A World Trading System for the Twenty-First Century

When designing a world trading system for the twenty-first century, “Keep calm and carry on” beats “Move fast and break things.”

Global trade is in trouble. Climate change, digital trade, offshoring, the rise of emerging markets led by China: Can the World Trade Organization (WTO), built for trade in the twentieth century, meet the challenges of the twenty-first? The answer is yes, Robert Staiger tells us, arguing that adapting the WTO to the changed economic environment would serve the world better than a radical reset.

Governed by the WTO, on the principles of the General Agreement on Tariffs and Trade (GATT), global trade rules traditionally focus on “shallow integration”—with an emphasis on reducing tariffs and trade impediments at the border—rather than “deep integration,” or direct negotiations over behind-the-border measures. Staiger charts the economic environment that gave rise to the former approach, explains when and why it worked, and surveys the changing landscape for global trade. In his analysis, the terms-of-trade theory of trade agreements provides a compelling framework for understanding the success of GATT in the twentieth century. And according to this understanding, Staiger concludes, the logic of GATT's design transcends many, if not all, of the current challenges faced by the WTO.

With its penetrating view of the evolving global economic environment, A World Trading System for the Twenty-First Century shows us a global trading system in need of reform, and Staiger makes a persuasive case for using the architecture of the GATT/WTO as a basis for that reform.

Robert W. Staiger is Roth Family Distinguished Professor in the Arts and Sciences and Professor of Economics at Dartmouth College and a Research Associate of the National Bureau of Economic Research.

Preface ix
1 Introduction 1
I The World Trading System of the Twentieth Century 29
2 The GATT/WTO 31
3 What Do Trade Negotiators Negotiate About? 59
4 Tariff Bargaining in the GATT/WTO 77
5 Tariff Bargaining without GATT/WTO Rules 99
6 The GATT/WTO as an Incomplete Contract 119
II Meeting the Challenges of the Twenty-First Century 147
7 The Rise of Large Emerging Markets 149
8 Climate Change 169
9 Digital Trade 187
10 The Rise of Offshoring and Global Value Chains 219
11 The Push toward Regulatory Convergence 237
III The Future of the Rules-Based Multilateral Trading System 263
12 The Elephants in the Room 265
13 A World Trading System for the Twenty-First Century 295
14 Conclusion 305
References 311
Index 325