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Nunnenkamp, Peter
Year of Publication: 
[Publisher:] Institut für Weltwirtschaft (IfW) [Place:] Kiel [Year:] 1993
Series/Report no.: 
Kieler Diskussionsbeiträge 204
The multilateral trade negotiations in the Uruguay Round have stagnated for years. At the same time, the world economy has witnessed a strong revival of regional trade arrangements. This juxtaposition suggests that major trading partners are drifting away from the GATT. Systemic weaknesses in the GATT framework, particularly the lack of effective sanction mechanisms, and the overly ambitious agenda of the Uruguay Round have rendered it difficult to reach a multilateral trade accord. In the EC, the Internal Market programme has been given priority over the GATT negotiations. And the recent move by the United States towards regionalism also threatens to undermine the basis upon which multilateralism could rest in the future. The future of the world trading system depends critically on whether the trading partners realise that regionalism cannot be defeated successfully by forming countervailing protectionist blocs. To prevent a further erosion of the fundamental GATT principle of mostfavoured- nation treatment, sweeping decisions are required in three respects: — In concluding the Uruguay Round, swiftness is more important than completeness. An immediate agreement should comprise all tentative achievements reached so far. — Trade disputes left operf for the time being and new challenges such as ecologically motivated trade barriers should be tackled in follow-up negotiations to be started immediately after conclusion of the Uruguay Round. — The EC and the United States should commit themselves to open regionalism by relaxing restrictive accession procedures. Moreover, GATT obligations must be extended by a provision stipulating that third countries whose trade is negatively affected by regional integration schemes will be compensated. The responsibility to establish the conditions under which regional integration and multilateral trade liberalisation could reinforce each other rests with the world's leading trading partners. Open regionalism in a strong multilateral framework would not only break the vicious circle that is eroding the world trading system, but may even induce a virtuous circle of mutual trade liberalisation between regional groupings.
Document Type: 
Working Paper

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