Ito: Convergence or Divergence? The Political Functions of the International Trading Regime on the Democratizing and Liberalizing Reforms

K Ito, “Convergence or Divergence?: The Political Functions of the International Trading Regime on the Democratizing and Liberalizing Reforms.”

Reliance on state-based economic decision making was in vogue as the Soviet and Chinese governments consolidated power and developed after WWII. However, this preeminence of bureaucratic decision making began to wane throughout the 1980s. This paper explores to what degree the GATT or WTO affected this transition. "I argue that the international trading regime, especially GATT, didn't lead these socialist and developing states to the liberalizing reforms directly by means of obliging them to abstain from intervening the international trade...At the same time, however, we can identify the indirect functions of the international trading regime which significantly contributed to the democratization and trade liberalization in those states. First, the beneficiaries of state-intervening economic policies in those states, such as the authoritarian political elites and import-competing business sectors, were all the more encouraged for the very permission of protectionist measures by the international trading regime...Second, the international trading regime has facilitated the commerce on goods and services among advanced industrial states, and has contributed to the dramatic increase in the amount and value of international trade" (1-2).

"This paper examines how the international trading regime has legally and politically affected the processes of democratization and liberalization in the developing and (former-)socialist states, with the emphasis placed on the effects of convergence and divergence of policies across those states, to which, I argue, the international trading regime has significantly contributed" (4).

Two different schools of thought are explored vis-a-vis the development and promotion of international trade regimes and their potential effects on units with the system. The first is hegemonic stability theory promoted by Kindleberger (though he didn't use the term). The second is neo-liberal institutionalism, promoted notably by Keohane.

GATT, for example, helped to spread the westerns sphere of influence throughout the Cold War. Specifically, it provided developing countries with large amounts of contingency plans if they were to join the trade regime. GATT restrictions applied most truly to only a handful of industrialized countries.

There were even more indirect effects that the author attributes to GATT. They helped promote policies that exacerbated the need for international institutions in the wake of the global recession threatening in the early 1980s. They also promoted policies that helped to spurn effects of globalization. Finally, they were stanch opponents of authoritarianism and protectionism.

However, after organizations like GATT did provide certain incentives to shy away from state-centered economic planning, there were additional effects that brought about an increased intensity of international trade that then went on to slightly constrain early adopters of the original organization.

While there was convergence around trade policy, this was not entirely uniform. The final section of the paper addresses issues of divergence.