Will the multilateral system overcome the pressures of economic crisis, preferential trade agreements and rising protectionism? Will it be able to weather the storm? Will the WTO survive the impasse of the Doha round of negotiations as well as steer the way for enhanced multilateralism? Are we going to see more protectionist trends both in the developed and developing worlds?
Andy Xie writing in the WSJ paints a gloomy picture for the future of the WTO. The author essentially posits that when the going is good everyone supports increased trade. however, in times of economic crisis, countries tend to become protectionist owing to domestic pressures and labour compulsions.
"The golden era of the WTO system is coming to an end. Indeed, trade disputes could multiply sufficiently to overwhelm the WTO system.
Economists tend to blame the trade protection policies of the Western economies for causing or worsening depressions. The reality is probably more complicated. The labor market has limited capacity to cope with globalization. The political backlash against globalization is inevitable when the later moves too fast.
Trade has grown twice as fast as GDP in the past two decades. This relationship is unlikely to continue. The best scenario is for the two to grow at the same pace. The global economy will probably be stuck around 2% to 2.5%. So would trade."
Is the future gloomy for globalization and the multilateral trading system? Will the compulsions of domestic politics, job loss, unemployment and local industry pressures override the need for opening up trade? Will the inequities of the global system outweigh the benefits that it offers? Are these just alarmist conjectures? Will the reality of global supply chains, dependence on international trade and the need to export prevail? Will countries become more dependent on the global economy or inward looking? What are the implications of these trends for the international legal system? How will it cope with it? Will it become redundant or reflect the realities of the time?