Early View Article - Breaking Gridlock: How Path Dependent Layering Enhances Resilience in Global Trade Governance

Breaking Gridlock: How Path Dependent Layering Enhances Resilience in Global Trade Governance

What are the implications of the proliferating preferential trade agreements (PTAs) for the liberal trade order? Many scholars and practitioners see large increases in PTAs as a destabilizing factor that undermines core features of the post‐war international trade system. By contrast, this paper argues that the accelerated growth of PTAs since the mid‐1990s enhances the resilience of the liberal trade order. PTAs increase the ability of the order to accommodate heterogeneous preferences and distributive conflicts. They represent a continuation of a longer path of liberalization set in motion by the General Agreement on Tariffs and Trade (GATT). This path‐dependent development created conditions for a gradual expansion of the membership and the regulatory scope of the GATT/WTO system, but also heightened levels of preference heterogeneity and distributive conflicts. By enabling groups of states with homogenous preferences to layer new rules on top of the multilateral GATT/WTO system, PTAs enable the continuation of the liberalization path. Consequently, PTAs have served as complements rather than to undermine the WTO.

Policy Implications

  • Layering offers a promising way to break gridlock in major international institutions. Especially given high levels of preference heterogeneity in a globalized world, decision‐makers should realize its potential to put in place workable governance solutions in the absence of consensus.
  • Layering gives rise to or expands regime complexes. Within regime complexes, the key task for practitioners is to invoke suitable governance techniques such as orchestration and deference to work towards mutual complementarity between layered international institutions. Inter‐institutional complementarity needs to be deliberately created by decision‐makers that work to coordinate the governance efforts of separately established international institutions.
  • Within the regime complex for international trade, decision‐makers should work towards balancing the desire to enable high levels of economic interdependence with the recognition that economic and political models around the world are highly diverse.
  • Decision‐makers working on ‘mega‐regional’ trade agreements should work towards maximizing the complementarity of the rules those agreements establish with existing WTO rules.

 

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