TRADE LIBERALIZATION AND CONSTRAINTS ON MOVES TO PROTECTIONISM: MULTILATERALISM VS. REGIONALISM

In this article, two key questions are asked: why has the General Agreement on Tariffs and Trade (GATT) and its predecessor the World Trade Organization (WTO) worked in terms of multilateral tariff reduction and promotion of global trade, and to what extent will it act as a constraint on economic nationalism? To answer these two questions, three themes are laid out in the article: first, the seminal economic model rationalizing the economic logic of the GATT/WTO is assessed; second, the perceived relevance of the GATT/WTO in a world of increasing regionalism is discussed; and third, the robustness of the GATT/WTO legal framework and dispute resolution mechanism is evaluated. The key conclusion is that the underlying economic logic of the GATT/WTO is still relevant, but that enforcement of the cooperative agreement will likely be placed under significant strain with the threat of increased protection, and even a potential trade war.