Freeing up trade has become far more complex today than even 20 years ago, especially when seen from the viewpoint of developing countries. Not only have the benefits of trade liberalization come under attack, increased activism on the part of the domestic special interests in response to the governments' desire to open up, demands for increased market access by trading partners in the context of multilateral negotiations under the auspices of the World Trade Organization (WTO) and the prospects of opening up vis-à-vis a selected few trading partners through the instrumentality of preferential trade area (PTA) agreements have also led to considerable confusion on the part of the governments regarding how they should go about liberalizing trade.

In this short book – it consists of just seven chapters within the space of 133 pages – Razeen Sally offers a clear, concise, and accessible introduction to the benefits of freeing up trade and the relative merits of various avenues to opening up trade. He explains why unilateral liberalization can be and has been a winner, how best to reform the WTO and make it a more effective guardian of the multilateral trading system, and what form bilateral liberalization under the auspices of PTAs must take to be beneficial despite its discriminatory nature. To liven up the discussion, Sally sets this discussion against the background of trade policy developments in Asia, the region that has most effectively deployed outward-oriented policies and is gradually shifting the center of gravity of the global economy from the west to the east.

Sally is a firm believer in the efficacy of free trade and markets. This belief is not an ideological one, but derives from the study of the debates on free trade versus protection, which has taken place for more than two hundred years, and the political economy of trade policy – neatly summarized in Chapters 2 and 3, respectively. He argues that the modern economic case for free trade, based on neoclassical welfare economics, is too narrow because of its restrictive framework, reliance on static analysis, and the assumption that government is capable of intervening intelligently. Therefore, he suggests returning to the eighteenth- and nineteenth-century intellectual roots and placing the case for free trade within the classical-liberal framework, re-coupling it with laissez faire. The case for free trade ‘should be a part and parcel of the wider case for free markets, limited governments, and economic reform’ (p. 20).

Like most pro-free-trade economists, Sally sees greatest merit in unilateral liberalization. He calls this ‘liberalization from below’ in contrast to multilateral and bilateral liberalization driven by international organizations and inter-governmental negotiations that he christens ‘liberalization from above’. In Chapter 6, he argues that the Nike strategy of unilateral liberalization (‘Just do It’) is not only quicker since it can eschew ‘protracted, politicized and bureaucratically cumbersome international negotiations’ (pp. 93–94), it also makes political sense. ‘Rather than relying on one-size-fits-all international blueprints, governments have the flexibility to initiate policies and emulate better practice abroad in experimental, trail-and-error fashion, tailored to specific local conditions’ (p. 94).

This proposition finds ample support in the post-Second-World-War experience of Asia. Country after country – Japan, South Korea, Taiwan, Hong Kong, Singapore, Malaysia, Thailand, Indonesia, China, and India – on the continent have chosen the outward-oriented policies, largely relying on internal political momentum rather than external forces such as the WTO or PTAs, and successfully achieved sustained rapid growth. Openness, as measured by both trade barriers and trade-to-GDP ratio, has increased in these countries during the last half century. And Asia, a continent Nobel Laureate economist Gunnar Myrdal once described as hobbled by colonial exploitation and trapped in unequal exchange with the west, is now ‘feared’ by manufacturers in the United States and Europe. It now also accounts for almost one-third of the world GDP at the purchasing power parity and one-fourth of its trade at the exchange rate.

Sally sees the PTAs, discussed in Chapter 5, as a mixed bag. He advocates the ‘WTO plus’ approach to them, defining it as consisting of comprehensive coverage of goods and services, WTO consistency, generous rules of origin, low external tariff, and strong provisions for non-border regulatory cooperation. According to him, only three PTAs – EU, North American Free Trade Agreement (NAFTA), and Australia-New Zealand Closer Economic Relations Trade Agreement – satisfy these criteria. Most other PTAs, particularly South–South but also many North–South, fail the WTO plus test. ‘These tend to be driven by foreign policy aspirations, but with justifications that are all too often vague, muddled and trivial, having little relevance to commercial realities and economic nuts and bolts of trade agreements’ (p. 78). One might add that the United States-centered North–South PTAs (including NAFTA) have also muddied the waters by including provisions linking labor standards to market access, with a view to eventually bringing this link more centrally into the WTO. Insistence on the inclusion of these provisions has not gone well with the larger developing countries, such as Brazil and India, which have refused to go along with any such provisions in proposed PTA arrangements with the United States and European Union, respectively.

When it comes to multilateral trade liberalization (Chapter 4), Sally feels that it has fallen victim to its own success. The Uruguay Round Agreement, which replaced the General Agreement on Tariffs and Trade (GATT) by the WTO, brought about wide-ranging multilateral disciplines over not just goods trade, but also services trade and intellectual property rights. It also brought the developing countries centrally into the negotiating process. With North–South interests diverging far more than the North–North interests and the liberalization process having to enter hard-to-liberalize sectors such as agriculture and textiles and clothing, the Doha negotiation proved far more difficult and intractable. Sally thinks that a serious Doha package is unlikely to succeed, while a ‘Doha light’ would do little good to salvage the reputation of the WTO as a liberalizing institution. While there is some truth to this conclusion, it is perhaps too pessimistic. Pressures resulting from the Doha negotiations have already led to a considerably improved regime in agriculture: export subsidies, so contentious at the time the Doha Round was launched, are nearly gone and a significant proportion of trade-distorting domestic subsidies, especially in the EU, have been either removed or de-linked from production. And the WTO remains an effective instrument for protecting trading rights of its member countries.

The book offers the reader much food for thought. The main complaint readers are likely to have is that the author makes at best limited effort to defend its propositions and prescriptions. But this is most likely the result of a conscious choice between a short book with clear advice for those interested in it and a long one that persuades the skeptics. I am glad the author chose the former, since I can now write the latter!