Left out

James Wolfen­sohn the (Aus­tralian) head of the World Bank says bq.  he would “have to think very care­ful­ly” whether [the pro­posed US-Aus­tralia Free Trade Agree­ment] was worth­while if it came at the expense of the mul­ti­lat­er­al trad­ing sys­tem, strug­gling after the col­lapse last year of talks aimed at low­er­ing inter­na­tion­al bar­ri­ers to free trade. bq. “It would be a tragedy, I think, if the world frag­ment­ed into region­al trade arrange­ments — it leaves peo­ple out and we can’t leave peo­ple out.” (“The Aus­tralian newspaper”:http://www.theaustralian.news.com.au/common/story_page/0,5744,8578853%255E2702,00.html) The WTO is already limp­ing along. The explo­sion in the num­ber of region­al trade agree­ments is not, how­ev­er, the cause. The WTO’s own assess­ments in its 2003 annu­al report points to the rapid growth in poten­tial­ly dis­crim­i­na­to­ry trade deals but detects no evi­dence that they have slowed net trade growth or sign­f­i­cant­ly ‘divert­ed’ trade from its expect­ed pat­tern under non-dis­crim­i­na­to­ry rules. A big­ger chal­lenge that the WTO faces is to over­come the prob­lem so evi­dent at the Can­cún min­is­te­r­i­al meet­ing last Sep­tem­ber. Some countries—including the world’s poorest—are leav­ing them­selves out of the growth of world trade by shy­ing away from agree­ments to reduce trade pro­tec­tion and bar­ri­ers to invest­ment.

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