Trade Policy 2006: A tour d'horizon

The global momentum in favour of trade liberalisation has slowed down; and there is more liberalisation-scepticism post-Washington Consensus. Chances are that the Doha Round will either collapse or deliver a very modest result. Both outcomes will leave the WTO in very serious trouble. For the WTO to have future relevance, its members must restore a market-access focus, and arrest crippling UN-style decision making. But its days as a major vehicle for liberalisation are probably over. PTAs, however, are not a serious alternative. Nearly all are bitty sectoral deals rather than comprehensive WTO-plus agreements. They distract attention from unilateral reforms and the WTO; and they are undermining non-discriminatory multilateral rules. The silver lining is that liberalisation is likely to come from a different route: from unilateral example-setting and competitive emulation. China is now the unilateral engine of freer trade, and this will reverberate elsewhere, especially in its Asian neighbourhood. That, not trade negotiations, is more important to Asia's unfolding transformation of the global economy. Multilateralism, especially a workable WTO, has its rightful place. But only if its means and ends are suitably modest and realistic. [PUBLICATION ABSTRACT]