What the world needs from the
multilateral trading system
Associate Editor and Chief Economics
Commentator, Financial Times
The multilateral trading system at the beginning of the twenty-first century is the most remarkable achievement in institutionalized global economic cooperation that there has ever been. The emergence of the gold standard in the four decades leading up to the First World War was unplanned. The système des traités that governed trade within Europe from 1860 was inherently fragile and limited in geographical scope, above all because the United States remained outside it. The Bretton Woods system of fixed exchange rates lasted for a quarter of a century, before its collapse in the early 1970s. But the General Agreement on Tariffs and Trade (GATT) of 1948— throughout its history no more than the provisionally applied commercial policy remnants of the still-born International Trade Organization—has done more than survive huge challenges. It has thrived. Reborn as the World Trade Organization (WTO) in January 1995, this institution, long of interest only to a narrow group of specialists, has become the most prominent symbol of globalization. Once threatened by ignorant indifference, it now confronts often equally ignorant malevolence. The central question to be addressed below is what wise policy makers ought to do in response to the pressures now falling on the system.