministers, the WTO secretariat, academics, civil society and the media – need to look beyond the Doha Round. Doha or not, countries will continue to strike bilateral and regional deals. Doha will do little or nothing to ‘tame the tangle’. What is needed is a WTO Action Plan on Regionalism.

The fact that regionalism is here to stay is not news to those who follow these issues. But Baldwin and Philip Thornton have a new book that makes a first pass at policy recommendations to address the new reality:

The action plan outlined in the book calls for:

· Quicker and more detailed disclosure of the start and extent of negotiations on regional trade agreements.
· A WTO-sponsored forum for small countries to exchange experiences of RTAs.
· The creation of a WTO advisory centre on RTAs for developing countries.
· Voluntary guidelines on disciplines for new RTAs and modifications of existing ones.
· Harmonisation of key elements of RTAs, such as “rules of origin” to create templates for existing and new deals.
· The adoption of “most favoured nation” (MFN) clauses in future RTAs that give other countries the protections offered by the RTA.
· Countries to lower their MFN tariff rates on goods that dominate inter-regional trade.

1 thought on “Multilateralising Regionalism: The Book

  1. the Sustainable Development Blogger

    I already heard Baldwin and its ideas on multilateralizing regionalism. I have at least one problem with its propositions. Baldwin, as most economists, is missing an important point: RTA pursues often other objectives than liberalizing trade. In fact, often RTA, notably South-South, pursue political objectives linked to security, to improve the weight of the region at the international level and to solve regional or global problems that the multilateralism failed to solve. For these reasons, RTA should be context specific and they should not comprehend a MFN clause. In fact, this clause will undermine many of South-South Regional integration processes that according to UNCTAD are likely to help to achieve development objectives. We need a more broad understanding of the RTA reality and its implications in terms of development. Furthermore, as I underlined in my blog, free trade is not bringing development gains in every situation. We should not forget that free trade is not a goal per se. Trade is only a tool to achieve sustainable development. To reach this goal free trade should be adopted by developing countries strategically.

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