chapter  5
7 Pages

Concluding remarks

Introduction The international trading system has never been more liberalized, more globalized, and less discriminatory than it is today. Much of the credit for such a phenomenal achievement may presumably be attributed to the multilateral trading system that evolved under the auspices of the General Agreement on Tariff and Trade (GATT) during the 1947 to 1994 period, and its successor, the World Trade Organization (WTO), since 1995. Even in the sixteenth through the eighteenth centuries, international trade was dominated by mercantilist regimes, characterized by archaic policies of protections, economic nationalism, and selfsufficiency. Mercantilist trading regimes flourished principally through the acquisition of colonies, which brought unprecedented prosperity for many European colonial powers at the expense of the rest of the world. In the nineteenth century the world began to witness a movement toward more liberal trade regimes, but experienced formidable setbacks in the 1870s and 1930s. It is since World War II that the world has been witnessing a sustained drive toward a more liberalized and more globalized international trading system under the GATTWTO trade regimes. The GATT, however, concentrated primarily on manufactures-especially on products of exports interests to the developed countries. Successive rounds of GATT negotiations succeeded in bringing down tariff barriers significantly for global trade in manufactures. But trade in textiles and clothing (T&C)—a manufacturing activity in which the developing countries had exports interestsexperienced movement in the opposite direction. The sector was systematically subjected to widespread protectionist measures in developed countries ostensibly to limit exports from developing countries. Similarly, the agricultural sector, in which developing countries had dominant exports interests, remained almost completely outside multilateral trade rules and disciplines, and was subjected to massive domestic supports, export subsidies as well as other protectionist measures in developed countries. It was the WTO, the successor of the GATT, which for the first time in world history brought all international trade sectors-agriculture, manufacturing, and services-into strengthened GATT disciplines and principles in 1995. The WTO

also emerged as the most powerful regulatory and watchdog agency unparalleled in world history. The WTO, however, does not guarantee unfettered free tradeit rather provides a platform for multilateral trade negotiations (MTNs), where members exchange liberalization commitments, and the outcome of such negotiations depends largely on member countries’ market power and negotiation capabilities.