ABSTRACT
This chapter discusses the postwar global trade regime and the changing role of the North and South in the regime. A major theme relates to the competing pressures for trade liberalization and protectionism. According to the Stolper–Samuelson theory, trade liberalization benefits abundantly endowed factors of production and hurts poorly endowed factors. Protectionist producers are often well organized and able to mobilize domestic opposition to unilateral trade liberalization. The chapter assesses the efforts of the World Trade Organization (WTO) and its predecessor the General Agreement on Tariffs and Trade (GATT) to deal with the collective action problem in trade, namely the need to avoid cheating on free trade principles. In earlier years, GATT promoted liberalization mainly by lowering tariffs. GATT’s first director-general referred to the non-discrimination principle as the fundamental cornerstone of the organization;. it reflects the need to treat all trading partners equally. During the years of GATT the reciprocity principle gave the major DC’s the most influence in global trade negotiations.
