ABSTRACT
Trade policy matters. On this point, history is clear. Rising barriers and rampant discrimination in international trade in the interwar years were a major cause of the Great Depression. Following World War II, multilateral tariff reductions on a most-favored-nation (MFN) basis contributed to an unprecedented expansion of both international trade and prosperity in the world economy. In both episodes the United States played a leading role. There is, however, growing evidence that the pendulum of protectionism has begun to swing in the opposite direction, and of particular concern is the policy of the United States. The concern is not so much that the United States has in recent years taken the lead in raising barriers to trade; that dubious distinction probably belongs to the EEC. Rather it is that the United States is abandoning its commitment to the postwar multilateral trading system which it took the lead in creating and in which it serves as the linchpin. 86Is this concern well founded? Is the United States abandoning multilateralism in favor of bilateralism? If so, why is this shift occuring, and what are its implications? These are the questions examined here.
