Managing the Decentralising International Trade Architecture

Global economic governance is in flux. The centralised international trade architecture of the post-Bretton Woods era is decentralising as new regional institutions are being established for various reasons. Decentralisation per se is neither good nor bad. It depends on whether there is “healthy” competition and functional complementarity or “unhealthy” competition between global and regional institutions. Against that backdrop, this chapter has three objectives, to: (i) review the decentralisation of the international trade architecture; (ii) identify the benefits and the risks of the decentralisation process and its implications for the centrality of World Trade Organisation (WTO) and (iii) recommend policies for the WTO to manage the process. This chapter argues that, so far, the benefits of new regional institutions and trade decentralisation appear to have outweighed the risks, and as a result global economic governance may have improved. Looking ahead, this chapter recommends a number of policy actions that the WTO should take to manage trade decentralisation. This chapter argues that Asian countries, especially those that are members of the Group of 20, should play a greater role in lobbying and driving the needed reforms of the WTO. They should also seek to expedite implementation of the Regional Comprehensive Economic Partnership (RCEP) and eventually institutionalise the complementarity between RCEP, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and the Belt and Road Initiative.