Prospects for Liberalizing the International Trading System

This paper analyzes the equilibrium degree of protection as the outcome of the interaction of demands for protection and the demand for a liberal international trading order. It then assesses the current balance. On one hand, the nature of technical progress, the institution of the Uruguay Round, the mounting costs of agricultural protections and the increasingly high costs of protection as the world economy integrates all conduce toward a more liberal trading order. Demands for protection will intensify to the extent that growth decelerates, that trade negotiators fail to find mechanism to deal with nontariff barriers and that the United States fails to assume this leadership role that was earlier taken.