Multilateral and bilateral trade policies in the world trading system: an historical perspective

Abstract

Events of the past two decades have generated increasing concern about the direction of the world trading system. While the General Agreement on Tariffs and Trade (GATT) helped orchestrate the substantial reduction in tariffs after World War II, the multilateral approach to trade liberalisation has encountered difficulty in stemming the proliferation of non-tariff trade barriers and in extending international rules to new areas of trade. Meanwhile, the appearance of bilateral or regional trade arrangements in Europe, the Americas, and elsewhere provides an alternative track for expediting trade reform, but also risks deteriorating into exclusionary, trade-diverting blocs that possibly may bring harm to world welfare.