The Challenges for the Multilateral Trading System Raised by the Ongoing Structural Transformations in the Global Economy

Over the last decade, international trade has been growing faster than global production, steadily increasing interdependence among nations. Sustained trade growth has been accompanied by profound changes in the patterns of trade flows, reflecting new production structures emerging under the impact of rapid progress in the development of transport, communications and information technologies, major shifts in the patterns of demand, rapid expansion of global production networks, and increasing integration of developing countries into the world economy. While global trade relations experienced a dramatic transformation during the last decade, the multilateral trading system and the WTO – the venue for international trade cooperation – failed to keep pace with the rapidly changing trade environment. Consequently, the world trade rule-book that is currently guiding international trade relations as a result of the Uruguay Round (1986-1994) and the creation of the WTO (in 1995) is stuck in the requirements of 20st century trade. Improving and adjusting multilateral trade rules and disciplines ranked among the main objectives of the Doha Round launched in 2001. However, trade negotiations have been stalled since 2008. And with this impasse, the legislative function of the WTO responsible for the elaboration of new rules has been also blocked, hindering thus the process of adjustment. This paper addresses the main challenges confrunting the multilateral trading system both in the long and short-term in its endeavour to adjust to the new realities of 21st century trade. More specifically, it takes a look at the key problems arising for international cooperation in trade from: (1) the continually shifting weight of economic power and influence within the world economy; (2) the dynamic spread of global production networks operated by TNCs; and (3) the explosion of regionalism and preferential trade agreements. Finally, the paper highlights the vital importance of concluding the Doha Round for curbing protectionist pressures and stimulating global growth, particularly under the present circumstances when the world economy continues to be plagued by the consequences of the global financial and economic crisis.