The World Trading System at Risk

The World Trading System at Risk

Copyright Date: 1991
Pages: 168
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  • Book Info
    The World Trading System at Risk
    Book Description:

    Jagdish Bhagwati, one of the world's leading economists, offers a fascinating overview of the perils and promise facing the world trading system. That system is now being subjected to powerful centrifugal forces. Concerns with unfair trade are rampant, managed trade is increasingly popular, and regionalism is spreading. The United States, the traditional bulwark of multilateralism, has recently resorted to aggressive, unilateral tactics in trade policy. To a consideration of these developments, Bhagwati brings a unique blend of economic theory, historical scholarship, and familiarity with the institutions of world trade. Bhagwati refutes facile but fashionable criticisms of the General Agreement on Tariffs and Trade (GATT). Warning of the dangers of flouting the GATT's provisions, he shows that its underlying conception of trading by rules will be undermined if we extend accusations of "unfair trade" practices to areas as diverse as retail distribution systems, infrastructure spending, saving rates, and workers' rights. He challenges the economic and cultural stereotypes of Japan that fuel the sentiments supporting managed trade and aggressive unilateralism. In addition, he provides novel suggestions for rebuilding the GATT and with it the world trading system itself--suggestions that should prove useful at the Uruguay Round and beyond.

    Originally published in 1991.

    ThePrinceton Legacy Libraryuses the latest print-on-demand technology to again make available previously out-of-print books from the distinguished backlist of Princeton University Press. These paperback editions preserve the original texts of these important books while presenting them in durable paperback editions. The goal of the Princeton Legacy Library is to vastly increase access to the rich scholarly heritage found in the thousands of books published by Princeton University Press since its founding in 1905.

    eISBN: 978-1-4008-6159-0
    Subjects: Business

Table of Contents

  1. Front Matter
    (pp. i-iv)
  2. Table of Contents
    (pp. v-vi)
  3. Preface
    (pp. vii-2)
    Jagdish Bhagwati
  4. CHAPTER ONE Overview
    (pp. 3-10)

    The multilateral trading system, focused on the General Agreement on Tariffs and Trade (GATT), is at a crossroads.* The threats presently faced by the GATT arise from a variety of fundamental changes in the world economy. These changes have produced fissiparous tendencies gnawing at many of the basic principles embodied in the GATT.

    Recalling that the preamble to the GATT forcefully declares its objective as the pursuit of “reciprocal and mutually advantageous arrangements directed to the substantial reduction of tariffs and other barriers to trade and to the elimination of discriminatory treatment in international commerce,” and mindful of its central...

    • CHAPTER TWO The Rise of Unfair Trade
      (pp. 13-22)

      Why have concerns about unfair trade risen to the forefront today? A conjunction of several factors drives these concerns.

      But if these forces have to be understood, assessed, and, for the most part, declared as hazardous to the health of the world trading regime, it is necessary to analyze the role of free trade vis-à-vis fair trade.

      Fair trade plays no role in the economic tradition, dating back to the British policy during the latter half of the nineteenth century, that emphasizes that unilateral free trade is advantageous for oneself no matter what others do. The “strategic” notion that if...

    • CHAPTER THREE The Issue of Managed Trade
      (pp. 23-47)

      The question of managed trade has arisen as a threat to the fix-rule GATT regime, not just because of the outbreak of unfair-trademindedness. It has also derived from three other notions: (1) most trade is managed trade anyway. (2) Japan, a major player today, is exotic and different; she will not, and cannot, play by rules. (3) High-tech industries are so important that they cannot be, or will not be, left to the marketplace. Each contention is erroneous, though simplistic and superficially beguiling. Consider each in turn:

      That trade occurs frequently by either bypassing or flouting the GATT discipline, as...

    • CHAPTER FOUR Aggressive Unilateralism
      (pp. 48-57)

      The concerns over unfair trade have created yet another hazard for the fix-rule GATT system, cutting at the heart of multilateralism, in the recent use of aggressive unilateralism by the United States to impose on others its unilaterally defined views of unfair trade practices.

      I refer here, of course, to the use of the Section 301 and “Super 301” provisions of the American trade legislation, as currently updated in the 1988 Act, to demand negotiations from specified countries on “priority” practices that the United States finds unacceptable, regardless of whether they are proscribed by GATT or another treaty, and to...

    • CHAPTER FIVE Regionalism
      (pp. 58-80)

      The question of regionalism has emerged recently with the moves to Europe 1992 and the U.S.-Canada Free Trade Agreement. These regional alignments have led to fears of fragmentation of the world economy into trading blocs in antithesis to GATT-wide multilateral free trade. Does such regionalism truly constitute a threat to multilateralism? If so, what is the nature of the threat? And what can be done to counter that threat?

      Before these questions can be answered, it is necessary to recall that the GATT itself extends MFN only to its members and hence falls short of worldwide multilateralism. But the important...

    • CHAPTER SIX The Uruguay Round and Beyond
      (pp. 83-98)

      The Uraguay Round, begun in the fall of 1986, is now coming to a close at the end of 1990. It seeks to extend the GATT discipline to new sectors (for example, agriculture and services), improve it in the old sectors (for example, textiles), reexamine old issues (for example, safeguards protection), and embrace new issues (for example, intellectual property protection and foreign investment). In many ways, as the fifteen negotiating committees work their way,¹ the contracting parties at the GATT are engaged on arguably the most ambitious and challenging task of constitution making since the original GATT itself.

      I cannot...

    • APPENDIX I Clarifying Conceptual Confusions and Refuting Fallacies
      (pp. 99-112)
    • APPENDIX II Changes in GATT Membership since 1982
      (pp. 113-114)
    • APPENDIX III Dispute Settlement Cases at the GATT, 1980–1988
      (pp. 115-125)
    • APPENDIX IV Explaining Section 301, Special 301, and Super 301 in U.S. Trade Legislation: The Instruments of Aggressive Unilateralism
      (pp. 126-140)
    • APPENDIX V The Negotiating Groups at the Uruguay Round
      (pp. 141-142)
  7. Notes
    (pp. 143-150)
  8. References
    (pp. 151-156)