From his new book:
The Pandemic of PTAs
There is yet another irony. The interwar proliferation of preferences was a result of an uncoordinated pursuit of protectionism, itself aided by the breakdown of financial stability and macroeconomic equilibrium in the world economy. But the current tide of preferences has been a result of politicians mistakenly, and in an uncoordinated fashion, pursuing free trade agreements because they think (erroneously) that they are pursuing a free trade agenda.
So today we have a cumulative total of over 350 PTAs reported to the WTO. Even if only active PTAs are counted, the estimated total is still large. By either count, the PTAs are evidently increasing continually.
Among economists, I was the earliest to warn against PTAs, starting in 1990 when I sensed that we were facing a systemic threat to the principle of nondiscrimination in world trade. I was then in a minority of one, even among economists, many of whom thought I was a "multilateralist freak." Arrayed on the other side were truly eminent economists, among them Larry Summers, who became the U.S. Treasury Secretary, and the remarkable Paul Krugman, my former MIT student and now New York Times columnist.
But now that the proliferation and its many downsides have become evident, and ever more threatening, I daresay that the profession has moved like a herd into my corner. Pascal Lamy, currently the Director General of the WTO, once remarked that half the economists in the world were now opposed to FTAs. I retorted mischievously that this was an English understatement by a distinguished Frenchman; in fact, nearly all were.
I discovered that the European Union which started the pandemic while the United States had grossly aggravated it, applied its MFN tariff to only six countries--Australia, New Zealand, Canada, Japan, Taiwan, and the United States--with all other nations enjoying more favorable tariffs. I asked Pascal Lamy, who was then the E.U. Trade Commissioner, Why not call it the LFN (least favored nation) tariff?
In short, we now have once again a world marred by discriminatory trade, much as we had in the 1930s. And we know how that turned out.
