Wednesday, April 18, 2012

WTO and domestic policy space

Project Syndicate is extremely engaging with its range of eminent personalities and relevant topics. The topic of the choice of the World Bank President is a currently hotly debated topic. Jose Antonio Ocampo, one of the names doing the rounds for the job had a piece on what the World Bank should do. I found his analysis of the comparative role of markets and the state relevant:
"That experience has taught me that successful development is always the result of a judicious mix of market, state, and society. Trying to suppress markets leads to gross inefficiencies and loss of dynamism. Trying to do without the state leads to unstable and/or inequitable outcomes. And trying to ignore social actors that play an essential role at the national and local levels precludes the popular legitimacy that successful policy making requires.

Indeed, the specific mix of markets, state, and society should be the subject of national decisions adopted by representative authorities. This means that it is not the role of any international institution to impose a particular model of development on any country – a mistake that the World Bank made in the past, and that it has been working to correct. Because no “one-size-fits-all” strategy exists, the Bank must include among its staff the global diversity of approaches to development issues."
I was trying to place the parallels with multilateral trading rules. Does this have lessons for the proponents of unbridled free trade and elimination of "protectionism"? Should all measures undertaken by countries pursuing domestic interests be viewed as "protectionist"? Does the WTO Agreements provide sufficient "domestic policy space" to pursue national interests as per the policy choice of representative governments? Is there a single truth that reduction of barriers as well as increased integration into the world economy is good for all countries or is there a need to think about a calibrated path to integration based on country specific needs? Does the WTO allow enough leeway for this country specific approach or is it a reversal of multilateralism? Is a country justified in taking "protectionist" measures when it feels that its interests are adversely affected with reduced barriers? Should multilateral trade rules allow for more flexibility to countries to engage with the outside world on their own terms. What are the dangers of this flexibility? Will it result in pre-GATT days of high tariffs and inward looking policies? Is there a middle path? Does the present multilateral rules permit taking this middle path?

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