Role of the State and trade agreements

The role of the State and government in a globalised world is a subject matter of great debate especially depending on which side of the spectrum you come from. Is the role of the State incompatible with free trade and globalisation? Can they co-exist? Does free trade and globalisation necessarily mean reduction of the role of the State in economic activity and governance?

I had written about this a long time ago in this blog piece that I "searched out" here - on State Capitalism and globalisation. A more recent piece is the rather critical one wherein Martin Khor alleges that regional trade agreements are reducing the role of the State, especially State Owned Enterprises with provisions relating to them found in these agreements.

Titled "The Role of the State in Developing Countries under Attack from New FTAs", he argues:

"Naturally, there are pros and cons to any agreement, including the FTAs. Any potential gain for a country in exports or investments should be weighed against potential losses to domestic producers and consumers, and especially the loss to the government in policy space and potential pay-outs to companies claiming compensation under the FTAs' investment rules. 

But if developing countries have to come under new international rules that curb the role of the state and that re-shape the structure of their economy, then the prospects for future development will be adversely affected."

The role of the State, State owned enterprises and government are a source of constant challenge in discussions on liberlaisation and globalisation. How do international trade agreements address this question? Does GATT/WTO distinguish between a State led economy and a liberalised economy? Does it prefer one over the other? Is there place for a mixed economy in this discourse? Can we build a model for a mixed discourse?

2013 - Would multilateralism prevail?

With the Bali Ministerial is fast approaching (in the context of trade negotiations a year is definitely 'fast approaching') calls for a reinvigoration of multilateralism have started surfacing again. The failure of the Doha round and a growth in bilateralism are seen as threats to the rule-based, non-discriminatory international legal framework.

Peter Sutherland, a former GATT and WTO Director General, called upon the US and China to take a lead in restoring the credibility of the WTO negotiation process. Writing in Livemint on the issue he stated:

"It is not too late to reverse the apparently inexorable tide of bilateralism. But the only way to do so is by proceeding with WTO negotiations. Even if the Doha Round cannot be concluded, there may be other routes, such as implementing what has already been agreed. 

Another alternative might be to advance multilateral negotiations among willing countries in specific areas, such as services, with other WTO members joining later. 

But if we are to move forward rather than revert to earlier, more dangerous times, the US, in particular, must reassert a constructive role in multilateralism. The US must lead again, as it did in the past. And now it must do so with China at its side."

WIll multilateralism prevail in 2013? WIll the low hanging fruit of multilateral negotiations be picked? Will a Trade Facilitation Agreement get a thumbs-up? Will more plurilateral agreements be entered into, to be adopted later by all members? Will it lead to the resurrection of multilateral negotiations to break the juggernaut of PTAs and FTAs? How will the impasse be broken? Which countries will take a lead? How will dispute settlement react to the progress in negotiations? How much pressure would it be able to withstand? Will it be continue to evoke the respect it does now?

One would need to see through 2013 for some of these answers, I guess.