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A Fragmenting Global Economy: A Weakened WTO, Mega FTAs, and Murky Protectionism

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  • Aggarwal, Vinod K
  • Evenett, Simon J

Abstract

Although the global economy has begun to recover from the 2008-2011 financial crisis, challenges to the world trading system have increased. Several trends are taking public policies further away from the core WTO disciplines of non-discrimination, namely MFN and national treatment. This has manifested itself in 1) growing resort to protectionism in the wake of the crisis; 2) continued interest in FTAs, in particular strong interest in interregional RTAs, such as the TTIP and TPP; 3) A stalled Doha Round negotiation where differentiation among WTO members has become a key source of discord. We identify and discuss four determinants of these trends. First, developing countries believe that they got a bad deal in the Uruguay Round and seek alternative terms. Second, the rapid economic growth of the large emerging markets has led them to be forceful advocates of the developing country position at the WTO. Third, in view of the deadlock at the WTO, the US and EU, and other trade-oriented states, have come to believe that interregional accords may provide a viable alternative to the WTO, and will simultaneously address the creation of a spaghetti or noodle bowl created by the proliferation of FTAs. Fourth, the rise of China, often with significant government intervention and state owned enterprises, has fostered interest in “new industrial policy” by many countries, both industrialized and developing. The prospects for a seemingly open yet fragmented global trading system are discussed.

Suggested Citation

  • Aggarwal, Vinod K & Evenett, Simon J, 2013. "A Fragmenting Global Economy: A Weakened WTO, Mega FTAs, and Murky Protectionism," CEPR Discussion Papers 9781, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:9781
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    References listed on IDEAS

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    1. Cathleen Cimino-Isaacs & Jeffrey J. Schott, 2016. "Trans-Pacific Partnership: An Assessment," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 7137, January.
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    Cited by:

    1. Yvan Decreux & Lionel Fontagné, 2014. "What next for the DDA? Quantifying the role of negotiation modalities," RSCAS Working Papers 2014/61, European University Institute.
    2. Luís Cabral, 2017. "Competition policy in the global era," New Zealand Economic Papers, Taylor & Francis Journals, vol. 51(2), pages 100-108, May.
    3. Benjamin Faude, 2020. "Breaking Gridlock: How Path Dependent Layering Enhances Resilience in Global Trade Governance," Global Policy, London School of Economics and Political Science, vol. 11(4), pages 448-457, September.
    4. Decreux, Yvan & Fontagnã‰, Lionel, 2015. "What Next for Multilateral Trade Talks? Quantifying the Role of Negotiation Modalities," World Trade Review, Cambridge University Press, vol. 14(1), pages 29-43, January.
    5. Shiro Armstrong, 2014. "Economic Cooperation in the Asia-Pacific and the Global Trading System," Asia and the Pacific Policy Studies, Wiley Blackwell, vol. 1(3), pages 513-521, September.
    6. Chunding Li & Xin Lin & John Whalley, 2020. "Comparing Alternative China and US Arrangements with CPTPP," NBER Working Papers 26877, National Bureau of Economic Research, Inc.
    7. Stephen, Matthew D. & Parízek, Michal, 2019. "New Powers and the Distribution of Preferences in Global Trade Governance: From Deadlock and Drift to Fragmentation," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, pages 735-758.

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    More about this item

    Keywords

    Doha Round; fragmentation; industrial policy; protectionism; regional trade agreements; WTO;
    All these keywords.

    JEL classification:

    • F02 - International Economics - - General - - - International Economic Order and Integration
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F52 - International Economics - - International Relations, National Security, and International Political Economy - - - National Security; Economic Nationalism
    • F53 - International Economics - - International Relations, National Security, and International Political Economy - - - International Agreements and Observance; International Organizations

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