Towards a Better Future
Multilateral trade, environment and development
If the sole objective of a multilateral trade regime is to ensure smooth and predictable functioning of the global trade activities, with little regard for the interlinks with environmental sustainability, the trade system will not continue to remain smooth nor predictable. The role of information and institutions is very significant in mitigating potential problems.
The operational objectives of multilateral trading system need to be formulated in terms of market institutions and their governance. The issue of governance must be better appreciated in terms of the implications on transaction costs, comprising mainly the costs of undertaking trade transactions as well as the costs of devising institutional arrangements, monitoring and enforcement. The role of welfare enhancing competition policies on a fair and non-discriminatory basis remains the foundation for all approaches toward multilateral trade governance. The natural forces operating on the market institutions constitute the fundamental dynamics, and these can only be partially influenced by the rules of governance. At the crux of the matter remains the issue of 'contestability of markets' (see Baumol et al. ( 1982) for a detailed account of the features). This feature may be characterized in terms of the prevalence of market conditions of the competitive processes wherein the anticompetitive forces due to government or private actions are eliminated so as to ensure unimpeded market access (see also Zampetti and Sauve, 1996).