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The World Trade Organization and the Future of Multilateralism


  • Richard Baldwin


When the General Agreement on Tariffs and Trade was signed by 23 nations in 1947, the goal was to establish a rules-based world trading system and to facilitate mutually advantageous trade liberalization. As the GATT evolved over time and morphed into the World Trade Organization in 1993, both goals have largely been achieved. The WTO presides over a rule-based trading system based on norms that are almost universally accepted and respected by its 163 members. Tariffs today are below 5 percent on most trade, and zero for a very large share of imports. Despite its manifest success, the WTO is widely regarded as suffering from a deep malaise. The main reason is that the latest WTO negotiation, the Doha Round, has staggered between failures, flops, and false dawns since it was launched in 2001. But the Doha logjam has not inhibited tariff liberalization far from it. During the last 15 years, most WTO members have massively lowered barriers to trade, investment, and services bilaterally, regionally, and unilaterally—indeed, everywhere except through the WTO. For today's offshoring-linked international commerce, the trade rules that matter are less about tariffs and more about protection of investments and intellectual property, along with legal and regulatory steps to assure that the two-way flows of goods, services, investment, and people will not be impeded. It's possible to imagine a hypothetical WTO that would incorporate these rules. But the most likely outcome for the future governance of international trade is a two-pillar structure in which the WTO continues to govern with its 1994-era rules while the new rules for international production networks are set by a decentralized process of sometimes overlapping and inconsistent mega-regional agreements.

Suggested Citation

  • Richard Baldwin, 2016. "The World Trade Organization and the Future of Multilateralism," Journal of Economic Perspectives, American Economic Association, vol. 30(1), pages 95-116, Winter.
  • Handle: RePEc:aea:jecper:v:30:y:2016:i:1:p:95-116 Note: DOI: 10.1257/jep.30.1.95

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    References listed on IDEAS

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    Cited by:

    1. Josef Schroth, 2016. "Supervising Financial Regulators," Staff Working Papers 16-52, Bank of Canada.
    2. Bruno, Randolph Luca & Campos, Nauro & Estrin, Saul & Tian, Meng, 2017. "Economic integration, foreign investment and international trade: the effects of membership of the European Union," LSE Research Online Documents on Economics 86615, London School of Economics and Political Science, LSE Library.
    3. Latorre, María C. & Yonezawa, Hidemichi, 2017. "Stopped TTIP? Its potential impact on the world and the role of neglected FDI," MPRA Paper 77162, University Library of Munich, Germany.
    4. Randolph Bruno & Nauro Campos & Saul Estrin & Meng Tian, 2017. "Economic Integration, Foreign Investment and International Trade: The Effects of Membership of the European Union," CEP Discussion Papers dp1518, Centre for Economic Performance, LSE.
    5. Nuno Limão, 2016. "Preferential Trade Agreements," NBER Working Papers 22138, National Bureau of Economic Research, Inc.
    6. Jovanović, Miroslav, 2016. "Emerging Mega International Blocs: Limits and Prospects," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 69(4), pages 271-316.
    7. David R. DeRemer, 2016. "The Principle of Reciprocity in the 21st Century," IEHAS Discussion Papers 1613, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences.

    More about this item

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • K33 - Law and Economics - - Other Substantive Areas of Law - - - International Law


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