ABSTRACT
This chapter addresses the twin issues of General Agreement on Tariffs and Trade (GATT) reforms and of the broad prospects for the international trading system, mainly from the vantage point of recent international conflicts in which Japan has played a major role. The optimum balance between the two conflicting tendencies in the embedded liberalism depends on the general trends of the economy in the particular phases of long cycles. So long as the economy followed upward trends, as in the 1950s and 1960s, the multilateral aspect of the system was dominant, leading to increasing trade liberalization and integration. In the post-war period, the GATT system has been confronted with very special problems in trying to accommodate Japan, this dynamic and challenging nation, into its own framework. Viewed from the perspective of "embedded liberalism," the crisis of the GATT system is above all a crisis of the open multilateral trading system.
