Chapter 5: Global Trade Policy in the New Century
Razeen Sally To expect, indeed, that the freedom of trade should ever be entirely restored . . . is as absurd as to expect that an Oceana or Utopia should ever be established . . . Not only the prejudices of the publick [sic], but what is much more unconquerable, the private interests of many individuals, irresistibly oppose it. (Adam Smith, Wealth of Nations) It tells them of freedom, and how freedom was won, and what freedom has done for them, and it points the way to other paths of freedom which yet lie open before them. (John Bright, on the repeal of the Corn Laws) INTRODUCTION In the last six decades, expanding international trade and capital flows have progressively reintegrated the world economy in ever more complex ways. Policy and technological innovation have combined to produce what we now call economic globalisation. Post-1945 trade policy has been a constant battle between freer-trade and protectionist forces. Generally, liberalisation has been the trend, but it has coexisted uneasily with varieties of protectionism that have always assumed new and potent forms. Free traders, in the spirit of John Bright’s stirring words, were at their most optimistic in the 1980s and 1990s, when liberalisation spread fast across the developing world and the ex-command economies. Since then a note of caution and pessimism has set in, echoing perhaps the sober Scottish realism of Adam Smith. This chapter tries to make sense of trade-policy developments in the new century. It also tries to shed light on the prospects for further external...
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