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Multilateralism’s promise

It is certainly no coincidence that the theme of this year’s World Trade Report, an annual publication of the World Trade Organisation should be an in-depth study of the multilateral trading system since its inception 60 years ago. On January 1, 2008, the multilateral trading system, now represented by the WTO and earlier by the GATT, will celebrate its 60th anniversary. That landmark occasion would be more meaningful and multilateralism considerably strengthened, i f there is a breakthough in the Doha development round negotiations that have been going on for the past six years. A breakthrough seemed possible even a month ago but it is now clear that the most ambitious multilateral trade deal ever attempted will take some more time to be clinched. However, even without a successful culmination of the Doha round, the overall report card of multilateral trade is generally impressive. As the WTO says, the story is one of remarkable change and adaptation of a system that has contributed significantly to post-war prosperity. The global trading system has underpinned an unprecedented span of economic growth. It has contributed to an environment in which many countries have been able to raise development levels and reduce poverty. World trade has grown 27-fold in volume since 1950, three times faster than world output. Perhaps the most significant achievement of the trade bodies is the dispute settlement mechanism that has brought the rule of law to world trade.

However, there have been drawbacks. Trade liberalisation has been uneven, with issues of agriculture and market access for industrial products proving to be particularly contentious. The prolonging Doha round has been partly responsible for the proliferation of bilateral and regional trade agreements. These are second-best options that create complacency and detract from the imperative of having to work for a stronger multilateral trade agreement. There is no denying that the multilateral system has not delivered on all its promises and, despite a 60-year record, still faces daunting challenges. The biggest of them all will be to convince governments that there is really no viable alternative to the WTO in a fast changing world. On many scores — economic, political and legal — the multilateral system scores over any format that has been devised. In addition to its near-term agenda of concluding the Doha round, the WTO will have to deal with new issues such as the relationship between trade and climate change and between trade and energy. Besides, continuing with existing tasks such as strengthening and deepening the multilateral trading rules in services will remain a priority.

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