WTO and FTAs - both can be good

Comments on Barry Desker “Time for rethinking trade policy and refocusing on the WTO”, 16/12/2010, http://www.eastasiaforum.org/2010/12/16/time-for-rethinking-trade-policy-and-refocusing-on-the-wto/

While it may be a time to do some re-thinking, a pre-determined view or conclusion that the WTO approach is definitely preferable to FTAs may be premature.

The very basis of the theory that Professor Jagdish Bhagwati uses may have involved unrealistic assumptions. The WTO rules or a realistic negotiated WTO outcome are themselves second best because of the many exemptions and distortions embedded in those rules. So the argument that FTAs are second best and therefore is inferior to a WTO approach simply ignores the fact WTOs are also second best.

So it should be a case of comparing one second best with another second best. In that comparison, there is no necessity that WTOs are better.

Let's consider a simple point. Is there a way to improve the current WTO based trade outcome for the world as a whole, or at least for those involved in FTAs by designing and implementing some optimising FTAs?

Can anyone say for certain that such improvements do not exist at all? I doubt it.

My view is that it is highly likely that some FTAs can be negotiated to further improve the current WTO trade outcome, based on pure logic and simple reasoning. Of course, complex modelling could be conducted to show that, based on realistic examples and cases.

It is not good enough just to resort blindly to the views of some existing authorities in a field to make conclusions without carefully examining the assumptions involved or used by those authorities.

That is not a sound and scientific approach.