EMBRACING MULTILATERALISM, ONCE AGAIN!
||17th July 2018
Washington Consensus promoted the view that the operation of the free market and the reduction of state intervention were crucial for development in the global South. It is of the view that developing countries should adopt market-led development strategies (such as free flow of goods, services, labour and capital) that trickle down to the benefit of all.
Recently, the trade environment has turned protectionist. There has been a resurgence in views that argue in support for protectionist policies. It is well known that when America sneezes, the World catches a cold. USA has not only pulled out of the TPP, it has also imposed high tariffs on around $50 billion worth of Chinese imports.These actions have triggered other nations like China and USA to exchange trade blows as they have also simultaneously increased tariffs on USA’s exports. It is not only the developed nations that will suffer as a result of these policies. Developing nations’ welfare and growth possibilities depend crucially on trade as underlined by many classical and neoclassical growth theories.
A major shift towards protectionism was observed after the 2008 financial crisis. As a policy response to the 2008 financial crisis, a number of trade restrictive measures were employed by both developed and developing countries.
In recent times, there has been a number of political conflicts coupled with the demise of multilateralism. Proof of this is the slow decline of European Union as well as Brexit. More recently, USA has imposed 25% tariffs on $50 billion worth of Chinese goods.As a result, agreements on a bilateral basis or bilateralism have become a centrepiece of trade diplomacy. Currently, there is a move towards bilateralism in every area, ranging from trade, security to foreign policy. While it has been argued by most economists that “……multilateral free trade should be the ultimate aim of commercial diplomacy”, bilateral agreements are only the second-best...