Paul Blustein: Avoiding the Bilateral Blitz

Paul BlusteinNow it’s more urgent than ever. The multilateral trading system needs support. And one of the best signals the United States could send would be to propose a moratorium on bilateral trade deals of the sort the Bush administration has pursued in wretched excess. These deals offer paltry advantages, and have major drawbacks, as I argued in an article for the WPJ’s special trade issue.

The urgency stems from the collapse on July 29 of negotiations aimed at securing an agreement in the Doha Round of global trade talks. Those negotiations dragged on for nine days at the World Trade Organization’s Geneva headquarters, only to end in yet another in a series of breakdowns—this time, over whether developing countries could raise emergency tariffs to protect their farmers. Never mind which countries deserve the most blame for the latest fiasco; there has been plenty to spread around since the talks were launched in the Qatari capital of Doha in 2001. The important point is that the debacle increases the risk that the WTO’s authority will undergo a significant erosion in years to come.

Minimizing threats to the WTO’s authority ought to be a top priority of trade policy, because as I contended in my article, the WTO plays a crucial role in fostering global economic stability. The WTO’s centrality to the trading system is already under some doubt, thanks to the proliferation in recent years of bilateral and regional trade agreements. So the global trade body is facing a double whammy in the aftermath of the Doha Round failure.

Having imparted so much momentum to bilateralism and regionalism, the United States should now exercise leadership in the hope of bringing this trend to a halt. The next president should renounce intentions to pursue further bilateral or regional pacts and declare that henceforth Washington will pursue trade deals only under WTO auspices—whether these are big conventional trade rounds or more limited agreements involving individual sectors such as services.

Regrettably, the response from some policymakers and commentators has been precisely the opposite. These knee-jerk free traders are calling for more bilateral trade deals, on the grounds that liberalization has stalled on the multilateral front. This is appallingly short-sighted, coming at a time when the multilateral system is imperiled.

A move by the United States to stop pursuing bilateral and regional trade agreements might not prevent other countries from striking their own deals. But it would be worth a try. So many countries seek these sorts of pacts because they see other nations doing so, and they feel left out. The best outcome, of course, would be a formal agreement among WTO members to prohibit more deals. Perhaps Washington could join forces with developing country to propose a new WTO rule to that effect, as part of an effort by the next U.S. administration to revive the Doha Round. It’s time for creative thinking to make sure the multilateral system gets through this very rough patch intact.

Paul Blustein is journalist-in-residence in the Global Economy and Development Program of The Brookings Institution. A former staff writer at the Washington Post, he is writing a book about the World Trade Organization.

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