Canadian Trade Policy in a G-Zero World: Preferential Negotiations as a Natural Experiment

Abstract

Canada has an effective trade agreement with all of our significant trading partners in the WTO, but its rules are slow to adapt to the rapidly changing economic realities analyzed in other chapters in this volume. As trade negotiators experiment with alternatives in a G-zero world without a country or group of countries able to impose global order, I question two common suppositions: that less-than-fully multilateral agreements are easier to negotiate; and that such preferential negotiations can more readily achieve the new agreements necessary for twenty-first-century trade. I conclude that proliferating preferential agreements are a symptom of fragmented global order, but they are not necessarily a solution. With respect to the first supposition, negotiators are experimenting with agreements that vary on the topics covered, the number of participants engaged, the methods of negotiation and the legal relation of the results to the WTO. These negotiations will be hard to conclude, and harder to ratify. With respect to the second supposition, I also have low expectations for the substantive results of the current set of negotiations. Important aspects of the twenty-first-century trade policy agenda will not be covered, and significant traders such as China will be omitted. We cannot know the results of this natural experiment in negotiation modalities, but I suspect that the future will require renewed efforts to strengthen the WTO.