The global economic crisis, and governments’ responses to the crisis, did not precipitate a descent into 1930s-style protectionism. That is a relief. But it provides no refuge from policy measures that will slow down globalisation and growth in the next decade. ‘Creeping protectionism’ is increasing, and the crisis has reinforced trends visible before the start of the crisis. New patterns of protectionism are similar to developments in the 1970s and 1980s rather than the 1930s. Domestic ‘crisis interventions’, especially in capital and product markets, and the return of Big Government, will spill over to external policy, with more defensive trade policies as a consequence.

The global momentum in favour of trade liberalisation has slowed down; and there is more liberalisation-scepticism post-Washington Consensus. Chances are that the Doha Round will either collapse or deliver a very modest result. Both outcomes will leave the WTO in very serious trouble. For the WTO to have future relevance, its members must restore a market-access focus, and arrest crippling UN-style decision making. But its days as a major vehicle for liberalisation are probably over. PTAs, however, are not a serious alternative. Nearly all are bitty sectoral deals rather than comprehensive WTO-plus agreements. They distract attention from unilateral reforms and the WTO; and they are undermining non-discriminatory multilateral rules. The silver lining is that liberalisation is likely to come from a different route: from unilateral example-setting and competitive emulation. China is now the unilateral engine of freer trade, and this will reverberate elsewhere, especially in its Asian neighbourhood. That, not trade negotiations, is more important to Asia’s unfolding transformation of the global economy. Multilateralism, especially a workable WTO, has its rightful place. But only if its means and ends are suitably modest and realistic.

The collapse of the Doha Round in Cancun is symptomatic of a wider malaise in the WTO. It has an overloaded agenda, and is becoming excessively legalised and politicised. The “UN-isation” of the WTO proceeds apace. Its decisionmaking mechanism is crippled. It is therefore not surprising that attention has shifted decisively to preferential bilateral and regional trade agreements (PTAs). To prevent permanent irrelevance, the WTO must, first, rediscover its market access raison d’être; and, second, revive an effective negotiating mechanism. The alternative is an increasingly fractured world trading system governed by unbalanced, unstable, power-driven PTAs.