Perilous retreat from global trade rules

Finally, the ability of mega-PTAs to set norms that benefit non-participants might prove to be more limited than many believe. Transatlantic trade rules on currency valuation, for example, might leave Japan indifferent. And specific rules to protect intellectual property would do nothing more than prevent Brazil and India from participating.

Overcoming these obstacles will require, first and foremost, some level of coherence among PTAs, with the various deals following roughly similar principles when addressing regulatory issues. Furthermore, if regionalism comes to be perceived as coercive and unfriendly, countries could form defensive trade blocs, leading to economic fragmentation and heightened security tension. To prevent such an outcome, the deals should be relatively open to newcomers and amenable to the possibility of multilateralization.

But the need for policy coherence extends beyond the mega-PTAs. Optimal outcomes for international trade require attention at all levels to the interface between trade and a host of other policy areas.

Consider food security. Effective national policies concerning land, water, and natural-resource management, infrastructure and transport networks, agricultural-extension services, land-ownership rights, energy, storage, credit, and research are as important as trade arrangements to transferring food from surplus countries to those in need.

Likewise, regional cooperation on water and infrastructure is critical to improving diplomatic relations and establishing well-functioning markets. And, at the multilateral level, agricultural production and trade is influenced by policies on subsidies, tariffs, and export restrictions (although the latter are not currently governed by strict WTO rules).

Despite the great value of regional cooperation and coherent national policies, a functional multilateral trade system remains vital. In order to reinvigorate multilateral trade cooperation, governments must work together to address unresolved issues from the Doha agenda, such as agricultural subsidies and tariff escalation. To be sure, the agreement reached at the WTO's recent ministerial conference in Bali represents a boon for world trade and multilateral cooperation. But governments must expand the agenda to include guidelines aimed at ensuring that mega-PTAs do not lead to economic fragmentation. Future WTO rules on export restrictions could help to stabilize international markets for agricultural commodities. Trade in services could be liberalized further, and industrial subsidies could prevent countries' green-innovation objectives from getting lost amid pressure to boost employment at home.

Moreover, global rules on investment could enhance the efficiency of resource allocation, while international guidelines for competition policy would serve the interests of consumers and most producers more effectively than the existing patchwork system. Increased cooperation with the International Monetary Fund on exchange-rate issues and with the International Labor Organization on labor standards could diminish trade tensions and enhance trade's contribution to improving people's lives.

A shared strategy for addressing non-tariff measures would help countries to avoid unnecessary trade friction. And new developments in energy production might facilitate more meaningful international cooperation on energy trade and investment.

All of this would require that emerging economies accept eventual alignment of their trade commitments with those of advanced economies, and that advanced countries accept that emerging countries deserve long transition periods. In 2014 and beyond, all parties must recognize that, in a multipolar world, an international trading system based on an updated set of rules is the least risky means of pursuing their growth objectives. The recent WTO agreement reached in Bali on streamlining border protocols, among other issues, shows that important steps in this direction can indeed be taken.

The author is former director general of the World Trade Organization, and chair of the Oxford Martin Commission for Future Generations.

Project Syndicate