The NYT reports that negotiators in Seoul squeezed through "the world's largest bilateral free trade agreement" before President Bush's fasttrack negotiating authority expired. Most free traders are mildly optimistic, but they'd certainly prefer that the deal was rendered unnecessary due to the success of the Doha round at the WTO.
The primacy of multilateral trade agreements over bilateral treaties always struck me as fairly straightforward. Yet political considerations have pushed the Bush administration into making quite explicit the contention that bilateral agreements are enough. I was actually surprised at the generally thin literature on this issue, but this article rather definitively decides the issue in favor of multilateral trade agreements.
The real question now is one of how to proceed from here. With the rather spectacular death of the Doha round, not even the smallest progress toward multilateral negotiation seems possible. Some progress on lowered trade barriers is obviously better than none, but distortions will creep into the system. The current bilateral trade regime is based on the "wheel and spoke" model, but invariably the "spokes" of trade are unbalanced and even overlapping. Real human costs are observable every time the international trade regime is upended by a new set of rules. The current adjustment makes the world richer on balance, but unfortunately future changes will be more painful because of the political failures of the Doha round.
Truly free trade, despite almost universal acceptance in principle, still eludes us. Maybe next time we'll finally get it right.
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