.
THE TRADE POLICYMAKING
CHALLENGE
There are several respects in which trade policymaking
today is a more important and difficult field of public
policy than it once had been. First, trade as traditionally
defined now comprises a larger part of most countries’
economies. The process of globalization has linked
rising shares of output, consumption, and employment
to imports, exports, and foreign direct investment, a
fact that holds true for countries at all levels of income
and development. Trade negotiations have grown in
number and scope over the past few decades; they
now cover a much wider range of issues than before
and take place simultaneously at the multilateral and
the regional levels.
Matters are made even more complex by the fact
that developing countries are now expected to bear a
greater share of the burden in the international trading
system. Gone are the days when most developing
countries were not contracting parties to the General
Agreement on Tariffs and Trade (GATT), many of those
that were in the Agreement opted not to engage
seriously in negotiations or to adopt most GATT
agreements, and trade relations with industrialized
countries were typically based on one-way preferences
granted by developed countries.
Developing countries
have subsequently become more active and significant
players in the multilateral system, with nearly all of
them joining the Agreement and then the World Trade
Organization (WTO), and most are also engaged in
at least one free trade agreement, customs union,
or other form of regional trade arrangement (RTA).
Some of them still restrict their regional negotiations
to pacts with their immediate neighbours, but others
opt to negotiate RTAs with one or more of the major
industrialized countries. The question most countries
face is no longer whether they will open and integrate
their economies, but at what pace and in what way.
Countries must decide what form of trade agreements
they will choose to negotiate, what terms they will seek
in these agreements, how far they will go towards the
reduction or elimination of tariffs and other restrictions
on trade and investment, and what domestic reforms
they will adopt — either autonomously or in order
to keep the commitments that they make in trade
agreements — as complements to their marketopening initiatives.