ABSTRACT
This chapter critically examines the workings of the various forces shaping international trade. After a brief review of the classical trade theory, we argue that trade has not been ‘free’ largely because it is not always beneficial to all parties. We present evidence to show that the world trading system has been managed by the General Agreement on Tariffs and Trade (GATT) through the use of various strategic trade policies that were favourable to developed countries and to the interests of powerful groups within them. The World Trade Organization (WTO), which grew out of the GATT in 1995, is seeking to emasculate government intervention in all markets. However, a careful reading of the various agreements that now form the institutional framework of the WTO reveals that the ‘new rules’, like the old ones, are written by the powerful actors. This leads us to explore the important issue of how trade, and globalization in general, has led to a rise in inequality (in income and wealth), both within and between countries.
