Free trade cannot wait for the WTO
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New study calls for the unilateral removal of protectionist barriers
In the context of policy paralysis at the WTO, the author, LSE trade expert Dr Razeen Sally, argues that governments must take back the initiative from supranational institutions. The priority must be unilateral liberalisation – removing trade barriers to benefit domestic consumers rather than waiting for tortuous international negotiations to be resolved. Governments can also help maximise the benefits of free trade by liberalising their economies and strengthening key institutions.
Asian economies have led the way in this regard. Those Asian countries that have successfully integrated into the world economy have done so through unilateral liberalisation. China has reduced its tariffs from an average of 65% twenty years ago to just 10% today – with dramatic consequences for GDP growth.
Yet despite the overwhelming evidence that free trade boosts economic growth, protectionism remains strong both in developing countries and the West. In particular, both the EU and the USA need to tackle continuing high barriers to agricultural trade as well as implicit barriers such as environmental regulations and rules of origin, while at the same time ensuring that a stable international order is maintained. Indeed, providing leadership in liberalising trade is vital if the West is to maintain general international support for free trade and free markets.
Read the full study here.