Robert E. Baldwin and David A. Kay
In the 21 years since the conclusion of the Second World War, a complicated, piecemeal framework of trading arrangements under various international organizations has been created. Now there is concern, internationally and domestically, as to whether this framework is a durable basis for expanded world trade.
Existing trading arrangements can be divided into four broad categories: (1) global trade arrangements that focus on multilateral trade expansion on a nondiscriminatory basis; (2) global trade arrangements with a principal objective of international income redistribution through the mechanism of international trade; (3) regional trade arrangements that focus on the economic relations of a particular political/geographic area; and (4) commodity-product trading arrangements that focus on the international terms of trade of a specific commodity or product. In 1971 about 70 percent of world trade moved under global arrangements and 30 percent under regional ones. The General Agreement on Tariffs and Trade and the Organization for Economic Cooperation and Development fall in the first category of global trade arrangements dealing with multilateral trade expansion on a nondiscriminatory basis.
The basic rules governing most international trade are laid down in the General Agreement on Tariffs and Trade. This agreement, drafted in 1947, has been signed by some 80 nations whose exports dominate world trade. As initially conceived, the GATT was to cover only the narrow commercial policy aspects of a
Robert E. Baldwin is a professor of economics at the University of Wisconsin-Madison, and David A. Kay is the director of the International Organizations Research Project at the American Society of International Law in Washington, D.C.