NIRA

JPN

OPINION PAPER

Why Choose the TPP?
-A Consideration of the Issues from the Perspective
of the System of International Trade-

What form will trade negotiations take in the 21st century?

The second half of the 20th century saw profound growth in the world
economy as a result of the liberalization of trade. At the center of this process were
the General Agreement on Tariffs and Trade (GATT) and its successor, the World
Trade Organization (WTO).



The WTO is an excellent system. Its great strength is its multilateral framework,
incorporating most of the world’s nations. The most-favored nation principle, which
demands non-discriminatory treatment from all member nations, has played a
significant role in extending the benefits of trade liberalization negotiations to the
entire world. Under the WTO system, the tariff rates of advanced manufacturing
nations have dropped to extremely low levels. Emerging nations have also opened
their markets in order to realize economic growth.



However, with the advent of the 21st century, the limits of the WTO’s functions have
become increasingly apparent. The Doha Round, marked by conflict between the
opinions of developed and emerging nations and the subsequent stalling of
negotiations, stands as a symbol of these limits. With more nations participating and
more comprehensive liberalization being pursued, it is unavoidable that negotiations
will face difficulties.



This is not to imply, of course, that the WTO has declined in importance. WTO rules
have made it impossible for nations to implement self-serving trade policies. WTO
rules forbid the illicit raising of tariffs and the restriction of trade by illegal methods.
Most nations respect these rules. In addition, when trade issues result in bilateral
conflicts, the WTO plays the role of arbitrator. This conflict arbitration function seems
to be becoming increasingly important.

It goes without saying that Japan should support the WTO. It will also be essential to
step up efforts in the Doha Round, which as indicated currently faces difficulties, in
order to reach consensus. But it is clear that the fate of the future world trade
system cannot be entrusted to the WTO alone. We need a mechanism to
complement the WTO...

Motoshige Itoh
President, National Institute for Research Advancement (NIRA) Professor, Graduate School of Economics,The University of Tokyo