The challenges to the world trading system 1
The Uruguay Round of the General Agreement on Tariffs and Trade (GATT) was the most comprehensive round in the succession of multilateral trade talks, both in scope and duration. Ironically, its ambitious agenda was set up and had to be negotiated during a time when the GATT system of multilateral and non-discriminatory trade policy was facing two serious challenges: an increasing non-tariff protectionism by industrial countries and a new wave of regionalism, visible in the proliferation of new trading blocs around the globe as well as in the extension and deepening of existing ones.
The rise in protectionist practices was more than just a backlash against multilateral tariff reductions negotiated in earlier GATT rounds. As those measures predominantly surfaced as non-tariff barriers to trade, directed against particular trading partners, they violated the spirit of the GATT which stands for a ‘fix-rule’ trading regime, with these rules applying to all GATT members without discrimination (except under specific, multilaterally agreed criteria). Likewise, regionalism almost by definition discriminates against non-members of a trading bloc as the latter receive less favourable treatment than club members.
These threats to the multilateral trading system must be seen against the background of a changing economic geography, both in terms of an uneven relative growth performance by individual countries and regions in the world economy and, of special interest here, in terms of changing patterns of trade, investment and production, a process commonly referred to as globalisation. Globalisation is visible in the financial sphere, in trade, and in cross-border investments. It is predominantly driven by microeconomic forces, like new technologies and globally oriented corporate strategies, but at the same time it has been propelled and reinforced by the market-oriented policy framework prevailing since the early 1980s. The subsequently increased intensity