Abstract
Global economic governance is in flux. The centralized international trade architecture of the post-Bretton Woods era is decentralizing as new regional institutions are being established for various reasons. Decentralization per se is neither good nor bad. It depends on whether there is “healthy” competition and functional complementarity or “unhealthy” competition between global and new regional institutions. This paper has three objectives, to: (i) review the decentralization of the international trade architecture; (ii) identify the benefits and the risks of the decentralization process and its implications for the centrality of the World Trade Organization (WTO), and (iii) recommend policies for the WTO to manage the process. The paper argues that, so far, the benefits of new regional institutions and trade decentralization appear to have outweighed the risks, and as a result global economic governance may have improved. Looking ahead, the paper recommends a number of policy actions that the WTO should take to manage trade decentralization. The paper argues that Asian countries, especially those that are members of the G20, should play a greater role in lobbying and driving the needed reforms of the WTO. They should also seek to expedite the conclusion and ratification of the Regional Comprehensive Economic Partnership (RCEP) and eventually institutionalize the complementarity between RCEP, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Belt and Road Initiative (BRI).
The funding support of MOE Tier 1 (RG80/18) is gratefully acknowledged.
