What should a new global trading system look like?
Published 28 November 2023
The changing nature of the international environment for trade means that the institutions that governed the postwar world economy now are increasingly outdated. The reforms necessary to regulate the distortions are all but sure to fail given the current geopolitical climate. Is it time for ‘like-minded countries’ to build an alternative multilateral system?
The global trading system is under severe strain. Economic policies have noticeably shifted away from trade facilitation and toward addressing three emerging concerns: national security risks stemming from dependencies and their potential weaponization; the existential threat of climate change; and the perceived repercussions of globalization on economic and social inequality.
The failure of the WTO to push forward the global trade agenda and sufficiently respond to challenges of the present day has led to a multiplicity of bilateral and plurilateral free trade agreements. More and more trade is conducted under a different set of rules.
But reform of the multilateral system requires a consensus, one that was absent at the time of the Doha round of multilateral tariff reductions and is even more remote now.
In this final instalment of our series on globalization, Research Fellow Stewart Paterson asks: Have the institutions overseeing the global economy failed to enforce rules that ensure a degree of equity in the trading system, or are the rules themselves lacking? Could all-inclusive multilateralism as epitomized by the WTO provide the model for ‘re-globalization’ going forward?
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