The International trade Regime: a Global Public goods Perspective

University of Maastricht Final Thesis Matteo Rizzolli 1 Introduction Global warming, pandemic diseases, international terrorism, financial crises and political instability are among the new global challenges that humankind faces nowadays. Issues that have traditionally been addressed at the national level are now going beyond the grasp of any single nation. Global concerns call for global solutions. A growing amount of literature points at the theory of global public goods (GPGs) as being a set of most useful concepts in understanding and addressing many problems on the global scale. If global concerns need international collective action, then understanding global public goods becomes central to any adequate theory of international cooperation and organisation. International cooperation to solve global problems was in the mind of the architects of the Bretton Woods system. They conceived an institutionalised and interdependent global system capable of delivering political stability, economic growth and social justice. In this framework, international trade played a central role in delivering growth through efficiency and stability through interdependence. Adverse distributional effects of trade were to be corrected both at the international level with foreign aid and other policy tools, and at the national level through the welfare state. Global interaction, rather than insulated isolation, has been the basis of economic progress in the world. Trade, along with migration, communication, and dissemination of scientific and technical knowledge, has helped to break the dominance of rampant poverty and the pervasiveness of nasty, brutish, and short lives that characterised the world. […] However, despite all progress, life is still severely nasty, brutish, and short for a large part of the world population. The great rewards of globalised trade have come to some, but not to others. (Sen, 2002) Fifty years after Bretton Woods it is arguable that the system fell short in delivering at least one of its expected outcomes: social justice. In turn, this creates distress in the overall architecture and drives the system into a crisis of legitimacy to which the international trade regime is not immune. Cooperation is still the only reasonable way-out of the crisis and a GPGs perspective casts new light on othe debate on international trade. The present thesis will look at the international trade regime through the lens of global public goods. In doing so, it will try to address the following problem statement: What does a Global Public Goods perspective add to the understanding of the present international trade regime, especially in respect to its role in a new global order and its capability to deliver fundamental global policy outcomes? The first chapter will look at international trade trough the eyes of economics. International trade brings undeniable efficiency gains to the world as a whole. However, international trade creates winners and losers. Moreover, trade interferes with the pursuing of pro- development and social policies both in developing and developed countries. The second chapter will present a review of the theory of public goods in a national context. National constituencies, it will be argued, have long organised the production of their collective needs in the form of nation-states. In the last centuries, nation-states have delivered important results at the national level, however, they have also shown all their limits when cooperating at the global level. With the third chapter, trade policy formulation will be observed at the conjunction between the national and the international level. National governments, playing the trade game, often get caught in prisoner's dilemmas.