Daniel Altman exaggerates just barely when he warns of the obsolescence of WTO in a Newsweek column in honour of this week’s WTO General Council meeting. The Organization is getting nowhere with the Doha negotiations, unable to make decisions, losing relevance as trade barriers are dismantled by bilateral agreement or unilateral decision. Altman could add that WTO’s boosters have exhausted credulity with their fanfares of atmospherics.
But Altman’s outlook for a WTO-less global trade regime is naive:
“The only way forward is liberation from the WTO. The majority of nations can simply leave the obstructionists behind and move forward with regional trading partners. Eventually, most of the world’s trading nations will arrange themselves into just a few big blocs. These blocs will be diverse, including rich and poor countries, since these complementary groupings often unlock the biggest gains from trade; rich countries like to use cheap materials and labor in poor countries, and poor countries like to export their products to high-income consumers. In fact, the blocs may be so big and diverse that they won’t need to worry about lowering trade barriers” Extract from The WTO Is Obsolete — Newsweek
Been there and done that. It was called colonialism; it structured world trade between rich and poor countries for about three hundred years until 1945 when a few people with the same lofty aims but more sense than Dr Altman agreed that discriminatory trading blocs had achieved neither full growth nor equity but had caused terrible conflict. Would such a world even be possible today without giving up the benefits of globalized supply-chains? Which ‘bloc’ would include China? India? Indonesia? Vietnam?
There’s no shortage of analysts who agree about WTO’s malaise but who offer more interesting and constructive suggestions for the future of liberal multilateralism than Altman’s simple-minded block-world. Three of my favorites: