Aaronson on Barton et al, _The Evolution of the Trade Regime: Law, Politics, and Economics of the GATT and the WTO_

[eh.net-review at eh.net]

Published by EH.NET (January 2007)

John H. Barton, Judith L. Goldstein, Timothy E. Josling and Richard 
H. Steinberg, _The Evolution of the Trade Regime: Law, Politics, and 
Economics of the GATT and the WTO_. Princeton, N.J: Princeton 
University Press, 2006. xiv + 242 pp. $30 (cloth), ISBN: 
0-691-12450-7.

Reviewed for EH.NET by Susan Ariel Aaronson, Graduate School of 
Business, George Washington University.


If success is about results, then the most successful international 
organization is the GATT/WTO. (The World Trade Organization 
superseded the General Agreement on Tariffs and Trade in 1995.) Under 
its aegis, trade has expanded dramatically. The ratio of world 
exports of goods and services to GDP rose from 13.5% in 1970 under 
the GATT to 32% in 2005 under the WTO. All major geographic regions 
recorded an excess of trade over output growth. In its almost 60 year 
history, the GATT/WTO has stimulated multilateral trade 
liberalization, settled disputes, and provided a forum for ongoing 
trade talks. The WTO has 150 members as of October 2006, and nations 
such as Iran and Russia, major world/regional powers, are clamoring 
to be admitted as members. But past success is no guarantee of the 
future; and the WTO's future in governing world trade is under threat 
from multiple sources such as the proliferation of bilateral regional 
trade agreements, the failure to find common ground on agriculture 
and other sectors largely outside the WTO, and the unwillingness to 
several large trading nations to implement WTO dispute settlement 
decisions. Moreover, the current round of trade talks, the Doha 
Round, is in jeopardy. In the five years of negotiations (since 
November 2001), WTO members have been unable to find common ground on 
a wide range of issues (particularly related to market access in 
agriculture). Thus, the Director General of the WTO suspended the 
talks in July, 2006. .

This book attempts to explain the multiple threats to the future 
success of the WTO by examining the political, legal and economic 
foundations of the GATT/WTO. The authors come from different 
scholarly traditions: law, political science, and economics. They 
then apply those multiple lens to their analysis of the evolution of 
the world trading system. They maintain that the key to the success 
of the GATT/WTO over this almost 60 year period is its "legitimacy" 
both to policymakers and the public engaging in trade. They argue 
that the GATT/WTO "was once oriented towards free trade and thus 
served a goal believed to be globally beneficial. But as it entered 
into other areas, it became a rule-oriented institution and therefore 
needed a new form of legitimacy" (pp. xi-xii). The book "argues that 
this 'authoritative gap' reflects the regime's inability to recast 
its rules and norms of behavior in line with the changing interest 
and power of its members" (p. 2). But as the authors note, the WTO's 
150 members no longer share norms. Many of the features that 
explained its success "later turned out to be its Achilles heel, 
creating demand for institutional change" (p. 2). The authors note 
that one key flaw in the design of the GATT/WTO is that it allowed 
nations to join preferential regional trading groups. "The result has 
been an explosion of such arrangements, even though the trade and 
investment diversion resulting from regionalization ... often 
conflict with the goals of the multilateral regime" (p. 3). I would 
argue slightly differently that the United States, one of the 
creators of the GATT/WTO, has deliberately undermined the institution 
it created. This focus of bilateral trade liberalization began with 
the first President Bush, but has reached its apex under Bush II, 
George W. Bush. His trade representative, Robert B. Zoellick, argued 
that competitive liberalization would stimulate greater attention to 
multilateral talks, but in fact it has undermined multilateralism and 
led more nations to develop such bilateral arrangements. On October 
9, 2006, EU Trade Minister Peter Mandelson noted that the EU would 
also pursue bilateralism. It is hard not to believe that such 
agreements take up time and energy from a focus on the WTO.

The book is at its best when it explains how the trade regime has 
evolved over time. The authors provide a thorough analysis of how 
GATT/WTO members have dealt with problems such as allowing China (an 
original GATT member) to rejoin the WTO; new issues such as 
accommodating health and safety standards, the environment, and 
services; and why it has failed to deal with key problems such as 
labor standards and movement of people. I was surprised to see that 
the book did not discuss why the inclusion of intellectual property 
rules was revolutionary for the GATT. The GATT/WTO delineates what 
policymakers can not do -- a form of negative regulation. But the 
Trade Related Intellectual Property Agreement (TRIPS) is positive 
regulation. Such an approach to global governance signified a major 
change in regulatory approach to the world trading system, yet the 
authors do not examine that change in that manner.

The book also contains some interesting findings. The authors 
describe a study that proclaims that while each nation has benefited 
from GATT/WTO membership, "nations may have been best off in a world 
absent this international institution" (p. 206). They make this point 
in regards to developing countries that have to comply with rules 
they did not devise. Yet I would have liked to see more on this 
analysis. Maybe policymakers from the newest entrants to the GATT/WTO 
didn't write the rules, but they have benefited from them. In 
addition, whatever the failures of the Doha Round, the focus on the 
needs of developing countries declared in that round has inspired WTO 
members to focus greater attention on what poor countries and people 
living in poverty need to participate in trade. The poor don't just 
need lower tariffs or abstract access to markets. They need low cost 
capital, education about land productivity and planting techniques, 
roads, understanding of national standards and the like. To put it 
differently, trade liberalization is insufficient to enable the bulk 
of the world's poorest people to reap the benefits of trade.

The authors also describe a study published in the _American Economic 
Review_ that claims that the GATT/WTO has not increased trade and 
that non-members may have had a larger increase in trade than did 
members (p. 213). But the authors disagree, citing the role of the 
GATT/WTO in assuring that agreements are honored, and they stress 
that the GATT/WTO has instilled among policymakers a shared notion of 
proper trade etiquette (pp. 213-14).

Yet this reader was left hanging about the authors' view of the 
future of the WTO. As of this writing, its future looks murky indeed. 
The Doha Round of trade talks is at death's door and no member state 
has been willing (or able) to make sufficient concessions to entice 
other members to take similar steps. The authors conclude that the 
WTO must find ways to change -- but the WTO is nothing but the sum of 
its members' wills. If they are unwilling to support change, the WTO 
will become an institution with a proud history and lost potential.

This book deserves a broad audience. It is not a book for entry-level 
undergraduate students in trade, political science, or governance. I 
highly recommend it for students that have already had some 
introduction to the politics and the economics of trade. It would be 
useful in advanced classes in trade, global governance, and law. The 
volume is a good synthesis of intellectual perspectives that can help 
students gain greater understanding of the nuances of trade.


Susan Ariel Aaronson teaches at George Washington University and is 
the author (with Jamie Zimmerman) of _Righting Trade: Public Policies 
at the Intersection of Trade and Human Rights_ (Cambridge University 
Press, 2007).

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