Limits to Free Trade

Limits to Free Trade

Non-Tariff Barriers in the European Union, Japan and United States

David Hanson

This book explores the growing list of non-tariff trade barriers raised by the US, EU and Japan and assesses the prospects for significant trade liberalization. The author examines the liability of global free trade through a review of the complaints that these three countries raised about each other over a five-year period. He concludes that free trade may be increasingly hampered as barriers are created more rapidly than can be resolved, and that the prospects for significantly strengthening safeguards are limited.

Chapter 10: Prospects for Reform

David Hanson

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

Extract

THE ARGUMENT THUS FAR In Chapter 1, it was argued that market expansion is an essential tool for economic development. Free trade has been the public ideology for most developed trading states. For most countries, public commitments to free trade have been backed up by the ratification of GATT, membership in the World Trade Organization and widespread acceptance of a series of trade agreements covering specific aspects of the trading process that were negotiated during the Uruguay Round. However, the effectiveness of the GATT trading system is being eroded by a mounting pile of non-tariff trade barriers. Some of the barriers are examples of outright protectionism (particularly in Japan and the United States) and some of them are by-products of domestic regulations that were probably not intended to limit trade (particularly in Europe and the United States). New issues are emerging at a faster rate than old ones are being resolved. The two major tools for dispute resolution are bilateral negotiations and appeals to the WTO Dispute Resolution Process. Unfortunately, there is little evidence that negotiations are likely to be very effective and the Dispute Resolution Process is time-consuming and generally contentious. Would it be possible to develop a more effective system for protecting free trade? 2. PROSPECTS FOR REFORM AT THE NATIONAL LEVEL If governments are truly committed to free trade, then why do these trade barriers emerge in the first place? If we want to mitigate the effects of trade restrictions, a good place to start would be...

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