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A New Dominant Trade Species Emerges: Is Bilateralism a Threat?

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  • Frederick M. Abbott

Abstract

Over the past decade, government trade and finance ministries have increasingly turned toward negotiating bilateral and regional trading arrangements, and away from negotiations in multilateral forums like the WTO. There are several reasons for this shift, including changes in the global political environment and negotiating obstacles encountered by the multinational business community at the multilateral level. This shift appears to be an embedded phenomenon. Positive and negative aspects of preferential trading arrangements (PTAs) are in evidence. Trade creation-trade diversion economic analysis suggests the results may be net global welfare enhancing, although such analysis does not readily assess distributional effects. The global economy is enjoying a period of sustained and widely distributed economic growth, suggesting that the PTA phenomenon is not an immediate economic threat. On the negative side, the PTAs lead to administrative complexity, and may be somewhat destabilizing as businesses are encouraged to relocate. Some countries may suffer if left out, but this risk is ameliorated by the wide availability of potential negotiating partners. The PTA negotiating environment strongly favors powerful economic actors like the United States and European Union, which are largely dictating terms to developing (and developed) countries. Developing countries, particularly the less economically powerful, are losing autonomous decision-making authority. The consequences of this are difficult to quantify, and may raise questions better attuned to moral philosophers than economists. The WTO continues on its way, relegated to a less central status. A return to the WTO might reinvigorate the role of less powerful actors, but such return does not appear an immediate prospect. The PTA phenomenon, on balance, does not appear aggressively threatening. We may, however, be underestimating the positive role of multilateralism. , Oxford University Press.

Suggested Citation

  • Frederick M. Abbott, 2007. "A New Dominant Trade Species Emerges: Is Bilateralism a Threat?," Journal of International Economic Law, Oxford University Press, vol. 10(3), pages 571-583, September.
  • Handle: RePEc:oup:jieclw:v:10:y:2007:i:3:p:571-583
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    File URL: http://hdl.handle.net/10.1093/jiel/jgm021
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    Cited by:

    1. Adlung, Rudolf & Molinuevo, Martin, 2008. "Bilateralism in services trade: is there fire behind the (BIT-)smoke?," WTO Staff Working Papers ERSD-2008-01, World Trade Organization (WTO), Economic Research and Statistics Division.
    2. Maniu Cristina & Marin Pantelescu Andreea, 2013. "Romanian’S Services In The Actual Context Of The Economic Crisis," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 1, pages 245-254, February.
    3. Francis Onditi, 2021. "What does the Data Tell Us About Dominatarian Theory of Regional Integration?," Jadavpur Journal of International Relations, , vol. 25(1), pages 73-100, June.
    4. Francis Onditi, 2021. "Dominatarian Theory of Regional Integration," Insight on Africa, , vol. 13(1), pages 76-94, January.

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