The World Trade Organization in the New Global Economy

The World Trade Organization in the New Global Economy

Trade and Investment Issues in the New Millennium Round

New Horizons in International Business series

Edited by Alan M. Rugman and Gavin Boyd

Despite the disruption of the multilateral trade talks at Seattle in December 1999, the work of the World Trade Organization (WTO) continues. The trade and investment issues that have been outstanding since the Seattle events are explored in this far reaching book. The distinguished contributors combine several analytical approaches for a comprehensive assessment of the trends, problems and opportunities demanding attention in international trade negotiations.

Chapter 1: The World Trade Organization and the international political economy

Alan M. Rugman

Subjects: business and management, international business, economics and finance, international economics


Alan M. Rugman The World Trade Organization (WTO) is in a crisis. This is due to a complex evolution of events in which the protests of its left-wing critics have diverted public and elite technical attention from the critical issues of interdependent trade and growth. These issues have emerged as international commerce has steadily expanded with major reductions of trade barriers, as negotiated in the Uruguay Round of multilateral interactions that concluded in the mid 1990s. The present crisis at the WTO concerns the status and functions of the organization’s secretariat, and the observance of its principles, norms and rules by member governments. The secretariat is an understaffed and overworked technical bureaucracy, facilitating, often opportunistically, bargains by governments to reduce trade barriers. While these facilitating services are valued, the subjective preferences of governments are not to endow the WTO secretariat with substantial independent research and advocacy capabilities. Governments are committed in principle to non-discriminatory and reciprocal reductions of their trade barriers, but tend to view their formal obligations in this regard as matters of expedience. The common trend is to press for their domestic protectionist interests with any available bargaining power. This results in hard and precise agreements, on the basis of which any subsequent disputes have to be settled through methods of adversarial legalism, combined with renewed bargaining leverage. The crisis of the organization is primarily a consequence of increasing unilateralism – an intensification of the trend in which quasi protectionist interests have been rampant. With this trend the...

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