Fifty Years of the GATT/WTO: Lessons from the Past for Strategies for the Future

Five major lessons for successful global trade management emerge from the first fifty years of the GATT/WTO system. They need to be applied to the present situation to set the stage for another half century of successful multilateral trade cooperation. I will summarize the key headings at the outset and then elaborate each, concluding with proposals for the upcoming Fiftieth Anniversary Ministerial and the WTO agenda for early part of the twenty-first century.

• The Bicycle Must Keep Moving. Forward momentum is essential to avoid backsliding into protectionism and mercantilism. A major new initiative is sorely needed at the present time to restart the bicycle.
• .Big is Beautiful. Large-scale initiatives work better than small ones in keeping the bicycle moving. The time has come to launch the largest liberalization effort in the history of the global system, an effort to achieve global free trade by a date certain (probably 2010 or 2020) via a new Millennium Round and perhaps one or two successors.
• 3. Building Blocks, Not Stumbling Blocs. Regional trade arrangements have been a major source of liberalization momentum throughout the postwar period, especially over the past decade, but also pose potential risks to the global system. Hence, they provide both the foundation for the next big multilateral initiative and another motivation to launch it.
• Money is Central. The international monetary and macroeconomic environment has been a critical determinant of the launch of all three major postwar trade rounds. Prospective monetary developments, particularly the onset of record trade deficits in the United States, suggest a similar imperative over the next year or two.
• 5. Leadership is Essential. The United States has galvanized each of the previous rounds but the European Union has been an essential partner in de facto "G-2" management of the system. With the creation of the euro, G-2 management will extend into the monetary arena and become more apparent-including for the next major WTO negotiation.

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