June 24, 2006

FORGET THE WORLD:

Plan B for Plurilateralists (Bernard K. Gordon, 22 June 2006, The Wall Street Journal)

It's the developing nations, led by Brazil and India, which are calling for just a "modest outcome," and it's time to recognize they have too small a stake to make that case. In fact, the world's 50 "least developed" nations account for less than 1% of global trade, and even with India and Brazil added, the total is less than 3%. The economies that are in fact the world's trade leaders are, not surprisingly, in North America, northeast Asia, the EU and the Asia/Pacific region.

If those trade heavyweights cannot close a satisfactory deal this summer, it will be time to start on Plan B, which would be centered on "plurilateral" or less than global-scale trade agreements. These would retain the key elements of the present multilateral system, which means they must exclude all preferences or preferential treatment; be based on full reciprocity; and be open to all who abide by those rules.

Fortunately the two essential elements to do just that are already in place. One building-block is the General Agreement on Tariffs and Trade's Article 24, which was initially drafted to allow for the original European Community. It provides legal cover for groups of nations to establish FTAs, so long as "substantially all trade" is included. The second building-block is in the several "free trade" agreements the U.S. already has signed, and the others on its current agenda. Included are NAFTA, the recent agreements with Singapore, Australia and Chile, earlier agreements with Jordan and Israel, and the largely completed CAFTA. FTA talks recently begun with Korea and Malaysia have produced encouraging signs (those with Thailand are on hold), and further down the road are several FTAs in the Middle East.


Realisatically, if we add free trade with India and Brazil, to the regime we already have, what choice does anyone else have?

Posted by Orrin Judd at June 24, 2006 11:17 AM
Comments for this post are closed.